Community energy projects – that is, energy infrastructure that is partly or wholly owned by local communities and run for their benefit – have seen something of a rise in the UK in recent years. According to Community Energy England, the group representing the sector, 583 community energy organisations operate in the UK today, managing a collective 398MW of renewable energy capacity between them. Last year, these groups generated 617GWh of power, enough to power roughly 228,530 households.

In short, community energy functions like this: members of a community invest in renewable energy generation projects and receive interest on their investment from the money the energy co-op makes from selling the power these resources generate. Money made from the sale of this power is typically also spent on schemes that benefit local people, often funding environmental initiatives like boosting the energy efficiency of community buildings.

Despite some community energy groups having existed for a decade or more, the idea is only now really picking up steam in the UK, but it’s commonplace across much of Europe. The EU has around 9,000 community energy projects across its member states, and a recent study in the journal Nature showed that involvement in citizen-led energy schemes is at an all-time high in Europe.

Bristol Energy Cooperative is arguably one of the most successful in the UK’s clutch of community energy groups. Founded in 2011, the group manages 13.4MW of installed energy generation capacity, of which 12MW comes from solar installations across 15 rooftop projects and two ground-mounted solar farms. Following major installations on Bristol Beacon – one of the city’s largest music venues – and a new share offering with Triodos Bank, the co-op is looking to continue expanding and boosting the profile of community energy.

Solar Power Portal spoke to Andy O’Brien, co-founder and development director of Bristol Energy Cooperative, to see what the rise of community energy means for Bristol and the UK as a whole.

Bigger than you think – misconceptions of community energy

The word “community” has some interesting connotations – for many, it might bring up images of something small-scale, DIY, or unprofessional, but as O’Brien explains, community energy operations go through a lot of the same processes as larger-scale producers do.

“It’s not like we put a ladder up against a community building and start just carrying up solar panels,” O’Brien begins, “We use professional installers, we don’t do it ourselves, and we use professional companies to maintain those systems. We have to be as professional as any other commercial renewables developer because it’s key if we want people to invest in us, and we want things to be safe, then we have to do it properly.”

Bristol Energy Cooperative, for its part, has been wildly successful in getting people to invest in them; the group has raised £15 million since its founding to fund its clean power projects, which have created enough revenue to raise £400,000 for community benefit.

Running a community energy group and keeping the successful momentum going long-term is, according to O’Brien, not as dissimilar to running a traditional commercial energy venture as people may think. “We’re commercially driven in terms of developing renewable energy schemes in the same way as commercial developers do.”

“We’re competing with them to a certain extent, and we have to find the finance to develop those sites and then actually build them out. We then have to maintain them and take on operations and maintenance people and asset management—all that is the same as what a traditional renewable energy developer would do.”

The F Word: Financing

Another area in which community energy groups operate in a remarkably similar way to their counterparts in the commercial energy sector is financing. Both rely on debt and equity funding, and both need to take the highs and lows of that in their stride. According to Community Energy England’s 2024 State of The Sector report, UK community energy groups saw a turnover of £43.2 million in 2023, with these groups securing £24 million in investment that same year.

Bristol Energy Cooperative is no stranger to major finance, having launched its tenth community share offer in May of this year. The co-op partnered with ethical bank Triodos Bank for the first time and is seeking to raise £1 million to boost its solar portfolio by 1MW.

Those who choose to invest in Bristol Energy Cooperative through this share offer will be paid interest each year, depending on the co-operative’s performance; the target interest rate is 6% each year.

O’Brien gave an update on this share raise, stating that it currently sits at around £300,000, with several months more to go before closing. While austerity measures and the cost-of-living crisis are limiting the potential pool of investors, optimism for this offering remains. However, O’Brien notes that, in order to hit the expansion goals the co-op hopes to see, impact investors—those who seek social return over financial return—are key.

In the traditional commercial renewable energy sector, pension funds have been some of the most high-profile investors, and their contributions to clean energy are set to soar; research from AlphaReal earlier this year showed that 95% of pension funds expect to increase their allocated investments to renewable energy assets over the next five years. Pension funds could play a significant role in the future of the community energy sector, too, argues O’Brien, and it could be precisely what is needed to give the sector its next big boost.

“The whole sector needs to get that point where pension funds will also invest in community energy, as well as other organisations who would regard themselves as impact investors – not looking for financial return but looking for a social return,” says O’Brien, adding that “this sector is absolutely perfect for them to get involved with”.

Power to the people – locally

It hasn’t escaped the notice of the community energy sector or the wider public that much of our energy infrastructure is owned by international companies. While estimates vary, some indicate that almost half of UK offshore wind capacity is owned by foreign entities, and many of the UK’s most significant solar projects or planned developments – including the recently approved Mallard Pass 350MW solar project – are owned, or part-owned by international firms.

Community energy represents the polar opposite of this: hyper-local, community-controlled energy infrastructure where everyone has a say. O’Brien notes that in an age where private water companies, rail firms, and other infrastructure operators have driven prices up and quality down, many people are seeking this, calling local ownership “such a live subject at the moment”.

Crucially, Bristol Energy Cooperative, like most community energy organisations, puts revenue generated from their projects back into local community projects. For O’Brien, this is the most valuable part of community energy. “We exist to provide a benefit to the community; it’s been fantastic to see how some of the groups that we’ve helped fund have gone on to do their own energy schemes themselves.”