The UK government is pledging to spend up to £1bn on community-owned green energy schemes in an effort to combat growing scepticism and resistance to renewables and grid upgrade projects.
Ed Miliband, the UK energy secretary, said the new funding was intended to help democratise the energy system, increase the wealth and financial independence of local communities, and potentially cut some local energy bills.
“Britain’s drive for clean energy is about answering the call for a different kind of economy that works for the many, not just the wealthy and powerful in our society. Local and community energy is at the heart of our government’s vision,” Miliband said.
“With the biggest-ever investment in community energy in Britain’s history, this government is saying to every local community: we want you to be able to own and control clean energy so the profits flow into your community not simply out to the big energy companies.”
The funding for local community-owned solar, wind, hydro and biomass projects will be overseen by GB Energy, the state-owned company that Labour hopes will help deliver much cheaper electricity bills and greater energy security for the UK.
Claiming that up to £1bn will be available to spend before the next election, the UK government described the offer as the largest ever investment in community-owned energy in the UK. The funding would be shared with the Welsh, Scottish and Northern Irish governments.
GB Energy said it initially hopes to support 1,000 clean energy projects, which will receive grants or loans. It could also allow communities and local councils to buy shares in large privately owned schemes.
Ministers expect the money to pay for solar panels on public buildings, churches and schools, potentially producing much cheaper off-grid power, or fund small new windfarms where all the profits are spent on building new homes for social rent, subsidised buses or village halls.
Officials in the sector have welcomed the new funding but said it is much less than the £1bn a year they recall being promised in Labour’s 2024 election manifesto. GB Energy said this funding was part of a multibillion green energy strategy, under which new solar and onshore wind projects will be announced this week.
Ministers and supporters of the fund hope it will help combat growing criticisms of projects to build taller and larger electricity pylons to significantly upgrade the UK electricity grid, as well as install major new onshore wind farms, solar arrays and battery farms in rural areas.
Critics see these as industrialising the landscape, angry that profits from those schemes flow to private investors and multinational companies. Some local campaigns challenging these projects are being embraced by the Conservatives and Reform UK, and weaponised by the US president, Donald Trump, in the battle to challenge Labour’s broader net zero agenda.
Neither the UK government nor GB Energy has yet published any targets for new community-owned energy capacity, but GB Energy said it planned to publish a much more detailed prospectus for the funding later this year.
The latest data compiled by the umbrella groups Community Energy England, Community Energy Wales and Community Energy Scotland shows the sector has grown consistently since 2017. The total installed capacity has grown by 81%, with solar and hydro capacity more than doubling.
The number of people who are members of community energy companies has also surged, from 30,000 in 2017 to nearly 85,000 in 2024.
Meanwhile, local councils have begun investing in publicly owned energy schemes. Edinburgh city council helped set up a solar co-op that puts crowd-funded solar panels on public buildings. Orkney Islands council recently won £62m funding from the UK government to install six turbines near Kirkwall.
Zoe Holliday, the chief executive of Community Energy Scotland, said the UK government had to ensure that the electricity grid was capable of carrying all this new power; the current system was too patchy, leaving some community projects unable to proceed.
Nonetheless, this funding could be “truly transformative” for local communities. “Many people in rural areas look out of their windows and look at these huge turbines on the horizon but they don’t materially show any positive benefits for the community,” she said.
“For groups taking forward their own community projects, these become community assets, addressing energy resilience, providing an income stream which they can use to deliver local priorities.”