New business models in community energy

Phil Beardmore looks at some of the new co-op projects which are working towards the carbon transition

The years 2010 – 2019 were a golden age for community energy in the UK. 

Dozens of energy co-operatives were established in towns, cities and rural areas alike. Mostly constituted as community benefit societies, they funded renewable energy generation through community share issues. The community benefited from cheap electricity from the roofs of community buildings; the economy benefited from keeping money in the local area; and the environment benefited from lower greenhouse gas emissions. Social benefits included the creation of community funds by some co-ops.

Then, in 2019, the old business model of putting solar panels on any community building, large or small, with a south-facing roof, crashed with the abolition of the government-backed feed-in tariff. Suddenly community energy co-operatives were at a crossroads, and risked fading into irrelevance.  We were not the only country where this happened – in July 2021 Co-op News reported a similar process in Germany.

Over several years, Community Energy England (CEE) has exemplified post-subsidy business models that have emerged. CEE’s State of the Sector report for 2021 stated that: “With the removal of subsidies and other financial support, there has been a shift in the sector away from electricity generation projects … Organisations are refocusing on a whole system approach, including both their core priorities of tackling fuel poverty and demand reduction, and exploring innovative business models on flexibility, low carbon transport and local supply.”

Related: Emma Bridge of CEE on the national changes the sector needs

Some energy co-operatives have recognised the need to be more strategic. Development of new projects has shifted to land and buildings where there is significant market demand for the renewable heat and electricity that is generated. In particular, many have honed in on the opportunity created by the pressing need to decarbonise the heat supply, through reducing demand for heat in buildings, and providing renewable heat for buildings through technologies such as heat pumps. The CEE State of the Sector report showed 20 energy co-operatives working on renewable heat projects, and 76 working on low carbon transport projects.  

We all know that co-operation among co-operatives is one of the seven co-operative principles but we also know that it doesn’t always happen. The Big Solar Co-op is a brilliant example of the way the community energy sector has responded to the twin challenges of Covid and the loss of subsidy, through collaboration. For small co-ops struggling to find a way forward, the Big Solar Co-op pools a number of risks that we face. 

These risks include volunteer burnout risks; increased exposure to the risk of economic failure of a partner who hosts one of our installations; and project development risks on larger and more complex projects. For organisations like Community Energy Birmingham, of which I am a board member, it means that we are now able to develop a pipeline of larger and more complex renewable energy projects with help from the Big Solar Co-op staff. 

These projects have greater environmental and financial impacts than our previous projects, particularly in an area like Birmingham that does not have wind, hydro, wave or tidal energy available to us, and which has suffered disproportionately from the economic impacts of Covid-19.  

Related: Co-ops must work with other movements on climate, says FOE expert

Another exciting focus of collaboration is in the area of home energy advice, where a number of co-ops have recognised the need to provide impartial advice to householders who are considering major investment in the retrofitting of their homes to make them lower carbon. We at Community Energy Birmingham have learned a lot from more experienced organisations like the Carbon Co-op, and from making friends with our peers in other cities such as Crew Energy, Croydon Community Energy, and South East London Community Energy (SELCE).  

We live in exciting times for community energy as the world wakes up to the climate emergency. If community energy is something that interests you then the best advice is not to re-invent the wheel, but talk to as many experienced practitioners as you can, because we are always willing to help and collaborate.

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