Blog examines future of community energy projects in the UK

University of Manchester researchers have called for policies to support the growth of the community energy sector in light of the Feed-in Tariff’s (FiT) closure to new projects.

In a blog, published on 25 March, it was stressed that without price support, only a minority of current community renewable models are likely to remain valuable. Schemes, such as the FiT, provide price stability and de-risk community energy projects for citizen investors, enabling smaller projects to be funded. However, with the FiT closed to new projects and its replacement, the Smart Export Guarantee, proving more complex and offering less security, policy support is needed to support the community energy sector.

Longer-term, the transition to a decentralised zero-carbon system will offer many opportunities for community energy, it was noted, however for the nearer-term, three policy interventions were proposed to expand the sector and support the delivery of positive social impacts.

Diversifying business models is one course of action that can be taken, with measures such as continuing the Renewable Heat Incentive beyond 2021, funding retrofit and ensuring that emerging flexibility markets are accessible to smaller players all cited as potentially helpful. It also was suggested some form of price stabiliser would be needed to revive the growth rate in community renewable energy beyond the small number of projects viable without support. This could be done with a floor price for exported electricity through national energy policy or the Contracts for Difference auctions.

A further option for price stability could be through long-term contracts, such as power purchase agreements. The researchers added that considering community energy’s potential contribution to wider social and local economic objectives, along with their current willingness to pay slightly higher prices, then policy should encourage, or even mandate, public sector bodies to purchase community-generated energy on a long-term basis.

University of Manchester