Government money for community energy is welcome, but market reforms will be far more effective

Last week the Government launched £30 million in funding for community energy projects. This is the first wave of investment to come through the Local Power Plan, its strategy for expanding the local and community energy sector. A total of £1 billion has been pledged, with an aim of supporting over 1,000 community-owned renewable energy projects by 2030.

Writing about the £30 million in the Guardian, Prime Minister Andy Burnham highlighted the thirst across Britain for community-led climate action. He referred to the promise he made on becoming Prime Minister to bring power to every postcode. Community energy, he suggested, would create jobs, lower bills and give people a direct role in tackling the climate crisis.

We welcome Mr Burnham’s assessment of community energy and the Government’s £30 million. However, while the new funding for ‘People’s Power’ projects is a useful step, truly unlocking orders of magnitude more community energy will require a fundamental change to the market rules governing how electricity is bought and sold. Specifically, the Government must introduce reforms that would allow citizens to buy their power directly from local community energy projects.

The new funding

The recently announced £30 million for community energy breaks down as follows:

• £20 million for the Great British Energy Community Fund, to help develop community-led renewable energy schemes across England, Wales and Northern Ireland.

• A £5 million Partnerships Grant scheme for joint projects between Local Authorities and community energy organisations in England.

• £1.8 million for community energy projects in Scotland, adding to over £10 million provided earlier this year.

• £2.9 million of support for energy advice services across England, Wales and Northern Ireland.

The Great British Energy Community Fund exists thanks to the efforts of Power for People’s supporters. In January 2024, the previous Conservative government opened a £10 million Community Energy Fund as a direct response to our advocacy. This proved successful and oversubscribed, so we campaigned for it to be extended and expanded. The current government responded in March 2025 with a further £5 million in funding for groups in England through the renamed Great British Energy Community Fund, as well as an additional £9.3 million in new funding for Scotland, Wales, and Northern Ireland. We are pleased to see the Government refinancing the fund now.

This is the third time in a row that our nationwide public mobilisation for legislative reform to accelerate the growth of community energy has led to government grant funding for the sector. We will however continue to push for legislative reform.

The need for energy market reform

At the moment community energy projects are prevented from selling power to local homes and businesses by outdated regulations and disproportionate costs. Addressing this would be the single most effective change to unlock the sector’s potential. We have always been clear that funding for community energy is helpful as a bridge – supporting growth while we move towards a system where projects can supply electricity directly to their communities.

It has been over 200 days since the Government published its Local Power Plan, which, as well as promising up to £1 billion for local and community energy, committed to making it easier for communities to sell their own power. It has been over a year since Minister for Energy Security and Net Zero Michael Shanks first told MPs that the Government was determined to deliver clean power that benefits local communities, so that they could buy it locally. Ministers have repeatedly promised Parliament that they will make this change.

Our cause is now backed by over 240 MPs, as well as a broad coalition of local and national organisations and tens of thousands of citizens in constituencies across the country. Furthermore, Parliament’s Energy Security and Net Zero (ESNZ) Select Committee – a cross-party group of MPs responsible for making policy recommendations to the Government – recently endorsed this exact reform following its extensive inquiry into how to grow the community energy sector.

We call on the Prime Minister to end the delays and deliver on these pledges within the forthcoming Energy Independence Bill. Only by rewriting the market rules can we return power to every postcode.

For more information on the ESNZ Committee’s recommendation and the upcoming Energy Independence Bill, see our previous update.

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