Support System Aspect
Legal Forms of Community Engagement and Energy Communities
Hover to read in light mode.
Cooperatives
Description
Cooperatives are a traditional collective form of business ownership that has been successfully used for centuries and are currently the most popular legal form for community energy projects, where local residents, businesses, or organisations, collectively own and manage an energy project. Each member has an equal vote, regardless of his/her financial contribution and number of shares owned. This is one of the most important, among the 7 cooperative principles outlined by the International Cooperative Alliance, which make cooperatives the governance model that best fills all forms of community ownership: legal, economic, technical and procedural ownership.
Examples
Energy cooperatives managing wind, solar, or biomass projects for shared community benefit. Have a look at some examples here.
Advantages
Cooperatives are a well-established governance model worldwide that have historically demonstrated more resilience to economic crises than traditional business models. Being a business means that when a cooperative delivers a profit this should be reinvested in its social and environmental mission. Cooperatives promote democratic governance, transparency, and local control. Members share both the benefits and risks of the project. Check out the 7 cooperative principles here.
Community Benefit Societies (CBS)
Description
A CBS is a legal form specifically designed for enterprises that benefit a wider community. This type of structure is often used for renewable energy projects that aim to reinvest profits into local communities.
Examples
Solar panel projects on community buildings where any surplus income supports local community development.
Advantages
Focuses on community benefit over profit, and is eligible for certain types of social investment funding.
Limited Companies (by Guarantee or Shares)
Description
Community energy projects can also be formed as limited companies. A company limited by guarantee (CLG) typically reinvests its profits into the community, whereas a company limited by shares (CLS) can distribute profits to shareholders.
Examples
Community-owned solar farms or wind turbine projects.
Advantages
More flexible than cooperatives and CBSs, allowing for a wider range of financial structures and external investment.
Trusts
Description
Trusts are used to hold assets (such as land or energy infrastructure) for the benefit of a local community. They often focus on preserving assets for future generations.
Examples
Trusts that manage community-owned wind turbines or solar farms, where profits are reinvested into local projects.
Advantages
Long-term security for community assets and a legal framework for ensuring that community benefits are preserved.
Partnerships (e.g., Public-Private Partnerships – PPPs)
Description
Partnerships between public authorities (local councils) and private companies can be used to finance and manage community energy projects. These arrangements often allow for shared investment, expertise, and risk management. Sometimes the community can take part in PPPs.
Examples
Local authorities partnering with private developers to build solar parks with shared ownership or benefit.
Advantages
Access to resources and expertise from both public and private sectors.
Energy Service Companies (ESCOs)
Description
An ESCO is a business model that provides energy solutions to local communities. While not always community-owned, some ESCOs operate under community-led or cooperative models, where profits are reinvested into the community.
Examples
ESCOs installing energy-efficient technologies or renewable energy systems for local communities.
Advantages
Tailored solutions for energy generation and efficiency, potential for community benefit in ownership models.