The Case for Community Energy: The Smart Investment in Britain’s Energy Future

Joe Shamash, Investment Director, Better Society Capital

Note: The views expressed on these pages are the opinions of their respective author(s) only and do not necessarily reflect the views and opinions of UKSIF.

This website should not be taken as financial or investment advice or seen as an endorsement or recommendation of any particular company, investment or individual. While we have sought to ensure information on this site is correct, we do not accept liability for any errors.

The Case for Community Energy: The Smart Investment in Britain’s Energy Future

Joe Shamash, Investment Director, Better Society Capital

The transition to a sustainable, climate-resilient economy requires two things at scale: massive investment and massive public buy-in. Communities must see tangible benefits where they live to support the transition to net zero emissions. Without this support, net zero will not happen.

Community energy – where communities take ownership stakes in energy infrastructure – offers a proven model for getting this right. It shows how we can align financial, social, and environmental goals while building the political license needed to go further and faster.

The Community Energy Model

In its simplest form, community energy means local ownership of energy assets, with participants sharing financial returns and running projects democratically with local accountability. These schemes deliver real benefits – supporting jobs, building economic resilience, and returning money to communities. Some models also deliver lower bills through local consumption of locally generated power – something many renewables experts have called on the Government to enable more of by introducing a ‘right of local supply’, which would create local energy markets that connect community producers directly with consumers.

Solving Britain’s Energy Challenges

Community energy schemes can tackle the smaller, more entrenched challenges that government struggles with – nowhere is this clearer than with energy efficiency in Britain’s housing crisis.

Our housing stock remains among Europe’s least energy-efficient, driving fuel poverty, poor health outcomes, and higher energy demand. The Department for Energy Security and Net Zero Committee reports this crisis has significantly set back decarbonisation efforts and pushed clean energy targets farther off track. Poorly designed retrofit schemes have struggled to achieve scale, hindered by complex technology choices, a lack of trust, and the challenge of reaching the most vulnerable households leaving people with high bills and cold homes.

Community energy groups offer a different model entirely. Using revenues from wind and solar projects, they can fund retrofitting schemes focussed on the most energy-inefficient homes at risk of fuel poverty. For example, Repowering London has delivered 1,141kWp in solar capacity and avoided 905 tonnes of emissions for hard-to-reach communities across London. Their expertise in place-based community engagement has also given them the platform to overcome the barriers to retrofit, including in blocks of flats – work that requires very high trust from local tenants and challenging economics.

Ambition Lawrence Weston, a charity in a lower income district in Bristol, developed England’s tallest single wind turbine in 2023. The money generated by this has been used to build a community centre, run a public shuttle bus, and retrofit homes to save on energy, bills and carbon.

Better Society Capital and Thrive Renewables set up a new Community Energy Catalyst venture earlier this year to provide £40m of flexible finance for more projects like these. Our first investment is supporting Scotland’s first community-owned subsidy free wind-turbine in Scotland, which is due to come online later this year. We designed this based on experience and confidence in the sector. BSC, for example, has helped finance more than half the UK’s community energy capacity. These investments have performed well for their communities and for lenders, benefitting from stable revenue streams and community groups that do phenomenal work to make their projects succeed.

The Policy Imperative

Community energy generates 12 times the local economic value of commercial projects. It has huge potential for growth but today it generates less than 1% of the UK’s renewable energy.

The UK Government’s GB Energy and Local Power Plan promise to help communities regain control of their energy systems by developing up to 8GW of cheaper, cleaner power. Community energy projects face structural challenges, lacking the economies of scale and flexible capital available to larger commercial operators. A new partnership between government, communities and investors can overcome these challenges.

What could this look like? First, government can make energy infrastructure smarter and more investable through zonal pricing, accelerated grid connections and planning processes, and streamlined pathways for smaller projects. Second, GB Energy can work with the community energy sector to establish clear standards for meaningful community engagement that go beyond consultation to genuine partnership, giving communities a right to buy in to new local energy infrastructure. Third, investors and government can unlock flexible capital for communities to take advantage of this opportunity. This requires early-stage grants to develop new projects, alongside de-risking mechanisms that enable impact-aligned investors to really scale this up. For all their benefits, community energy projects are more complex, and some of the highest impact projects are likely to need blended finance and underwriting from the government while the sector ramps up. Given the lack of clarity in the recent Spending Review on its future direction, there’s a critical opportunity to follow through on the Local Power Plan’s promises and create the policy framework that community energy needs to thrive.

Conclusion

As we expand Britain’s energy infrastructure, we have a unique opportunity to build an asset base that delivers real long-term prosperity for communities. The UK government has set a target of 70-80 GW of new onshore wind and solar energy by 2030. Enabling a 10% stake in this for communities would create £5-10 billion in community assets, powering hundreds of thousands of homes while generating revenues for the next thirty years that communities can reinvest for a sustainable, resilient future.

Note: The views expressed on these pages are the opinions of their respective author(s) only and do not necessarily reflect the views and opinions of UKSIF.

This website should not be taken as financial or investment advice or seen as an endorsement or recommendation of any particular company, investment or individual. While we have sought to ensure information on this site is correct, we do not accept liability for any errors.