Community-owned energy supply is coming

Written by Rebecca O'Connor on 20th April 2016

Mongoose Energy, the community energy developer, will launch the UK’s first community-owned energy supply business by the end of this year, it said today.

The Bristol-based community energy developer raises funds from private investors via Ethex, the ethical investing platform, to install, connect and operate renewable energy projects that are owned by the community.

Typical returns can be in the region of 7 per cent and offer tax relief alongside interest, however, investment in community shares is considered risky. Investment offers are not regulated by the Financial Conduct Authority and compensation for loss of capital is not available from the Financial Services Compensation Scheme.

Despite the risks, community energy raises are proving popular

Community Energy typically refers to wind or solar energy projects that are planned, developed and owned by people rather than shareholder-owned companies, with all profits from the electricity supplied being distributed back to the community of owners.

The community is often but not always local people who support the idea of greater energy security and want to do their bit towards reducing carbon dioxide emissions. People who do not live in the local area can usually invest too.

Jan Willem Bode, chief executive of Mongoose, said: “This is a first for a UK energy company and, with the majority of our profits going back into the community groups, I believe this has the potential to transform the nature of energy ownership in the UK”.

Currently, community-owned energy projects sell the electricity they generate via Power Purchase Agreements to commercial energy suppliers.

Renewable energy suppliers such as Ecotricity and Good Energy typically own their own renewable energy developments, but can buy from community-owned projects.

Mongoose Energy said the new supply business would offer “a competitively priced range of tariffs for its customers”, which would be announced in the third quarter of 2016.

Sir Ed Davey, former energy secretary, is a board member of Mongoose.

Launched in April last year, the company claims to have 34MW of capacity under management with a further 30MW of capacity in the pipeline.

Peter Capener, chair of Bath and West Community Energy, said: “The rise of community energy means that energy generation can be used to bring about positive social change and Mongoose groups are all signed up to this philosophy. We see this as the future for the UK, with profits being retained within the community to re-invest in socially and environmentally beneficial projects that meet community needs.”

In a comment blog for BusinessGreen, Bode said that the new supply business had the potential to “transform the nature of energy ownership in this country” following a “rollercoaster” year for the sector characterised by record investment rounds and surprise changes to government policies that threatened to undermine returns from future community energy projects.