What is community energy?

Energy doesn't have to come from a distant power station owned by a large corporation. Community-led energy projects keep financial benefits local – for example, providing investment in local facilities.

Community energy projects range from solar farms and wind turbines to energy efficiency schemes and retrofit programmes. What they have in common is that they're led by the communities they serve. FEL is focused on the first of these – solar farms and wind turbines.

The scale of community energy in the UK is growing. In 2024, projects contributed £24.5m to local economies. The government's Local Power Plan has set out a vision for every community to have the opportunity to own a local energy project if they want. This vision is backed by £1bn in grants, loans and expert support to help the community energy sector grow.

We like this video, ‘What is Community Energy?’ from Power to Change.

How do community energy projects work?

There's no single model, but many community energy projects follow a similar path. A local not-for-profit identifies an opportunity, perhaps a suitable site for a small solar farm. They raise money, often by selling shares to local people, and use that to fund construction. The landowner receives rent; shareholders receive a return on their investment.

And the profit made by the development doesn’t disappear into a remote head office. Instead, it’s reinvested locally, funding whatever it is that the community decides. This might be energy efficiency measures for homes, upgrading community buildings, or offering grants to local groups.

What examples are there?

There are many examples of successful community energy projects in England. Here are just a few of them; click on the links to find out more:

What is the financial model of a community energy organisation?

There are different financial and legal models that a community energy organisation might adopt. One of the most common is Community Benefit Society (CBS). The not-for-profit business model of a CBS makes it very attractive to funders who offer grants, set-aside land or other assets. Bath and West Community Energy is a CBS. You can find out more on their website FAQs.

Community Energy England has produced this guidance on how to finance community energy projects and how to sell power from them.

The best place to find out more about community energy is Community Energy England, ‘the national voice of the community energy sector’. The Energy Learning Network also has useful resources.