Peers Briefing: Great British Energy Bill Report Stage – Remediating the Absence of Community Energy
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 organise to provide cheaper, greener power and distribute the benefits locally.
Community energy schemes currently generate around 0.5% of the UK’s electricity.[1] This could grow twentyfold in ten years, according to studies by the Environmental Audit Committee and others. This would power 2.2 million homes, save 2.5 million tonnes of CO2 emissions a year,[2] create over 30,000 jobs,[3] reduce dependence on energy imports, boost local infrastructure investment, reduce people’s bills, reduce electricity system wastage and drive the public’s appetite for the transition to a sustainable economy.
Yet, despite all this, the Great British Energy Bill has no mention of community energy. This means that the company it sets up will have no legislative requirement to support community energy’s growth. Ministers have said in the House of Commons and the House of Lords that they support communities taking greater ownership of energy generation, and that they anticipate that Great British Energy will provide additional support for the sector. However, they continue to rebuff calls to include community energy in the Bill.
There are precedents for Ministers setting up arms-length bodies they say will provide support for a particular area of policy, only for the body itself to fail to do so. The community energy sector has also faced years of stop-start policy that has prevented it from growing at the rates seen in other countries.
To address this, Baroness Boycott has tabled the amendment below. By strengthening the Bill to include community energy, this would give needed confidence to the sector and its potential investors.
We urge Peers to vote for this amendment at Report Stage on Tuesday 11th February.
The Amendment
Sponsors: Baroness Boycott (Crossbench), Baroness Young of Old Scone (Labour), Lord Teverson (Liberal Democrat), Baroness McIntosh of Pickering (Conservative)
Clause 5, page 3, line 8, at end insert—
“(1A) The statement of strategic priorities under subsection (1) must include a priority to advance the production of clean energy from schemes owned, or part owned, by community organisations.”
Member’s Explanatory Text: This amendment requires the advancement of community energy to be included in the strategic priorities.
Public and Parliamentary Support
Clear cross-party support for including community energy in the Bill has been shown during its Second Reading and Committee debates in the House of Lords. Baroness Young (Labour), Lord Offord (Conservative), Earl Russell (Liberal Democrats), Baroness Hayman (Crossbench) and Baroness Bennett (Green) were amongst many who spoke in favour.
This built on cross-party backing during the Bill’s House of Commons debates. A cross-party group of over 80 MPs signed amendments at Committee stage[4] and Report stage[5] that aimed to ensure one of Great British Energy’s priorities would be supporting community energy’s growth. This was a result of our public campaign, supported by dozens of national charities and NGOs and thousands of local community groups.
The Potential of Community Energy … and the blockages
The community energy sector could grow by 12-20 times over ten years, powering 2.2 million homes and saving 2.5 million tonnes of CO2 emissions annually.[6] This would take community-led renewable energy generation to around 6 gigawatts – roughly the equivalent of two large nuclear power stations.
Until the recent launch of the Community Energy Fund in January 2024, the sector had seen minimal growth for over six years. With the Fund only scheduled to last until the end of 2025, there is a danger new projects will fall away again, and those in the sector say that this stop-start approach to community energy is one of the key reasons preventing the sector from reaching its full potential. Requiring Great British Energy to focus on longer term support for the sector creates a real opportunity to end this.
Previously, community energy 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 projects were scrapped and there has since been a collapse in growth.
The Rationale for Including Community Energy in the Bill
The community energy sector has had a rough ride over the past six years, having faced the end of the Feed-in Tariffs that led to the growth seen during the early 2010s and seeing almost no growth since. Whilst other nations have seen community-led renewable energy schemes surge over the last decade, in the UK its total generating capacity has stayed below a tiny 400 megawatts. The lack of a requirement in the Bill for Great British Energy to support community energy risks undermining the confidence of potential investors and the staff and volunteers in the sector.
Unless community energy is in the Bill, future ministers, governments or chief executives of Great British Energy may decide not to pursue it and the full benefits of local energy may not be realised. There is precedent for this, detailed further below.
Further to the argument directly above, it was concerning that, when giving evidence to the House of Commons Committee, Great British Energy’s Chair, Juergen Maier, stated that community energy does not have the potential to become gigawatts of renewable generation.[7] This directly contradicts studies that say the exact opposite, including one by the Parliamentary Environmental Audit Committee during last Parliament that said community energy generation could increase by around twentyfold over ten years with the enablement, i.e. to around 6 gigawatts. Such comments from the company’s Chair show how vital it is that community energy is in the legislation.
Benefits of Community Energy
Cheaper prices and warmer homes: By ploughing their profits back into the local area, community energy can help people cut their bills. In 2021, community energy groups spent £510,160 on energy efficiency upgrades, helping 20,843 people reduce their energy bills and stay warm. An additional 57,600 individuals and communities were engaged in energy efficiency initiatives. The combined efforts of community energy groups saved £3.35 million on consumer energy bills in 2021.[8] At a tenfold increase in community energy, up to £90 million could be saved on consumer bills due to the resulting additional expansion of energy efficiency initiatives,[9] resulting in 830,000 people being helped.
Climate change: If community energy generation was enabled to grow to 3 gigawatts – a tenfold increase – around 1.5 million tonnes of greenhouse gas emissions could be saved each year.[10]
Job creation: In 2021 community energy groups across the UK had 3,325 volunteers and 644 full time staff, with approximately only 30% of groups employing any paid staff.[11] This equates to roughly five volunteers for every paid staff member. At a ten-fold increase, and with the professionalisation of the sector that the Electricity Suppliers Services Scheme aims to create, more than 33,000 jobs could be created.[12]
Energy security: A mechanism to enable the supply of locally-generated electricity would reduce dependence on imported energy, increasing the resilience of domestic energy supply. Community energy groups tend to build small and medium sized installations and bring confidence to local people to develop schemes that would not be likely to be built by larger companies or developers.
Community benefit: Community energy is a vital foundation stone of the sustainable economy we are striving to create and can drive public acceptance and an appetite for change. Community energy enables people to see immediate, tangible benefits from the energy transition in their local area: a friend is employed by the local community energy company, the local sports centre has been refurbished from the community energy fund – these can create profound perception benefits.
The Government’s Position
Ministers and Government policy has repeatedly stated their desire to help community energy achieve its growth potential. Yet, in the face of all the support and evidence as detailed above, Ministers remain opposed to including anything in the Bill that will ensure this happens.
The Labour Party’s election manifesto committed to enabling community energy, saying:
“Great British Energy will partner with industry and trade unions to deliver clean power by co-investing in leading technologies; will help support capital-intensive projects; and will deploy local energy production to benefit communities across the country. … We will invite communities to come forward with projects, and work with local leaders and devolved governments to ensure local people benefit directly from this energy production.”[13]
At the Bill’s House of Lords Committee sitting, 17th December, the Energy Security and Net Zero Minister, Lord Hunt of Kings Heath, opposed the inclusion of community energy in the Bill, saying:
“We think we have got the balance right between what should be in the legislation and what should be left to a proper government statement of strategic priorities,”[14]
and he rebuffed calls for community energy’s inclusion again at the 15th January Committee sitting, saying:
“The role of Great British Energy has been set out in its founding statement, and our commitment to putting local communities at the heart of the energy transition is a very strong component of what we are doing. The local power plan will support local communities to take a stake in the shift to net zero, as owners and partners in clean energy projects. They are important in themselves, as there is a huge appetite in many localities for community power, engagement and involvement. I agree that seeing a tangible benefit for local communities is important in itself, but it is also growing general support for the move to clean power and net zero, which is very important indeed.”[15]
At the Bill’s House of Commons Report stage on 29th October, Parliamentary Under Secretary of State for Energy Security and Net Zero, Michael Shanks, responded to calls to include community energy with:
“We have been advocating for community energy for decades—this is not a new idea for us—and empowering communities is critical. The hon. Lady [Pippa Heylings MP] and I share that passion and a commitment to community energy. I can assure the House that the Department is looking to take a cross-government approach—not just through Great British Energy but, crucially, on a number of the points that have been made—to ensuring that community energy projects can be delivered, with all the changes to planning and governance that are required to make that happen.”[16]
At the same debate, Secretary of State for Energy Security and Net Zero, Rt Hon Ed Miliband said,
“I know that many Members of the House are passionate about the issue of local power, so let me reassure them that the Government are committed to delivering the biggest expansion of support for community-owned energy in history.”
Pertinent Precedent – OFGAS Director General’s refusal to follow ministerial intentions
Clare Spottiswoode was Director General of OFGAS from 1993-98. After the Rio Summit in 1992, Minister Michael Heseltine set out carbon emissions reduction policy in, ‘Climate Change: the UK Programme’. It contained several emissions reduction proposals, with the new ‘Energy Saving Trust’ (EST) public-private body tasked with delivering 25% of the cuts – the largest share – at around 2.5 million tonnes of carbon.
EST programmes were to be funded in equal parts by the electricity and gas regulators, and the head of the EST – ex-Conservative Minister, Lord Moore – said the EST would need £1.5 billion to deliver the cuts.
After a seven month delay in looking at the proposal, Clare Spottiswoode announced in February 1995 that OFGAS would not fund the vast majority of it. She told a Parliamentary Committee that her predecessor, James McKinnon, who had funded some programmes, did not have legal authority to have done so and that nor did she. Much public disagreement ensued, leading to Ms Spottiswoode apologising to a Parliamentary Committee, but never backing down, and the EST never received the required funding.
This episode shows the potential risks if the law does not contain a requirement for Great British Energy to support community energy as part of a clean energy system. We seek to avoid any risk of an arms-length body similarly frustrating the welcome intentions of Ministers and policy aims of the Government.
We of course hope that Great British Energy will take community energy seriously and we fully accept the Government's argument that the terms of reference it is being set up under allow it to do so. But history shows that an arms-length body being ‘allowed’ to do something is not the same as it being required to. This, added to the comments from the company’s Chair, Juergen Maier, on community energy not being a substantial part of the solution, clearly shows that the Government needs to be more robust.
About Power for People
This briefing was prepared by Power for People, an organisation that aims to accelerate the UK’s transition to renewable energy and ensure that local communities benefit.
Contact for Further Information
Steve Shaw, Director of Power for People
steve.shaw@powerforpeople.org.uk
[1] standing at 398 megawatts in 2024; Community Energy England’s Community Energy State of the Sector Report 2024
[2] Environmental Audit Committee; 2021 – https://committees.parliament.uk/call-for-evidence/406/
[3] The Poverty and Environment Trust, ‘The Call for A Level Playing Field’; https://povertyandenvironmenttrust.org/current-projects
[4] https://publications.parliament.uk/pa/bills/cbill/59-01/0005/amend/gb_energy_day_pbc_1010.pdf (top of page 2)
[5] https://publications.parliament.uk/pa/bills/cbill/59-01/0005/amend/gb_energy_day_rep_1029.pdf (top of page 4)
[6] Environmental Audit Committee inquiry 2021, https://committees.parliament.uk/call-for-evidence/406/
[7] https://parliamentlive.tv/event/index/50e500a7-c82d-4742-9745-3d731f366373
[8] Community Energy England’s Community Energy State of the Sector Report 2022
[9] WPI Economics report 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
[10] Ibid
[11] Community Energy England’s Community Energy State of the Sector Report 2022
[12] The Poverty and Environment Trust, ‘The Call for A Level Playing Field’; December 2021
[13] Labour Manifesto, pages 53-54 https://labour.org.uk/wp-content/uploads/2024/06/Labour-Party-manifesto-2024.pdf