Britain to Invest Up to £1bn in Community Energy Projects

Public funding signals a shift towards locally owned energy

The Department for Energy Security and Net Zero has confirmed plans to direct up to £1 billion of public money into community owned renewable energy and storage projects across the UK. The announcement marks a clear change in how government sees the role of local ownership in the energy system.

Instead of relying only on large offshore wind farms or grid scale solar, ministers are placing more weight on projects owned or part owned by communities. These include solar on rooftops, small wind, local heat schemes, and shared batteries that store electricity for local use.

For UK SMEs, this matters because energy costs, supply security, and tender expectations are increasingly linked. Many smaller firms now sit inside supply chains that face climate reporting rules or public sector procurement tests. Local energy projects can affect prices, resilience, and the way firms demonstrate action on emissions.

Community energy is not new, but funding has often been piecemeal. The scale now being discussed is different. It brings community power closer to the mainstream of the UK energy economy. As a result, businesses based near these projects may see practical changes within the next few years.

This investment will largely flow through Great British Energy, a new publicly owned company set up to invest directly in clean power. The focus is on long term public benefit, rather than short term returns. For many SMEs, that signals greater stability and clearer rules.

Although the funding targets communities, the effects will spread more widely. Local authorities, landlords, and nearby firms are likely to engage in new energy arrangements. Understanding what has been announced helps businesses plan ahead rather than react later.

Government plans link Great British Energy to community ownership

The £1 billion commitment sits within a wider reshaping of UK energy policy. At its centre is Great British Energy, often shortened to GBE. The government has stated that GBE will act as a developer, investor, and owner of clean energy assets.

Unlike earlier support schemes, GBE is designed to hold stakes over the long term. It will back projects that struggle to attract private capital, particularly smaller schemes with local ownership. According to the Department for Energy Security and Net Zero, this includes renewables and energy storage.

Community projects will be one of GBE’s core channels. Funding is expected to cover early stage development, planning, and construction. The aim is to remove barriers that have held community schemes back, such as grid access costs and planning risk.

The announcement builds on the Local Power Plan, which the government has been developing with Ofgem and the National Energy System Operator. This plan looks at how local energy can trade power, share flexibility, and connect to the wider system.

Flexibility in this context means the ability to shift when electricity is used or stored. For example, batteries or heat pumps can draw power when it is cheaper or cleaner. Community batteries are a key part of the discussion.

Earlier funding streams give a sense of direction. By January 2026, the GBE Community Fund had already provided £5 million to more than 60 early stage projects in England. Separately, the Rural Community Energy Fund continues to support schemes in villages and remote areas.

The government has also set out a larger capitalisation plan for GBE itself. A proposed £5.3 billion equity subsidy is under review by the Subsidy Advice Unit. This review focuses on compliance with subsidy control rules.

Alongside community energy, ministers highlighted progress in offshore wind and hydrogen. In 2025, offshore wind capacity reached around 16GW, supplying roughly 17 percent of UK electricity, according to the department’s own figures.

All of these strands connect back to national targets. The government has restated its aim for clean power by 2030 and net zero emissions by 2050. Community energy is now framed as a delivery tool, not a niche addition.

Cost, compliance, and tender effects for UK SMEs

For smaller businesses, the most immediate question is cost. Energy bills remain volatile, and many fixed contracts signed before 2023 are now ending. Community energy projects can influence local prices over time, though not overnight.

Where businesses can buy power locally, they may see more predictable pricing. Some community schemes use power purchase agreements that fix prices for several years. These are different from standard retail contracts.

Reported savings in government briefings focus on households. Average figures of £450 per year are cited. Flats linked to shared solar and batteries could cut grid use by 60 to 70 percent. While these numbers do not transfer directly to businesses, they show scale.

SMEs located in mixed use buildings or estates may benefit if landlords engage. Solar panels on commercial roofs paired with storage can lower peak demand charges. This can matter for workshops, small manufacturers, and food businesses.

Compliance pressures are another driver. Larger customers increasingly expect suppliers to report carbon emissions. Even where SMEs are not legally required to report, tender questions often ask for evidence.

Using locally generated renewable power can support these responses. It can sit alongside other steps, such as switching tariffs or improving efficiency. Community schemes also provide clearer data trails.

Supply chain risk is also part of the picture. Energy security has moved up the agenda since 2022. Local generation does not remove national risks, but it can add resilience in constrained areas.

For example, community batteries can help manage local network limits. They store power when the grid is under less strain and release it later. This reduces the chance of delays for new connections.

Planning and development may also feel indirect effects. Local authorities involved in community energy may view nearby developments differently. Businesses looking to expand sites could find grid conversations change.

That said, there are limits. Not every area will see a project. Timelines vary, and planning remains a challenge. SMEs should avoid assuming quick savings.

The practical impact is gradual but cumulative. Over the next five years, community schemes could shape local energy markets in ways businesses need to understand.

What the £1 billion programme includes so far

• Up to £1 billion of public investment earmarked for community owned renewables and storage.
• Funding is expected to flow mainly through Great British Energy.
• Support covers early development through to construction.
• More than 60 projects had early stage backing by January 2026.
• Technologies include solar, onshore wind, heat, and batteries.
• Community batteries are under active review through a call for evidence.
• Linked programmes include the Rural Community Energy Fund.

Government statements describe this as the largest public commitment to community energy to date. Detailed allocation rules are still emerging.

What SMEs should consider now

From an advisory standpoint, the key point is timing. Most SMEs do not need to act immediately, but ignoring the change would be a mistake.

First, understand your local context. Check whether your council or local energy group is already developing a scheme. Many publish updates or consultations.

Second, review energy contracts and break points. Long fixed deals may block access to local supply arrangements later. That does not mean switching now, but awareness matters.

Third, think about your premises. Roof space, car parks, and flexible loads may become more valuable. Even if you do not host generation, neighbours might.

Fourth, link energy decisions to carbon reporting. If customers ask how you reduce emissions, local renewable use is easier to explain than offsetting.

At SBS, we see SMEs struggle when policies land without warning. Community energy will not hit like a regulation, but its effects will still be felt.

It is also worth being realistic. Not every project will deliver savings. Governance and finance remain complex. Due diligence matters.

We advise businesses to treat local energy as part of their wider energy strategy. It should sit alongside efficiency, procurement, and risk management.

For firms bidding into public sector or large frameworks, expect questions to evolve. Evidence of engagement with local energy may support responses.

Our work on energy procurement support for SMEs often intersects with these issues. The same applies to carbon reporting compliance advice.

The main message is preparation, not haste. Track developments, ask informed questions, and avoid locking out future options.

Further Reading

Details will continue to develop through 2026 and 2027. Businesses seeking primary sources should rely on official channels.

The Department for Energy Security and Net Zero publishes updates and policy papers at gov.uk. This includes announcements on Great British Energy.

Ofgem provides information on local energy and flexibility markets at ofgem.gov.uk. This is useful for understanding grid and licensing issues.

The National Energy System Operator also releases technical material on system planning and local networks via neso.energy.

For independent reporting and analysis, outlets such as BBC News business coverage and the Financial Times energy section regularly cover community energy and public investment.

Using these sources will help you separate confirmed policy from early commentary as the programme takes shape.