Policies that provide price stability and business model innovations are key to realising the community energy sector’s potential contribution to the zero-carbon energy transition.
In a policy brief published in research journal, Nature Energy, on 10 February, it was explained how community energy groups are able to raise citizen finance for renewable energy projects at lower interest rates than from commercial lenders, but this is often dependent on price guarantee schemes.
This is where schemes such as the Feed-in Tariff offer price stability and de-risk community energy projects for citizen investors, meaning smaller projects can be funded by low-cost citizen finance. It was noted that without some price support, only a minority of current community renewables business models will likely still be viable. Projects that have an on-site customer for their power, typically solar rooftop photovoltaics on buildings with high daytime energy demand, are ones that tend to perform best without price support revenues.
Encouraging, or even mandating, public sector bodies to purchase community-generated on long-term contracts could support growth of the sector, while alternatively a floor price for exported electricity, or support for smaller projects through the UK power auctions scheme, could provide price stability for community energy.