Consumers, voters, residents or investors: who will be at the heart of future community energy organisations?

Tim Braunholtz-Speight, University of Manchester

This dialogue session addresses the question of how shifts in financing, the energy market, and grid regulation and technology might affect the future structure of community energy organisations, and how citizens participate in them.

To date, community energy companies in the UK have largely focussed on renewable electricity generation. A range of corporate structures and membership models exist, but two dominate. Several early initiatives were Companies Ltd by Guarantee, where membership was limited to local residents, and projects were financed by grants and loans. However, the growth of community energy over the last decade has been dominated by Community Benefit Societies, a form of cooperative, where membership and finance are linked through the issue of interest-bearing but non-transferable ‘community shares’. A minimum investment is typically £100 or more; and shareholding is generally not limited to local residents. However, substantial cuts to FITS, and a number of other changes around investment regulations, have slowed new activity down and led many in the community energy sector to question the future viability of this business model.

The search for new business models offers opportunities to address some of the gaps in existing community energy. Thus it is notable that while these initiatives have increased direct participation of people in energy generation, it has tended to be as owners or investors. They have not – with one or two off-grid exceptions – sold energy direct to consumers. This is often attributed to technological and regulatory challenges associated with ‘local supply’ (difficulties in linking local electricity generation to consumption, and onerous regulation aimed at national scale organisations). However, moves towards smart grids, and regulator recognition of the decentralised future of the energy system, suggest that these barriers may be overcome. It may then be possible to create local energy cooperatives where members might be consumers, instead of (or as well as) investors in an energy generation project. This could open up membership of community energy organisations to people who could not afford to become investors – placing consumers at the heart of community energy?

A further force for change is the growing engagement of local authorities in the UK energy system, potentially putting local voters at the heart of community energy. Some are working in partnership with community energy organisations (e.g. Oxford City Council and the Low Carbon Hub); others (e.g. Plymouth, Swansea) have created hybrid or spin-off community energy cooperatives. While constrained local government finances may threaten the growth of ‘civic energy’, they may also drive local authorities to explore it further as a potential longer term revenue stream.

Finally, some community energy companies do exist that focus on demand-side energy activities. They too are developing new business models around new technologies, such as LED lighting, energy storage and smart metering. And combinations of these activities with renewable generation could enable the creation of multifaceted community energy services companies (of which some already exist). This session brings together a panel of practitioners, policymakers and academics engaged in these issues to ask how might these shifts in consumer and civic engagement impact on community energy in the UK? What are the risks and opportunities, and how might various actors best respond?