Community shares are a way for co-operative societies and community benefit societies to raise finance for local projects.
Resource
Funding mechanism: Community shares
Community shares are a way for co-operative societies and community benefit societies to raise finance for local projects.
*A list of funding sources for co-operatives and community benefit societies can be found here.
Residents buy shares in a society that owns a renewable energy (RE) asset, such as a wind or solar farm, becoming members and shareholders with a say in how it is run. In 2021, around 14% of community share offers financed renewable generation projects. Local authorities can actively help establish these societies, including through early-stage co-investment.
For this model to work, shareholders need a clear route to financial return. RE projects work well because subsequent Power Purchase Agreements (PPAs) guarantee investor payback and can service any loan finance. Applying this model to heat pump installations would require an equivalent revenue stream to cover repayable finance streams – for example, a successor to the domestic Renewable Heat Incentive (RHI) or a revenue-sharing model linked to household energy bill savings.
In practice, community shares usually form one part of a wider funding package. As shown in the diagram, a blended finance model could combine grant funding, a community share offer and repayable finance from institutional investors.
- Good Finance. (2023). Community shares: A democratic investment.
- Co-operatives UK. (2024). The Community Shares Handbook.
- Co-operatives UK. (2011). The practitioner’s guide to community shares.
- Plunkett Foundation. (2019). Funding a community business with community shares.
- Co-operatives UK. (2023). Communities doing it for themselves.
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