This model provides heat pump owners with discounts on their energy bills through investing in a cooperative.
Resource
Business model: Community-owned renewable heat
This model provides heat pump owners with discounts on their energy bills through investing in a cooperative.
Households can invest in shares of a cooperative society that collectively owns a renewable generation project (e.g. wind or solar farm). The funds raised are used to develop the project, with development, operations and maintenance works undertaken by a managing partner.
Once the project is operational, an energy supply partner purchases renewable electricity generated by the project at its production cost.
The difference between the production cost and the wholesale market price represents the savings rate, which is passed on to cooperative members as a credit on their energy bills for the lifetime of the project or as a dividend payment.
The total savings for each member is calculated by multiplying the savings rate (p/kWh) by their share of energy generated by the renewable assets (kWh).
Primary benefits
- Coop members receive reduction in energy bills / dividend payments in line with their share of asset ownership.
- Savings available for the operational lifetime of the renewable project.
- Provides opportunity for customers to own shares in a large-scale renewable generation project, which may otherwise have not been possible.
- Ability to ‘port’ agreement from one property to another if customer moves home.
- Wider decarbonisation benefits from increasing the deployment of renewable generation assets (additionality).
Key risks and considerations
- Fluctuations in wholesale electricity prices can impact the amount of energy savings that customers receive.
- Prior understanding of household energy consumption with a heat pump is preferred as can better inform investment decisions (e.g., how much to invest to maximise energy bill savings).
- Only available through partner energy suppliers, of which there are a limited number, meaning customers may need to switch from their current provider.
- Customers can switch suppliers if they are unsatisfied but only to those that are existing partners.
- Proposition only available on a project per project basis.
- Likely to be best suited to owner occupied households however further research could explore how the proposition can be modified to be more desirable to landlords.
Case study: Graig Fatha wind farm
Ripple. (2024). Graig Fatha monthly blog updates.
Overview
Graig Fatha, the UK’s first consumer-owned wind farm, was delivered by Ripple, a renewable energy developer.
The farm has been operational since March 2022 and is owned by over 900 cooperative members.
Ripple publishes monthly blog updates that provide key information about the farm’s performance, including metrics such as output, energy bill savings and CO2 emission reductions. The graphs illustrate the farm’s performance using data available for select months in 2024.
Financials
The project was supported by a £1.1 million grant from the Welsh Government.
Income generated by the Welsh Government’s portion of ownership is distributed to two charities: the Fuel Bank Foundation and the RCT Interlink. So far, more than £700,000 has been raised and distributed to these charities.
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