Community energy suffers as cuts take hold

Projects slow to a “trickle”, as subsidy changes undermine margins

Fewer community energy projects will go ahead in the next few years, as subsidy cuts and policy changes take effect, the chief executive of trade body Community Energy England (CEE) has warned.

Speaking to Utility Week, Emma Bridge, said there was a “huge rollout” of schemes last year, as groups sought to get projects up and running before changes to feed in tariffs and other subsidies took hold, but a “fewer number of projects” will now go ahead, at least in the short term.

Bridges comments came as CEE published details of its first-ever state of the sector report, which surveyed a total of 222 community groups around the country.

The report shows that while these groups have a collective generation capacity of 121MW, almost a third of respondents reported a project has stalled or been put on hold in the last year.

“Those [projects] that will stall have already stalled, but right now it’s about making sure we still get the same value out of community energy,” said Bridge.

“We might see less get developed now, so some projects which are on the precipice will have to go on hold for a while longer.”

On a more optimistic note, Bridge added that, despite short term challenges, the community energy sector is “resilient”.

“We will start to see growth again in the next couple of years,” she said. “But in the meantime it will be more of a trickle.” 

Bridge explained that, following subsidy cuts, community energy schemes have had their margins squeezed.

“There are still some business models, which work,” she said, “but the margins are so much tighter now.”

Bridge added that the risks involved in deploying rooftop solar schemes have increased.

“You have to make sure you have the perfect roof and a building where they are going to use all the electricity.”

CEE’s report shows that community energy groups have raised a total of £190 million worth of investment in recent years, mostly from community share issues.

The finding follows the launch this week of a new crowdfunding platform from Mongoose Energy, designed specifically to extend more finance to community projects.

In terms of environmental impact, CEE found that community energy schemes have collectively reduced UK carbon emissions by a total of 100,000 tonnes across more than 70 local communities.

Looking towards the future, Bridge said that preserving UK membership of the EU energy union as part of the Brexit settlement is “key” for community energy and the wider economy.