MP Briefing: Buying Community Energy Locally
Community energy has huge potential to help the Government achieve its Net Zero aims. The most effective way of realising this potential is to enable the buying of community energy locally.
Energy Ministers have repeatedly said that they intend to rectify this and the Local Power Plan is a very welcome step. What local communities really need to know now are more details and the timescale, in order to initiate their plans for new renewable energy schemes.
We ask MPs to please encourage this to be done expeditiously by signing
Early Day Motion 2151 ‘Buying community energy locally’
Ministers’ supportive statements over the past eight months
Lord Whitehead, ESNZ Minister, Local Power Plan debate, House of Lords, 11th February 2026:
“Indeed, we see those things as an essential part of the move forward with the Local Power Plan, so that communities can, for example, start to trade in local energy.”
Ed Miliband, ESNZ Secretary of State, Local Power Plan debate, House of Commons, 10th February 2026:
“We are right into the nerdery here—and it is really important nerdery. [John Whitby MP] makes an essential point about the ability to sell this power back into the grid. I assure him that we are working on this with Ofgem.”
Michael Shanks, ESNZ Minister, ESNZ Committee’s ‘Unlocking community energy at scale’ inquiry, oral evidence session, 28th January 2026:
“The regulatory system needs to make it much more straightforward for community energy groups to get up and operate, but then also to benefit from being able to sell their electricity locally. … There are also ways—and we want to explore this further—around how we can support local energy networks so that there are communities directly benefiting from genuinely selling the electricity locally.”
And at Oral Questions, House of Commons, 15th July 2025:
“[Sir Jeremy Wright MP] is right to make the point about delivering clean power that benefits local communities, so that they can buy it locally and really see the benefit of hosting it. That is exactly what we are determined to do and we will continue to work to make it happen.”
The Local Power Plan
On 9th February DESNZ published the Local Power Plan. We welcome the policies it contains aimed at supporting the growth of community energy.
Regarding enabling the buying of community energy locally, the plan contains these two statements:
‘Support Type 4: Policy and Regulatory Changes’ says: “Give communities fairer access to energy markets. DESNZ will: … Make it easier for communities to sell their power.” (page 24)
One of the ‘next steps’ for the Government’s energy company, Great British Energy, is to: “Establish route to market for unlocking SLES.” SLES being defined as a ‘Smart Local Energy System’. (page 27)
These commitments to the principle are welcome and complement the supportive statements above from energy Ministers. The next step is for details to be brought forward on how and when the buying of community energy locally will be implemented.
The potential of community energy … and the barriers
In the midst of an energy price crisis when cheap, clean, home-produced energy has never been more vital, there is huge potential nationwide for growth in small-scale renewable energy generation – especially by community groups that provide cheaper, greener power and distribute the benefits locally.
Community energy – community-run renewable energy generation schemes – currently generate less than 0.5% of the UK’s electricity (411 megawatts in 2025).[1] With the right support, this could grow twentyfold in ten years, powering 2.2 million homes and saving 2.5 million tonnes of CO2 emissions per year.[2]
Despite the cost of renewable technologies having fallen rapidly and now being cheaper than ever, community energy schemes have seen almost no growth for many years. This is largely due to the prohibitive costs they face in accessing markets to sell their electricity.
Community energy schemes face insurmountable costs when it comes to selling the electricity they generate to local customers. Estimates of financial, technical and operational requirements involved in becoming a licensed energy supplier put initial costs in excess of £1 million.[3]
The barriers mean that not one single community energy scheme sells their power directly to local customers. To make matters worse, community energy schemes receive no guaranteed price certainty for the electricity they generate. Previously, schemes could plan knowing the income they would receive from Ofgem’s Feed-in Tariffs. When that scheme closed to new applicants in April 2019, many planned community energy generation schemes were scrapped and there has since been a collapse in growth.
Other government interventions have been attempted but have failed to reverse the slump in new schemes. Not a single community scheme has used the ‘License Lite’ route to market due to a failure to place reasonable limits on its costs and fully licensed energy utilities being under no obligation to partner with community groups wishing to become License Lite suppliers.
More recently, the ‘Smart Export Guarantee’, which places a requirement on larger existing electricity suppliers to purchase power from small schemes, has no guaranteed purchase price or length of contract, often leading to export prices for energy that prohibit any community investment. And, whilst welcome, the £15 million Great British Community Energy Fund, which makes small community energy development grants, has led to minimal growth due to its modest size.
The solution
Small-scale renewable energy generators need to receive a guaranteed, fair price for the electricity that they contribute to an energy system in desperate need of homegrown energy. Community energy schemes in particular should also be enabled to sell their power directly to local households and businesses in order to ensure they can realise their huge growth potential and unlock considerable community benefits.
What is needed is regulatory reform to make the costs and burdens involved in supplying energy to local customers proportionate to the scale of the supplier. Whilst it is legally possible for community energy schemes to sell their power to local customers under the current energy licensing rules, the various regulatory burdens and obligations associated with those rules make the costs of doing so impossibly high.
Legislation to address this was put forward during the previous Parliament. The Energy Security and Net Zero Minister, Lord Whitehead, worked with us on the drafting of the Local Electricity Bill 2023, which was then supported by Ed Miliband, Michael Shanks and a cross-party group of over 320 MPs. Ed Miliband put down two amendments to the former Government’s Energy Act (new clauses 53 and 58) at its Report Stage on 5th September 2023 which were almost identical to the Local Electricity Bill.
The Local Electricity Bill was an attempt to enable the buying of community energy locally. We are agnostic on the exact legislative solution that is made, so long as it is effective. What is needed is for the Government to turn encouraging words into action and bring legislation forward, especially given the clear and welcome support that current ESNZ Ministers have stated.
The benefits of community energy
Job creation: In 2025 community energy groups across the UK had 4,677 volunteers and 964 full time staff.[4] This equates to roughly five volunteers for every paid staff member. At a ten-fold increase, and with the professionalisation of the sector that local trading would create, more than 40,000 jobs could be created.[5] Almost all constituencies would benefit from this, due to the distributed nature of community energy schemes.
Energy security: Enabling the supply of locally-generated electricity would reduce dependence on imported energy, increasing the resilience of domestic energy supply. Community energy groups tend to create investment amongst local people in smaller installations not likely to be built by larger developers.
Cheaper prices and warmer homes: By ploughing profits back into the local area, community energy can help people cut their bills. In 2025, community energy groups saved people £1.86 million on their fuel bills due to energy efficiency upgrades. An additional 61,000 individuals were engaged in energy efficiency initiatives.[6] At a tenfold increase in community energy, over £180 million could be saved on consumer bills due to the expansion of energy efficiency initiatives.[7]
Climate change: If community energy generation was enabled to grow to 4,000 megawatts – a tenfold increase – over 1.5 million tonnes of greenhouse gas emissions could be saved each year. This is roughly equivalent to the emissions of all UK domestic flights.[8]
Public appetite for Net Zero: Community energy can be a cornerstone of a future sustainable economy and drive public acceptance and an appetite for it. It enables people to see tangible benefits in their area: a friend is employed by the local community energy co-operative, the local sports centre is refurbished from the community energy fund – these kinds of things can create profound perception benefits.
About Power for People
This briefing was prepared by Power for People, a not-for-profit organisation that aims to accelerate the UK’s transition to renewable energy and ensure that local communities benefit from it. It is leading the campaign to enable the growth of community energy through direct local energy trading.
Contact: Steve Shaw, Director of Power for People
07788 646 933, steve.shaw@powerforpeople.org.uk
[1] Community Energy State of the Sector 2025, page 4
[2] Environmental Audit Committee; 2021 – https://committees.parliament.uk/call-for-evidence/406/
[3] IPPR, ‘Community and Local Energy’; 2016 https://www.ippr.org/files/publications/pdf/community-energy_June2016.pdf
[4] Community Energy State of the Sector 2025, page 4
[5] The Poverty and Environment Trust, ‘The Call for A Level Playing Field’; December 2021
[6] Community Energy State of the Sector 2025, pages 4 and 5
[7] WPI Economics for SP Energy Networks, ‘The Future of Community Energy’; January 2020; http://wpieconomics.com/site/wp-content/uploads/2020/01/Future-of-Community-Energy-20200129-Web-Spreads.pdf
[8] Ibid