What is community energy?

Community Energy involves delivery of renewable energy, energy efficiency or retrofit projects which are led by community members to benefit a local area.

In 2024, community energy projects contributed £24.5m to local economies and saved £1.86m in energy bills. They also reduced carbon emissions by 120,000 tonnes, the same as 1,033,578 trees planted.

The Local Power Plan, produced by the Government, has a vision for every community to have the opportunity to own a local energy project. £1bn investment in a combination of grants, loans, advice and expert support will help deliver this.

How does community energy work?

There are many different financial models that a community energy project can adopt; it will depend on the area and project. But many follow a process similar to this:

A local not-for-profit community benefit society wants to develop a small solar farm.
They raise money, including through selling shares to local people.
The solar farm is built through the money raised.
The landowner receives rent. Shareholders receive a financial return on their investment.
Extra profits are spent on projects for the local community e.g. energy efficiency measures for homes, upgrading the village hall. Local groups can apply for grant funding for projects.
Profits stay within the community, the renewable energy installation tackles climate change and energy security.

Where can I find out more?

For more detail on community energy models please see an example from Bath and West Community energy here. You can also check our FAQs.