Project Overview

A written guide to establishing and running low-carbon community revolving funds. Forum wrote this guide in collaboration with Bates Wells & Braithwaite solicitors (BWB) to show communities how they can use smart finance to kick-start carbon saving projects like these in their area and make their investments go further.

Building a low-carbon, sustainable economy is one of the biggest challenges of our time. Climate change, rising oil prices and energy security are all powerful reasons why this is fundamental to our future wellbeing. To meet these challenges, we need to generate renewable heat and power from the sun, earth, wind and rivers and retrofit our buildings to save energy.

We believe to do this we need more than the right technologies and funding. If local people run these projects and invest their own money it brings them closer together, enriches their lives and keeps the benefits in the community. Carbon saving projects can empower people and engage them in the promise of a sustainable future so they use less energy, shop locally and grow their own food.

Pioneering communities around the UK, such as West Oxford, Awel Aman Tawe, Kirklees and Hook Norton are already using revolving funds to finance community energy projects which cut carbon emissions and benefit local people. The guidance comes from these groups and many more as well as the Forum’s expertise and experience, that of the Climate Finance Advisory Group and BWB’s environmental and social enterprise leading lawyers. Barbara Hammond, Chair of West Oxford Community Renewables, one of the pioneering communities showcased in the guide, said: “Funding Revolution is just what communities need to launch projects and grow their activities to reap the rewards of the low-carbon revolution. I wish that we had all this great information at our finger tips when we started up four years ago.”

Together, we aim to give local authorities, housing associations and community groups to tools to set up schemes such as making private homes more energy efficient or installing solar panels on factory roofs. It will also be of interest to other organisations that provide advice to communities, companies interested in working with communities on carbon reductions, central government departments and academics.

The essence of a revolving fund is that the initial investment in a local energy project is repaid by returns, freeing up cash to invest in further carbon reduction schemes. Revenues from reduced energy bills, selling energy, and feed-in tariffs can fund a community’s activities for decades on a steady, predictable basis. By reinvesting returns, or spending them on other carbon saving projects, the community can multiply the impact of its investment and avoid the need for continual injections of grant funding.

Many communities are selling shares to local homeowners and organisations. By allowing them to invest in projects and have a say in the running of the fund, they create a spirit of individual and collective ownership and pride in becoming a low-carbon community. This can lead to positive impacts beyond the immediate energy projects. These include households becoming more energy conscious, people taking an interest in the environment and becoming a closer community, more resilient to economic and social pressures.

There are two versions of the guide available to download: an executive summary, which covers the basics of building a low carbon community and the full guide. The full version provides detailed guidance and advice on all aspects of setting up and running a revolving fund including: suitable legal forms; most appropriate ownership models and structures; governance and fundraising issues; managing risks; financial aspects and tax considerations. It will be valuable to groups getting community energy projects underway as well as detailed advice on how to make the most impact with a fund for those who are further ahead.