Community energy faces tough times unless government policy changes, report warns

‘It is clear that the community energy sector has suffered in 2017 and dramatic changes are needed if the benefits of community energy are to continue’

Last year was a difficult one for the community energy sector marked by a slowdown in growth, a report warns.

The State of the Sector Report 2018, the second annual review of community energy in in England, Wales and Northern Ireland, says only one new community organisation was constituted in 2017, with 30 fewer successful projects and 31% less generation capacity installed or acquired in comparison to 2016.

Cuts to subsidies and tax incentives are still hitting profits, it says, but the sector has stayed resilent thanks to successes in large-scale generation, increased collaboration, new business approaches, innovative financing and new technologies, such as battery storage.

The report, a survey of more than 200  organisations by Community Energy England (CEE), Community Energy Wales (CEW) and Scene Connect (Scene), calls on local and national government to create clearer strategies, including early stage funding, financing support and subsidy review. Without this, the problems hitting the sector will continue, it says.

The report, released on 23 June to mark the start of Community Energy Fortnight and the Community Energy Conference in Manchester, found that:

  • 228 organisations have active or in development community energy projects, supported by over 48,000 members and 166 full time staff
  • Communities across England, Wales and Northern Ireland own 168 MW of electrical generation capacity and generated 202 GWh in 2017, enough to meet the annual demand of 65,000 homes
  • Including Scotland, UK communities own a total of 248 MW of generation capacity as of the end of 20171
  • Communities own 1.9 MW of renewable heat generation capacity, generating 3.2 GWhth in 2017
  • 74 communities offer energy efficiency improvements in their communities, engaging 84,000 community members and installing over 1000 upgrades in 2017
  • Five communities have installed 20 electric vehicle (EV) charging points and provide five EVs as a community service
  • Five energy storage projects were identified as being installed or progressing in 2017, showing the drive for, and necessity of, innovative approaches to community energy  Over 71,000 tonnes of CO2 emissions were avoided by community energy activities in 2017
  • Over £1.1m in community benefit funding has supported community education, environmental improvement, community asset purchase and supported local community development in 2017
  • Nearly 30% of community energy organisations have a stalled or failed project due to a number of issues, in particular poor project margins due to reduced or removed subsidies and early stage support.

Communities will continue to collaborate through 2018,” the report says, “maximising available resources, such as start-up funding from established community organisations, expertise and knowledge sharing and amalgamation of groups into wider bodies, networks and under umbrella bodies.

“In line with these changes and the major successes seen in 2017, collaborative and partnership approaches to existing site purchase is likely to become the dominant model of community renewable energy development.”

It adds: “It is clear that the community energy sector has suffered in 2017 and dramatic changes are needed if the benefits of community energy are to continue to be felt in communities across the UK. Clearer government strategy and support are critical in overcoming the barriers seen in 2017, particularly in England and Northern Ireland where local energy targets and support mechanisms are needed to bring ambitions in line with those seen in Wales and Scotland.

“Beyond these national targets and programmes, localised funding and initiatives are needed to support new projects, improve financial margins and support ongoing innovations throughout the sector. Importantly, and despite the many challenges faced by community organisations during 2017, the motivation and enthusiasm to develop community-led energy projects remains.”