Community energy projects stall in the wake of subsidy cuts

Around a third of community energy groups have seen projects stall or become inactive since government subsidies were slashed, a new report has found.

According to Community Energy England’s State of the Sector report, almost a third of the 222 groups surveyed reported a stalled project, with half of those groups specifically blaming changes to the feed-in-tariff system, which has been dramatically scaled back over the last few years.

The report found the groups are now operating solar, hydro and wind power schemes across England, Wales and Northern Ireland.

The projects surveyed have a collective generation capacity of 121MW, which is enough to power 85,500 homes.

Solar energy schemes account for 99MW, while wind accounts for 20.6MW and hydro schemes represent 1.7MW.

In addition, the groups have so far raised £190m of investment, mostly through community share issues.

‘The achievement of community energy organisations across the UK is incredible and shows how they are delivering real benefits for local communities, the wider environment and the UK energy sector too,’ said Community Energy England chief executive, Emma Bridge.

‘These projects have proved that they are both innovatory and resilient in a very tough climate but the unprecedented cuts in subsidy and tax incentives present them with their biggest challenge yet.’

The report found community energy schemes have also been affected by changes to tax relief schemes, like the enterprise investment scheme, which mean groups are no longer able to use them to attract more investment.

The closure of key initiatives like the Urban Community Energy Fund in 2015 and the removal of the renewables obligation (RO) are also hitting organisations hard.

The report shows 12% of community energy groups used the RO scheme and 7% used the renewable heat initiative.

‘There is a clear link between recent subsidy changes and an increasing number of failed or stalled community projects,’ added Ms Bridge.

‘These, or similar, support mechanisms are essential in providing the community energy sector with the security and viability to progress their projects and objectives.

‘For all this, the sector has proved it is an increasingly significant part of the UK’s energy solution, delivers real benefits for local communities, the economy and the environment and can win the confidence of investors.

‘If government is serious about creating a new renewable energy industry to meet the nation’s power needs it has got to share this confidence, embrace the community energy sector and restore the modest support that it needs to thrive.’

Ms Bridge said she is also concerned that the community energy sector could lose expertise and volunteers in the next few years as the rollout of new projects slows down.

‘A lot of the people involved in community energy are involved with wider community initiatives,’ she said. ‘Their passion will still continue, but it might continue in other areas. When that growth picks up, I’m hoping we won’t have lost that generation of volunteers and experts relating to community energy, who are ready to take up the mantle again.’

The report will be officially launched at this year’s Community Energy Conference in Manchester on 24 June.