The UK’s Energy Security and Net Zero Committee held an oral evidence session on March 12, 2025, as part of its inquiry into “Unlocking Community Energy at Scale.” The session featured experts discussing the definition, challenges, and opportunities within community energy, particularly regarding the government’s Local Power Plan delivered by Great British Energy (GB Energy).

Key participants included Marna McMillan (Energy4All), Louise Marix Evans (Rossendale Valley Energy), Zoë Holliday (Community Energy Scotland), Jake Burnyeat (Communities for Renewables), Matthew Clayton (Thrive Renewables), Hugh Goulbourne (CO2Sense), and Helen Martin (Bristol Energy Cooperative).

Key Insights from the Session:

1. Definition of Community Energy:
   
   • Generally viewed as not-for-profit enterprises locally owned and governed, focused on generating renewable energy to benefit local communities financially and socially.
   • Emphasises local empowerment, social equity, reinvestment of profits into community development, including tackling fuel poverty and housing retrofits, and increasing community understanding of the energy system, ensuring relevance and local agency in energy planning.

1. Challenges Identified:
   
   • Significant financial and regulatory barriers including funding access, restrictive planning processes, and grid connection issues.
   • Current schemes provide insufficient long-term funding and financial certainty, making it difficult to establish viable business models.
   • The complexity and resource demands in deprived areas necessitate targeted capacity-building support.
   • Smaller community energy projects face disproportionate financial burdens compared to larger commercial projects due to similar due diligence costs and lower returns.
   • Lack of access to affordable finance and price stability mechanisms for smaller-scale community energy projects.

1. Proposed Solutions and Recommendations:
   
   • Introduce tailored financial instruments and modify regulatory frameworks to support long-term viability.
   • Establish a clear, comprehensive definition of community energy to distinguish it clearly from municipal or private sector energy projects.
   • Facilitate shared ownership models with mandatory community stakes (suggested at least 20%) maintained in perpetuity, ensuring enduring community benefits and preventing future dilution of ownership.
   • Implement incentives for developers offering shared ownership, such as priority in grid connections and planning processes.
   • Require local authorities, as a condition of funding, to proactively engage with community energy initiatives, including appointing dedicated community energy officers. Where absent, councils should be supported to establish these roles.
   • Develop innovative financing models, including GB Energy taking early stakes in projects, later transferring ownership to communities.
   • Adjust existing price stability mechanisms, such as extending Contracts for Difference (CFD) to smaller projects or creating bespoke pricing structures.
   • Establish a robust ‘Right to Local Supply,’ enabling community groups to directly provide energy to local consumers, revising current regulations to allow exemptions from certain levies and charges. Currently, community groups face regulatory limitations, preventing direct supply without establishing costly energy supply companies or partnerships.
   • Pool smaller projects into investment vehicles to attract institutional and private investors, streamlining administrative and investment processes. Introduce a “Hub and Spoke” support mechanism providing new and existing community energy groups with essential access to finance, skills, and resources on an as-needed basis.

1. Wider Implications for Policy and Practice:
   
   • Stronger community involvement can increase public support and active engagement—not just passive acceptance—for renewable energy projects, fostering local energy resilience and directly supporting the UK’s legally mandated net-zero targets.
   • Policymakers must ensure community energy benefits reach deprived areas, preventing inequitable energy transitions and enabling equitable access to smart tariffs that currently benefit only more affluent households.
   • Aligning Local Power Plan funding with existing schemes, such as retrofit programs, can amplify community and environmental benefits.
   • Promote a holistic, whole-systems approach, incorporating generation, flexibility, storage, and heating to create integrated local energy systems.

In conclusion, the Committee’s session emphasised the transformative potential of community energy and the necessity for targeted policy support to overcome barriers and scale community-driven renewable initiatives effectively.

NB: This document is a personal summary of a public parliamentary evidence session. It is not an official record and does not constitute legal or financial advice.