What is community shared ownership of renewable energy infrastructure? What opportunities and challenges does it present for communities and renewable energy developers? What’s the link between big wind and solar farms, tackling fuel poverty and making our housing stock more energy efficient? Jake Burnyeat, Director of Communities for Renewables CIC, and Dr Jessica Hogan, Energy Analyst at Regen, joined Fraser and Matt, hosts of the Local Zero podcast to discuss Regen’s new report, “Sharing Power: Unlocking shared ownership for a fast and fair net zero transition”.

• Listen to the podcast on Apple Podcasts HERE
• Listen to the podcast on Spotify: HERE
• Read the Regen paper HERE

Shared ownership is nothing new. The first community-owned wind farms in the UK, developed by Energy4All, where shared ownership projects. 49MW out of the 50MW of the community-owned solar that CfR manages was acquired into community ownership from commercial developers pre- or post-construction. These transactions only happened because of the ‘split FiT’ policy introduced by the coalition government in 2015.¹ These projects, which started out as transactions with commercial developers, have all grown into vibrant local energy enterprises. An ambitious and compulsory shared ownership framework which provides positive incentives and clear guidelines for both communities and commercial developers is key to scaling up the local energy sector.

Key elements would include:

• A community ‘right to buy’ a minimum 20% in projects over 5MW.
• Access to an easy access CfD or export guarantee for the community-owned element of a project.
• Priority access to grid for projects incorporating at least 20% community-ownership.
• Priority access to CfD for projects incorporating at least 20% community-ownership.
• Planning policy support for projects incorporating at least 20% community-ownership.
• Community energy enterprises able to access CEF grants and community energy loan schemes to help fund their involvement in shared ownership projects.
• Ongoing benefits to the share of project retained by the commercial developer – e.g. business rates reduction or CfD upside.
• Clear guidance on the range of shared ownership structures eligible, ensuring community and developer interests are protected.
• A price mechanism which enables developers to recover their development costs plus a reasonable regulated profit whilst providing price certainty to communities.

With a favourable policy environment, locally-owned energy (including shared ownership) could make a significant contribution to the UK’s renewable generation needs. However, it’s not just about megawatts. Communities and local authorities generating their own energy enables them to generate surplus income to support fuel poverty, retrofit and community-led net zero transition activities in their localities. If the UK had a viable local supply framework, it would also enable them to supply local households with affordable green electricity.

Local ownership of generation is a means to an end of towns, villages and cities having well-resourced local energy enterprises working to support their locality’s net zero transition including tackling retrofit and fuel poverty. This is an efficient use of capital and subsidy where required. Surplus revenue from large-scale investable projects is recycled into harder to finance low carbon measures and supporting local energy enterprises which have the local knowledge, trust and engagement needed to deliver them. Locally-owned generation is the source of £ and kWh for a ‘functional local energy ecosystem.’

This isn’t the current norm. The current norm is the large-scale investable projects are picked off by the private sector with little local economic benefit whilst the public and community sector is left with the hard to do stuff, dependent on scarce and intermittent grant funding. 

CfR believes policy measures which support a mainstream role for locally-owned generation would be good for the sector as a whole. We can have a thriving renewable energy industry based on local ownership.

1.  In 2015 the Government capped the Renewables Obligation (RO) for new solar generation at 5MW. At the same time they introduced the ‘split FiT’ policy which enabled 2 projects of up to 5MW each sharing a site and grid connection to both get a FiT, if at least one of them was community owned. This created an incentive for developers with (for example) a 10MW solar project to split it in 2 and sell half to community ownership. The policy resulted in at least 100MW of solar being transferred to community ownership. It’s impact was short-lived due to subsequent cuts to the FiT. Local communities have seen little benefit from some of the projects that took advantage of the split FiT policy as the definition of community ownership was not sufficiently robust and/or the community paid too high a price for the asset. ↩︎