Low-cost finance for renewables enabled by community energy
12 February 2020
Community energy in the UK has grown due to some favourable government policies and the decreasing cost of renewable energy technologies.
However, in the last few years, the government has withdrawn most financial support for small scale renewables, putting community energy business models under strain.
We surveyed community energy organisations across the UK to learn more about their business models and finances, and explore the impact of public policy on prospects for their future. We compiled a database of 153 projects from 56 organisations, with information on organisation structures and size, project activities, financing, costs, resources, revenues, customers and community benefit activities.
We found that there are three basic sorts of community energy projects: larger “standalone renewables” projects financed mainly by loans; smaller "on site customer" renewable energy projects, mostly rooftop solar PV and financed mainly by community shares; and “demand side” projects working on energy efficiency and fuel poverty. On average, community shares carried interest rates two percentage points lower than loans – benefitting smaller projects. We also found that most renewable energy projects were reliant on income from the Feed-in Tariff and similar schemes to provide revenue support and security.
Now that the Feed-in Tariff is closed, we suggest policy measures and business model innovations that could enable the sector to realise its potential contribution to the zero-carbon transition.
View the full paper, policy brief and key facts infographic at the links below:
- Business models and financial characteristics of community energy in the UK
- Price support allows communities to raise low-cost citizen finance for renewable energy projects
- UK Community Energy Business Models: Key Facts