Labour's billion pound gamble: Can community energy deliver the affordable power the UK needs?

The kids at the Radcliffe School in Wolverton have a new thing they can stare at. After their school installed solar panels on its roof, they can see how much energy they are producing and using.

“They can see exactly how much is being generated on their roof. It’s their little power station. That little power station then gives them an opportunity to understand in real life,” says Jane Grindey, of Wolverton Community Energy.

“It costs a lot of money, and if you’re a school struggling to pay your bills, putting solar on your roof – how can that be a number one priority? Someone like us can come along and say, we’ll put the solar on the roof, and make sure the energy is lower cost and stable pricing over time,” adds Grindey, who explains the school did not have to pay for the solar panels up-front.

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The panels generate electricity for the school to use. Only when there’s not enough solar to meet the school’s needs, will it start using power from the grid. Any solar they can’t use gets sold back into the National Grid. Installed during half term in October 2024, the scheme will generate 45,000kWh of power a year – equivalent to what 20 small homes would use in a year – and reduce the school’s carbon footprint by 9.5 tonnes of carbon dioxide every year.

“They use as much solar energy as they can, or might be available, and that means their first hit of energy is the cheapest they get,” Grindey adds.

Keir Starmer’s Labour government is going big on community energy. As part of the Great British Energy Bill, now in its final parliamentary stages, the government will pump £1bn a year into the sector. It wants communities to generate eight gigawatts of power (approximately six Deloreans). The Local Power Plan (LPP) will provide £400m of low interest loans each year for community energy and £600m a year for local authorities to build clean power in the towns, cities and villages of Britain. It’s key to one of Starmer’s five missions.

Those in the scene say community energy can help us quit our reliance on foreign power, uplift communities, and perhaps even bring energy bills down. Big Issue been digging into the promised revolution, discovering how solar panels and wind farms are allowing communities to build pots of money to fight problems. But deep barriers remain, from subsidies cut off to an inability for communities to actually use the energy they have generated.

The money is a landmark investment, but pales in the context of Labour’s promises, says Green Party co-leader Carla Denyer. “All of this is still a massive retreat back from the £28bn climate investment pledge,” Denyer told Big Issue. “I am worried that the government is a little bit stuck in second gear on the motorway on some of this stuff.” By contrast, the Greens would be “designing community involvement from the start”.

The flagship success story of community energy is Ambition Lawrence Weston. In 2023, a community in a deprived part of Bristol built England’s tallest onshore wind turbine. In fact, it’s one of only two onshore wind turbines built in 2023. “Not only is it a huge carbon emission reduction, it’s generating significant sums to reinvest in their community projects,” says Ed Wallis, director of policy and engagement at Locality. 

It is perhaps the tallest sign of a revolution taking place across the country. A community in Burnham and Weston purchased a 9.3 megawatt solar farm at a cost of £11.4m. In West Sussex, a community in Ferry Farm bought a 5 megawatt solar farm off commercial owners in 2020 with £6m of funding. Near Buckingham, Gawcott Solar has used £4m of funding to buy a 4.2mw solar farm in 2016. It is expected to generate £2.8m for local projects.

These are, research suggests, not just popular projects – they are a popular concept. 62% of the public would support a community-owned renewable energy project in their area, compared to 40% support for a privately-owned project, according to polling by Common Wealth. Meanwhile, 53% of the public say they would be likely to reduce their energy consumption in support of a community energy project.

Crucially, as net zero becomes the subject of debate, community energy’s proponents argue it can help get the public onside by showing the benefits of clean power. “The reality is that to decarbonise the grid by 2030 is achievable but difficult. It’ll mean a lot more local wind farms and solar panels,” says Prina Sumaria, a net zero project manager at Regen. “People really love community energy, and they’re much more likely to accept a renewable project near them if they can benefit from it and they have some sense of ownership.” 

There is one big barrier. Most community energy projects don’t get to use the energy they produce. In this way, Wolverton stands out – schools can use the solar power harvested on their roof. But most community energy projects work building a pot of money to put back in the community. In pure financial terms, they could just as well be selling heroin. As a consequence, despite what you might think of as an obvious benefit, the projects are largely not making energy cheaper for communities who clock into community energy.

Earlier this year, Bristol City Council was prevented from buying renewable energy from community energy groups in the city – a set-up known as “sleeving”. This same dilemma is faced by community energy groups around the country, who instead have to sell their power back to the National Grid. “It’s the obvious thing that people expect from a community solar farm. When you stand up in a village hall, the obvious benefit people expect is they’ll get cheap electricity,” says Jake Burnyeat, director of Communities for Renewables. Could we get there? Carla Denyer believes so, telling Big Issue: “That is one of those the government could get out of the way that doesn’t cost money.” Campaign group Power for People wants the government to adopt its Local Energy Bill, which would allow community energy schemes to sell power locally.

Another barrier is the disappearance of the Feed-in Tariff, which acted as a subsidy for the community energy and saw the sector grow hugely from 2013-16. “You really saw the sector struggle after that, with trying to find a business model that works with the scale they were doing,” says Sumaria. Nick Plumb, director of policy and insight at Power to Change, adds: “Growth has slowed a little bit and plateaued, and that’s particularly due to the loss of the feed in tariff. But there’s also a huge renewed optimism, given the fact the LPP has been on Labour’s agendas for a few years now. It’s one of the most ambitious things we’ve seen in community energy ever.”

With Labour in power, figures in the scene told Big Issue providers should be offered a guaranteed rate. Many community energy projects fall under the 5mw threshold needed to qualify for the government’s “Contracts for Difference” scheme for supporting low-carbon energy. Regen wants a guaranteed price for 15 to 20 years to be introduced. “Although the price of renewable energy is falling rapidly, community energy projects struggle to get funding because there’s no price security for them,” says Dan Stone, a policy officer with the Centre for Sustainable Energy.

The prize on offer, should Labour get it right, could be transformational. “If we can get a majority renewable grid, then we can make stable prices, because we won’t be reliant on Russian gas,” says Sumaria. As poverty continues to grip the country, community energy could help fight its effects. Burnyeat saw the difference which could be made in lockdown, when community energy firms could mobilise funds quickly. Ferry Farm was able to, within a couple of days, put funds towards local schools to pay for home learning “way quicker than the government could fund it”, Burnyeat said. “They just had this pot of money they were able to deploy very quickly in a crisis.”

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