Communities hosting renewable projects must “see profits as well as pylons” if ministers want public support for the clean power transition to hold, MPs have warned.
A new report from the Energy Security and Net Zero Committee says community ownership is in danger of being left behind, with local energy projects facing grid delays, weak revenue models, planning barriers and a retail system that makes it too hard to sell power locally.
The Committee says the Government risks missing a major opportunity to build public support for its 2030 clean power targets unless community energy is treated as a serious part of the transition rather than a nice extra.
There is a warning that areas that host large-scale renewable projects are putting up with infrastructure but too often do not share enough of the value created.
The Government has a target for 8GW of local and community energy by 2030 but MPs say they are not convinced that will be delivered from the current level of just 411MW in 2025. The report says it was not even clear from government evidence whether the 8GW figure is a firm commitment, a target, an ambition or an aspiration.
That matters as community energy projects are small compared with commercial developers but can carry much greater local value.
The Committee says they can build support for energy efficiency and renewable generation by giving people a real stake in the assets around them, with profits going back into community needs, rather than corporate returns.
And there’s evidence that community-led projects can deliver 12 to 13 times more social and community benefit than commercial schemes.
But MPs say the system is stacked against them as the regulatory framework treats community projects like major commercial developments, despite the fact they do not have the same balance sheets, legal teams or ability to spread risk across multiple sites.
Grid connections are also one of the biggest barriers.
The Committee says community energy should be designated as a strategic priority, allowing existing community-owned projects to move up the connection queue and forcing regulators and network operators to remove unnecessary barriers. It also says Labour must move away from “ownership agnosticism” and give community energy a special status in the system.
The retail market is another major problem for community schemes.
Community energy groups often want to sell locally generated electricity to local people at lower prices but the cost and complexity of getting a supply licence are prohibitive. The Committee wants ministers to produce, within six months, a regulatory framework allowing community energy generators to sell electricity to local consumers.
If Ofgem does not approve local supply rule changes this summer, MPs say the Government should bring forward legislation similar to the Local Electricity Bill.
Finance is also holding projects back.
Since the closure of the Feed-in Tariff, community energy has lacked a stable long-term revenue model, while the Smart Export Guarantee has failed to give investors enough certainty because payments are low, variable and short term.
The Committee wants a new Community Energy Export Guarantee, with a negotiated floor price guaranteed over 15 to 20 years and underwritten by government – and wants a defined share of the £1 billion Local Power Plan funding ringfenced specifically for community-owned projects, not simply wider “local” schemes.
The report also calls for communities to have the right to take a minimum 20% stake in onshore and offshore renewable projects in their local area, with the minimum stake developers must offer rising from 5% to 20%.
Planning rules should also change so community share and enhanced local benefits become material considerations when commercial renewable projects seek consent.
Bill Esterson MP, Chair of the Committee, said: “Communities are an important part of the energy transition if the government is going to hit its targets. Across the UK, communities are putting in huge effort and resources to host large-scale renewable projects. But they face a system stacked against them, and too often they don’t share the benefits.
“Our report is calling for urgent action through the new Energy Independence Bill. We’re asking the government to prioritise community energy projects for grid access, guarantee communities are offered the opportunity of a minimum 20% stake in local renewable energy development and make it easier for community generators to sell their energy locally.”
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