Community Energy at a Crossroads: Powering Growth in the Low-Carbon Transition

Wind Turbines

Author: Hugh Goulbourne, Director and General Counsel at CO2Sense CIC

Table of Contents

Community Energy at a Crossroads: Powering Growth in the Low-Carbon Transition

The “State of the Sector 2025” report from Community Energy England paints a picture of the community energy sector with immense potential, but one at a critical juncture in the low-carbon transition. While community energy is growing, it faces significant challenges. What stands out is that to truly thrive the sector must embrace a more commercially savvy mindset and take control of its own destiny, telling a powerful story about community-owned energy projects leading the charge in the low-carbon transition.

A Growing Impact

The report highlights the substantial progress made by the community energy sector in 2024:

  • Growing Capacity: Community energy projects across the UK generated 575 GWh of clean electricity, enough to power over 212,000 households for a year.

  • Organisational Growth: The number of community energy organisations has grown by 24% since 2021, reaching 614.

  • Economic Impact: The sector’s total organisational turnover increased by a remarkable 58%, contributing over £24.5 million to local economies through community benefit funds and other expenditures.

Community Engagement: These organisations are highly effective at engaging the public, reaching over 85,000 individuals and saving them an estimated £1.86 million on energy bills.

What’s striking about these figures is that they confirm what the CO2Sense team are seeing across the sector, which is a growing appetite from communities to take control of their energy future and deliver real local benefits.

The Need for a New Mindset

Despite these successes, the report identifies a significant slowdown in the project pipeline, with both generation capacity and investment for future projects declining. It is clear from working with community groups across the UK that these bottlenecks are all too familiar. Without a shift in commercial strategy, promising projects risk stalling.

The clear message is that community energy groups must become more commercially astute to secure future investment in energy projects. This means actively pursuing the most investable assets and aggregating sufficient power generation to be a viable partner for energy companies. GB Energy, while a welcome development, is not a “messiah” for the sector. The government has made it clear that future support will be in the form of repayable grants or investment capital, not free grants, which are needed for other public sector decarbonisation projects. The sector must demonstrate its commercial viability to secure the investment needed for growth.

Unlocking Future Growth

The report outlines key recommendations to overcome these hurdles and unlock the sector’s potential, focusing on finance and asset access:

Financial Innovation:

Community groups need increased funding for development and capacity building, including new models for shared ownership with GB Energy potentially providing loans for communities to purchase stakes in private projects.  CO2Sense strongly supports this approach and is working with partners in the social investment sector to develop affordable investment capital and loan models that make community energy projects viable and attractive to investors.

Access to Assets:

As existing renewable energy assets reach the end of their lifespan, community organisations should be supported to take over the leases and repower them. This would create a new pool of available assets, such as farm-based wind turbines, and prevent the loss of existing community-owned infrastructure. CO2Sense is very open to partnering with other organisations to commission a survey that identifies the availability of these assets, helping maintain community-owned infrastructure.

Development and Post-Construction Finance:

Although the report highlights the critical need for accessible, affordable, and readily available pre-and post-construction finance, it doesn’t offer any proposed solutions. Community groups need investment capital to move quickly from the development stage to installation. CO2Sense is actively working on a model to provide these loans and equity at the right price, making them attractive to a wide pool of investors.

Communities that take control of their own energy future can tell a powerful story of local ownership and empowerment, showing that the transition to a low-carbon economy is not just a top-down mandate but a community-led movement. What’s clear from working across the sector is that with the right support, access to finance and assets, communities can lead this transition and CO2Sense is committed to making it possible.

View the Community Energy State of the sector 2025 report

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