An obsessively centralised system of regulation, and the energy corporations’ power, are blocking change, some activists argue.
Even modest proposals to support community energy projects with a long-term, fixed price for their electricity fall on deaf ears.
 |
| A site visit preparing an area-based retrofit scheme in south Manchester. Carbon Co-op works as an intermediary party on the scheme |
And while the government says it wants to make it easy for community projects to supply local customers directly, it has shied away from scrapping the multiple obstacles to them doing so.
A deeper-going shake-up, to facilitate local microgrids, is at least being talked about – but is even further away from implementation.
Community energy representatives say that, if projects are stuck in years-long queues for a connection to the electricity grid, the government can wave goodbye to its commitment to expand community energy renewable generation capacity nearly 20-fold, to 8 gigawatts by 2030.
The House of Commons Energy Security and Net Zero (ESNZ) committee said last month [June] that the Local Power Plan “risks failing”. The MPs were “not convinced” the government would hit the 8GW by 2030 target.
It is best to assess the government’s actions in relation not only to its own targets, but to community energy’s potential both to combat social injustice and to make a substantial contribution to tackling climate change.
That potential could be realised most effectively by taking electricity networks into public, cooperative and municipal forms of ownership, and by prioritising decentralised renewables technologies and flexible throughput.
The Local Power Plan could be a battleground on which progress is made on both counts.
The gap between words and actions
The Local Power Plan, published in February, promises to “accelerate the build-out of clean power” in communities, through up to £1 billion of investment between now and 2030 in “grants, loans, advice, expert help and more”.
The government claims the funding – partly through a new state-owned company, GB Energy – will reduce electricity bills, “transform communities” and “create jobs”.
There are about 700 community energy projects in the UK with generation capacity of 440 megawatts (MW), or 0.44 gigawatts (GW). The government’s Clean Power Action Plan includes the target of 8GW of new renewable community electricity generation by 2030 – but no details about how to achieve it.
Community energy groups say this aim will be frustrated by the grid connection crisis, constraints on selling energy locally, the lack of a guaranteed price from the big market players, and other regulatory failures.
The biggest obstacle to new projects is the near-impossibility of getting a grid connection, without which electricity can not be generated. 379 MW of electricity generation capacity, that would almost double total output from community schemes, is “stalled by grid delays and outdated policy”, a coalition of 250 organisations complained in an open letter to the government.
The years-long queue for grid connections is a national scandal that also affects big commercially-operated renewables. The lack of transmission capacity, especially between Scotland and England, means that wind farms in Scotland are paid to stop working, while gas-fired power stations in England are ramped up, a damning report by Carbon Tracker showed.
It is a story of neoliberalism and underinvestment: in the decade 2014-2023, the deployment of solar and wind quadrupled, but investment in the transmission grid stayed flat, and after 2017 decreased.
In the financial year 2024-25, the National Energy System Operator (NESO), that runs the grid, paid £2.7 billion in balancing costs – mostly compensation for switching off wind farms. In 2024, Scotland’s largest wind farm, Seagreen, was paid £65 million to restrict output 71% of the time.
In December last year, NESO addressed a related scandal by reforming the grid connection queue to throw out speculative and “zombie” projects, for which companies requested a connection, but which might never go ahead.
 |
| A ship loading jackets for the Seagreen offshore windfarm at Nigg Energy Park. Seagreen’s output was curtailed 71% of the time in 2024. Photo by Glen Wallace / wikimedia |
An infuriating irony of the reform was that for community energy projects in Scotland, it actually made matters worse. New regional grid capacity requirements were set, and all of Scotland’s capacity for wind, solar and battery projects was allocated, up to 2035.
“This means that new community-led projects, including some that volunteers have spent years working on, will be unable to get a connection”, Zoe Holliday, chief executive of Community Energy Scotland, said in an interview.
“The only opportunities now available will be in cases where projects that have received offers don’t go ahead.” Then, “the impact on communities should be recognised” in the decision-making process, she said.
Another barrier to community energy in Scotland is the expensive and time-consuming Transmission Impact Assessment (TIA) required for projects larger than 200 kilowatts (kW) capacity, or just 50 kW on most of the Scottish islands. In England and Wales, the threshold for this process was recently raised to 5MW: Community Energy Scotland and the energy research group Regen call for a similar revision north of the border.
Along with the grid connection queue, community energy projects have to battle market regulation that favours large-scale electricity generation from gas-fired power stations.
Guaranteed prices for electricity exported to the grid are essential to make projects “financially secure long term”, and to attract investment and borrow funds from banks, Zoe Holliday of Community Energy Scotland said. Until 2019, small-scale renewables – including community projects – were supported by the Feed-in Tariff (FiT), a subsidy that was scrapped by the Tory government.
There are “multiple mechanisms that would work” today, Holliday argues: a floor price (i.e. a minimum that small renewables generators would be paid, supported by state guarantee if necessary); something similar to Ireland’s Small Scale Renewable Electricity Support Scheme, which includes a community tariff; or a simplified Contract for Difference (a financial derivative used by the government to protect commercial renewables projects from price swings volatile markets).
Community Energy England calls for a Community Energy Export Guarantee, with a minimum price guaranteed for 15-20 years. The MPs on the ESNZ committee backed that proposal, pointing to the lack of a secure pricing mechanism is “one of the biggest barriers” to the growth of community energy.
Community energy is also being stifled by market rules that all but force projects to sell via the wholesale market, advocates say. The “big six” corporations that control 90% of electricity sales are in no hurry to change the system.
Big suppliers buy electricity from community energy projects and sell it back to local people, often at two or three times the price. An energy club, that negotiates a “match price”, paid by households directly to a local generator when it is working, can cut out the middleman, and Energy Local, a non-profit, supports dozens of these.
Jeff Hardy of Sustainable Energy Futures, who leads an energy transition research team at Imperial College, London, said in an interview:
At present, being a small supplier is a dangerous place to be. You need to be able to do supply, and to do flexibility.
Steve Shaw of Power for People, which lobbies for legislation to enable community energy projects to sell electricity directly to local customers, said:
In practice, to make it economic and practical to get a supply licence, you need to operate on a national scale, and have more than 250,000 customers. This has to change.
The MPs on the ESNZ committee agreed: the cost of setting up as a supplier, and getting a licence, is “prohibitive for small community projects”, and licence exemption rules are not fit for purpose, they argued.
Regulators are working on a rule change that supports the formation of local electricity markets, called “complex sites” (Elexon’s P441 modification). But the ESNZ committee has told the government it should go further, though, “to accommodate all types of local supply and require the participation of local suppliers”.
The tweaking of local trading rules might sound arcane – but without it, the potential of decentralised networks, an essential technical complement to small-scale renewables, will never be tapped.
A report commissioned in 2023 by the government’s own innovation agency, Innovate UK, on the potential of decentralised energy resources was scathing, declaring it “difficult, if not impossible, to trade and settle energy locally in local energy markets”. This constrains not only small-scale renewable generation, but also flexibility, i.e. the efficiencies achieved by adjusting electricity use to reduce the load on networks at busy times.
The rules for licencing energy suppliers, and the industry’s self-governance of codes and standards, “stifles decentralised energy from realising its potential”, the report stated. The rules set by Ofgem, the industry regulator, for licencing are “complex, prescriptive, rigid – and were not designed with a highly decentralised energy system in mind”.
Government has a responsibility to champion inclusive ownership models – and this is missing from the Local Power Plan – Alan Simpson, the former Labour MP and long-time community energy campaigner, said in an interview. “Many community energy organisations are investor co-ops, rather than co-ops in the traditional sense, and the danger of losing the community aspect is always present.
To become a real force for uniting communities, co-ops should be open to people who are not in a position to invest, but are in a position to benefit from sharing energy resources.
 |
| Solar panels installed by Glasgow Community Energy at Ashton secondary school in Easterhouse |
The weakness of local government structures, and a complex web of planning rules, further frustrate community energy, the House of Commons ESNZ committee heard from multiple witnesses.
The Energy Savings Trust told the MPs that there has been no long-term strategy to support community energy since 2014; many local authorities “do not have sufficient resources or knowledge” to give effective backing; and the competitive bidding processes through which they have to access funding are a “postcode lottery”.
Planning rules need to be revised and guidance be given by something better than GB Energy’s proposed advice service, the MPs concluded.
Alan Simpson, the former Labour MP, put the issue in political context in his evidence: the core problem with the Local Power Plan is that it has “few statutory powers to override existing constraints”.
He pointed to the Mozes community energy co-op in Nottingham, that spent several years applying for permissions to develop a local energy grid. “Detailed schemes were submitted, with university and energy technology partners, but blocked by the Distribution Network Operator, Ofgem or existing energy suppliers.
Current approaches are largely tokenistic and designed to be non-disruptive of the existing UK energy cartel.
Since it lacks teeth, what is the Local Power Plan likely to achieve, without additional pressure from civil society? Some campaigners fear that, given the finite budget and finite time-scale, cash support for shared ownership schemes – under which community organisations take shares in commercial renewable projects – is likely to be prioritised.
The danger looms of a gigantic failure to enhance social change and climate action.
Realising the potential of microgrids
A striking feature of the Local Power Plan is its lack of ambition for microgrids – proven technologies that cut carbon emissions and rationalise electricity use, and that community energy organisations would be well-placed to manage.
Microgrids are semi-autonomous from electricity networks, and share electricity produced locally. In the US, microgrid capacity, strongly supported by government, was expected to reach 10GW last year. Microgrids are mushrooming around industrial parks in China and are widely used in the global south to supply geographically distant communities.
US microgrid development is largely corporate-led, partly in response to soaring electricity demand from data centres. But it does not have to be. June Sekera of Boston University last year published a blueprint for community-run local power networks, envisaged as “a ‘back-to-the-future’ model – a return to decentralised, locally-controlled, non-corporate generation and supply of electricity: self-generation for self consumption”.
In the UK, things are slower. The Local Power Plan includes only a vague, timeless commitment that GB Energy “will explore, with stakeholders and expertise, the future potential of generating and sharing power locally” – even though the plan’s evidence annex lists ways in which microgrids can benefit the electricity grid.
Small-scale electricity generation “has the potential to defer network reinforcement, by lessening the growth in power flows that drive constraints on network assets”, the annex states. By making full use of flexibility, battery storage and rooftop solar, Smart Local Energy Systems (i.e. microgrids) could save £1.7 billion a year.
The combination of decentralising networks and flexibility “delivers multi-billion-pound annual systems savings”, the annex continues.
Were community-owned and -managed microgrids to develop at any scale, they would pose a massive headache to the big energy corporations, who make money by buying electricity and selling it to consumers.
Such microgrids would give communities greater control over the economics of electricity generation and use, and manifold opportunities to cut costs for households. They could also open up potential for energy efficiency, which has been “systematically underfunded” and tends to be implemented patchily by suppliers because it “jars with their business model to sell more commodities”, as the Innovate UK report argued; “it is hard to get paid for not demanding energy, even though it carries system benefits”.
Ultimately, community-managed microgrids could help to challenge the decades-old neoliberal assumption that electricity is best supplied as a commodity, instead of being provided as an essential service. Against this, radical engineering researchers have long ago shown how networks could treat electricity as a commons.
Tackling social injustice and global heating together
For all of us who seek to unite the struggles for social justice and climate action, community energy projects are a great inspiration. Where I live, South East London Community Energy has for years supported low-income households against fuel poverty and campaigned against energy system injustices. Volunteers up and down the country do the same.
What would it take to build on such action, to generate and use renewable electricity outside of the control of the big corporates and the markets they serve? Far more than is offered in the Local Power Plan, that’s for sure.
First, we need to try to find ways to restore the principle of electricity provision as a service that meets a need, not as a commodity. In my view, local supply rights that community energy advocates are demanding could be a step towards this. Then national market regulation needs to be prised out of the big corporates’ hands.
Second, the battle for public, community and collective forms of ownership is vital. The importance of inclusive co-operatives, open to all no matter their ability to contribute, can not be overestimated.
Third, we need to find ways for communities to access, and use, the technologies that allow decentralised renewables to realise their potential. Semi-autonomous microgrids with renewable generation and batteries are widespread: we need them here in the UK, free of corporate control.
