What is community energy?
Community energy is all about people owning the means of supply of cleaner renewable energy at a community level.
Community energy companies are run with the aim of providing affordable renewable energy to schools and other organisations and businesses and investing any profits back into the community, for example to fund energy efficiency support or nature restoration.
By placing democratic control, shared benefits and active participation at the centre of project delivery, community energy can create a foundation for the significant infrastructure and cultural change we need to reduce dangerous climate change, increase our energy security, build more resilient communities and enhance the local environment.
Why community energy?
To minimise dangerous climate change we need to urgently phase out use of polluting fossil fuels and to do that we need to:-
- Waste less energy
- Use energy more efficiently
- Generate energy from less polluting renewable sources like solar and wind.
Renewable energy, such as solar and wind power, are undoubtedly much less harmful than fossil fuels, but all forms of energy production have harmful impacts on life on earth, in terms of driving demand for resources and rare minerals and so destroying land and habits through mining, or creating waste or harming wildlife through building pipelines/cables across land or seabeds etc.
So wind and solar power are great, but to minimise harm to life on earth we still need to produce energy from renewable sources as efficiently as possible and where it is most needed. Community energy projects do just that, focusing on creating energy on, and delivering it to, schools, community groups and local businesses, shortening the supply chain and channelling the financial benefits from energy production back into the communities and not into the pockets of the very energy companies who have caused dangerous climate change and fuel poverty.
Helping to increase community energy production not only speeds up transition from fossil fuels in a very direct and immediate way, it also puts control over energy in the hands of communities and so provides protection for schools and other community organisations from high energy prices.
If you are an impact investor looking to maximise sustainable and social impact for your money, arguably it helps to get your money as close to the impact as possible.
Unlike investing in funds, or funds of funds, when you invest in community energy you are getting your money as close to the impact as possible, without tier after tier of leakage into the pockets of bankers and other city bods. Now of course we need these great financial minds for massive energy projects – but then that’s why we like community level projects so much.
Renewable energy is great, but community owned renewable energy is even better.
Now we do need to point out the downside to all this. When you invest in community energy, none of your money is going towards the massive bonuses paid out to energy company bosses. Sorry about that, but hey, you can’t have everything!
To find out more about community energy check out:-
Definition, impact and sector potential | Community Energy England
How can you invest in community energy?
Community energy projects are mostly funded through share or bond offers which offer a moderate rate of financial return.
In impact investment terms we see this as high impact, low risk, moderate financial return.
Impact achieved is also guaranteed and pretty much immediate, particularly compared to a lot of impact investing in either innovation, startups and/or large projects which can take years before having an impact and sometimes achieve nothing as the innovation doesn’t convert to implementation.
Each share offer has its own minimum and maximum amount which you invest. The minimum is often £100 making this a type of investment open to many people. If your own roof isn’t suitable for solar panels, it’s a way of supporting renewable energy. Many people also use it as a way of saving for their children or grandchildren’s future, whilst helping to protect that future at the same time.
My personal favourite is helping to get solar panels on school – which offers the triple whammy of powering education renewably, saving precious school budgets and educating the children in the jobs of the future.
As well as a warm glow from helping to tackle the climate and energy crisis, investors receive a financial return – as at April 2024 usually in the 3-6% per year range.
Another bonus above more old school investments is that, within community energy companies, shareholder decisions are based on one investor one vote. So an investor with £100 worth of shares has the same voting rights as an investor who has invested £50,000. So much more democratic, a rare find even in impact investing.
Whilst its obviously great to invest in community energy projects in your area, there’s no need to stop there. You can invest in community energy projects throughout the UK.
To find out about current opportunities to invest in community energy check out:-
Share Offers | Community Energy England
Ethical Crowdfunding Investments | Triodos Bank (triodoscrowdfunding.co.uk)
Latest investment opportunities on Ethex
Solar For Schools 1 (kartra.com)
Big Solar Co-op – community solar
Note – our website doesn’t offer investment advice – we just share ideas on what we are doing. All investments involve risks – before investing read carefully the information about the investment on the relevant website.
Speeding up community energy with bridging loans
We (Tim Stumpff, Julia Davies and a small group of others) provide bridging loans to community energy companies to help them progress renewable energy installations before they have raised all of the funds needed to pay for them.
Being able to start the project and show what was being delivered can make it easier to get interest in the share offer. It can also enable the work to be carried out at a convenient time, eg during school holidays, or before Christmas.
Here’s some examples of where we have done this:-
- We provided Home – Grimsby Community Energy (NOTE NEW ADDRESS IN LINK) with a loan to cover the VAT on project expenses for 2 solar installations. That VAT can be claimed back from HMRC, three months after it has been paid out. Dr Vicky Dunn, managing director of GCE said “a loan was a perfect solution to the issue. Members investing wouldn’t like their money back after just 3 months, but we did need the 20% VAT from somewhere”
- We also provided Grimsby CE with a loan to cover the cost of installing solar panels on 2 community buildings. Grimsby CE had already raised enough via community shares for part of the project. Vicky Dunn explained “the loan enabled us to place an order for the full project, because we had deadlines to meet, and to keep fundraising in the background. It took uncertainty out and ensured we could deliver the full 308kW we hoped.”
- We provided Solar for Schools with a loan to help speed up installing solar on 4 schools.
- Robert Schrimpff, Founder of Solar for Schools‘Thanks to We Have The POWER, we’ve reached another 4 schools in the growing queue of 100s of schools wanting to go solar. These schools would have otherwise had to wait for up to a year for funding. Their rooftops are collectively now providing over 400kWp of solar, saving thousands of pounds each year in energy bills for the schools and saving over 64 tonnes of CO2. Most importantly; thanks to these solar projects being reaslised, around 400 additional students have witnessed decarbonisation in action’.
- Emma-Jane Kelly, Headteacher, Barncroft Primary School, Walthamstow, London
‘Now, our roof hums with green energy, powering our classrooms and sparking the imaginations of our young eco-warriors’.
- We agreed to provide a loan to Drumlin Wind Co-op to help buy a new modern wind turbine to increase energy production. Our loan offer gave the directors of the company the confidence to place the order for the new turbine. In the end the loan wasn’t needed because the community share offer exceeded expectations but without our loan offer the project would have been significantly delayed.
- We provided Brighton & Hove Energy Services Co-operative (BHESCo) with a loan to install solar power on four schools and a leisure centre while they raised money for the projects through a community bond offer. These projects will collectively save the schools £3.1 million on energy bills and mitigate 2,700 tonnes of CO2 over their lifetime. Sam Harris, Business Manager of Mile Oak Primary School in Hove, said: “We are tremendously excited about installing solar panels on our roof. Not only will it be great to know we are using sustainably created electricity, but this will also be a powerful symbol to our children as we look to educate them about climate change and what we can do about it.
Want to join us in our Power to the People mission?
We hope that by sharing what we are doing we will inspire others to do the same.
If you would like to help provide bridging finance for community energy, or you are a community energy company looking for help, please contact Tim at tstumpff@msn.com.
