*SPECIAL MINI SERIES* Episode 5 of 6 Community Energy as a Retrofit Finance Model

Part of the podcast series bringing Healthy Homes Hub and Energiesprong UK's playbook, 'Deploying Innovative Retrofit Funding Models in the Social Housing Sector' (also available as an audiobook), to life, on how a locally agreed tariff, set using half hourly smart meter data, lets residents buy power generated on their own street below the grid rate while easing strain on the local network. 

Host: Emily Braham, Director, Energiesprong UK 

Guest: Dr Mary Gillie, Founder and Director, Energy Local 

At a Glance 

• Energy Local uses half hourly smart meter data to match residents with locally generated renewable power at an agreed price, below the standard grid rate for residents and above the wholesale rate for the generator, while also easing strain on the local network by shifting demand toward when local power is available. 

• A newer case study extends the model into a whole systems approach, combining local power generation, a heat network and retrofit under one investment, using grants for the retrofit element and patient equity capital for the power generation asset. 

• The regulatory framework governing electricity supply dates from 1989 and was not designed for local generation; Energy Local's route through it relies on partnering with an external licensed supplier instead of making residents responsible for their neighbours' unpaid bills. 

Energy Local's model rests on half hourly smart meter data, which can show precisely when a household is drawing power at the same time as a local renewable generator is producing it. That data allows a locally agreed price to be set for the electricity used in that window, a price lower than the standard grid rate for residents and higher than the wholesale rate the generator would otherwise receive by selling into the national market. The result works on both sides: households pay less for power that is demonstrably local, and generators earn more than they would from a wholesale sale. 

The model also carries a network benefit alongside the bill saving. Encouraging households to shift demand toward the hours when local generation is highest reduces strain on the grid at peak times, in particular the evening period when heat pumps, showers and electric vehicle charging overlap. Pricing is structured to reinforce that shift: any power beyond the matched local supply is charged on a time based basis, cheapest overnight, more expensive during the day and most expensive between four and eight in the evening, so that behaviour is encouraged away from the periods when the network is under most pressure. 

Community energy clubs run on this model are now operating across Wales and England, having started in Bethesda in North Wales, and a first club in Scotland is expected shortly. Success is measured on more than one dimension: bill savings that matter most to households already under financial pressure, a saving that is predictable rather than variable so it can be relied on within a tight budget, reduced carbon emissions, and network wide savings that benefit bill payers well beyond club membership once the model operates at scale. 

A newer case study extends the same principle beyond electricity into a whole systems approach, combining local power generation, a heat network and retrofit under a single investment instead of pursuing each separately, since addressing one in isolation can undercut the economics of the others. The approach is aimed at a community with chronic fuel poverty, using grant funding for the retrofit element and patient equity capital, expected to take longer than five years to return, for the local power generation asset. Equity investors taking a financial stake in the outcome is treated as what keeps them engaged in making the wider model work, since a grant or soft loan can simply be written off without consequence for the funder. 

Electricity supply regulation dates from 1989 and was designed for a market of a small number of large suppliers, not distributed local generation, so Energy Local's route to compliance depends on partnering with an external, already licensed supplier instead of asking residents to manage payment or debt collection within their own community. Trust with residents has been built gradually, and scepticism left by previous, over promised initiatives has had to be overcome through visible, hands on demonstrations rather than promises alone. The closing advice for a housing provider considering a similar model for the first time is to know residents well and to monitor contractors closely throughout delivery, since both directly affect whether residents trust the process. 

Practical steps for housing providers 

• Establish whether a proposed local energy tariff is set using granular, verifiable metering data, since that is what allows a genuinely local price to be demonstrated, not simply assumed. 

• Ask how a model shares risk with residents on a tight budget, prioritising a saving that is predictable over a saving that is larger on average but variable month to month. 

• Where local power, heat and retrofit are being planned separately, consider whether combining them under one investment case would improve the economics of each. 

• Check how a proposed funding partner's stake is structured, since equity that shares in the outcome creates a different set of incentives to a grant or loan that can be written off. 

• Confirm how a novel local supply model fits within existing electricity regulation, and who holds the licensed supplier relationship, before assuming residents can be asked to manage that role themselves. 

• Invest time in understanding residents' circumstances and any scepticism left by previous initiatives, and use visible, hands on demonstrations to build trust rather than relying on promises alone. 

• Monitor contractors closely throughout delivery and get to know tenants well, since both are highlighted as directly shaping whether a scheme is trusted.