5th November 2015

How community energy works

Across the UK communities are coming together to respond to vital challenges such as climate change, resource scarcity, and the domination of the energy market by the ‘big six’, bringing ever-mounting electricity prices. British Gas, EON, Npower, EDF, Scottish Power and Southern Electric now control over 90% of the UK’s energy market. It makes sense for us, the people, to want to take control of the energy they consume and try to establish a more sustainable energy supply.

Community energy schemes are typically owned by collaborative ventures established by a wide-ranging group of individuals and families, often located in the surrounding area of the project. The members of this group together raise the investment needed to provide the equity for the project. They are also often able to source their electricity from the project, which they own.

The most common structure for community ownership of assets is via a Community Benefit Society, Co-operative Society or Community Interest Company. Nottinghamshire Community Energy is a Benefit Society.

From wind and solar to biogas and hydro there are thousands of community power projects popping around the world. In the UK alone there are over 5,000 community-owned renewable projects and the number is growing. These projects may be used for on-site power or to generate wholesale power for sale, and come in many shapes and sizes depending on the needs of each community. It might be anything from a few photovoltaics on a school roof to a 22-acre solar array to a small hydro system or a 5 MW wind farm. Additionally, many community-owned projects include the creation of a community fund, which supports the re-investment of surplus profits back into local communities via contributions of their choice, voted by the residents.

The benefits of community energy are many:

Economic benefits:

  • Members have a direct stake in a local project, access to attractive financial returns and income tax relief under the Enterprise Investment Scheme (EIS)
  • It leads to saving money on energy bills, as well as a decline in communities’ reliance on the ‘big six’ firms and foreign energy supply
  • It creates long-term, high quality local jobs and skills

Environmental benefits:

  • It helps reduce greenhouse gas emissions and tackle climate change
  • It may lead to the implementation of biodiversity management plans and the enhancement of wildlife habitats
  • It reduces our dependence on fossil fuels

Social benefits:

  • It provides opportunities for local participation
  • It gives voice to people’s interest in green energy, and may increase community awareness of energy use and its effects
  • It leads to the establishing community funds that redirect profits back into the community