Community energy – supplier obligation
Published 4 November 2026
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This publication is available at https://www.gov.uk/government/publications/energy-independence-bill-factsheets/community-energy-supplier-obligation
Factsheet relating to the Energy Independence Bill.
Summary
We are legislating to require large electricity suppliers to engage with and offer Community Energy Groups (CEGs) prescribed services that will enable CEGs a route to market. These services may include an agreement between a supplier and CEG to purchase CEG generated electricity or provide an CEG with the means to supply electricity directly to end users. The Bill also defines a CEG in statute.
Together, these measures support the government’s wider ambition to grow the community energy sector by helping more communities participate in and benefit from the clean energy transition. By improving access to electricity markets, the measure seeks to remove a key barrier faced by community energy organisations and complements the objectives of the Local Power Plan to expand community-owned energy generation, increase community participation in the energy system, and ensure communities share directly in the benefits of clean power.
Why are we legislating?
Community energy projects face significant market access barriers that voluntary measures have failed to address. A 2024 call for evidence on barriers to community energy projects received 114 responses, with 66% citing regulatory complexity and 72% identifying funding and revenue certainty as key barriers.
The Smart Export Guarantee (SEG), while providing some support, offers minimal payments of 1-5p/kWh compared to CEGs’ requirements for stable, long-term revenue streams that enable project viability. Whilst the SEG seeks to support small-scale, low carbon electric generation, this support mechanism requires qualifying larger electricity suppliers to offer at least one export tariff. It is the supplier who sets the tariff rate and contact terms. There is no ability for an CEG to negotiate or engage with a large electricity supplier.
The Supplier Obligation, introduced in this Bill, will require suppliers to undertake specified actions in support of CEG, such as purchasing electricity or providing market access arrangements.
What are the government’s objectives with this measure?
The obligation will seek to address market barriers that can make it difficult for community energy projects to sell the electricity they generate and realise the value of their investment by requiring large electricity suppliers to engage directly with CEGs and provide support to access electricity markets. In doing so, the measure supports the government’s wider ambition to grow the community energy sector, enabling more communities to participate in and benefit from the clean energy transition and helping communities directly benefit from the energy they help to produce
How will this measure deliver these objectives?
We are seeking to take a statutory enabling power to require licensed electric suppliers to offer prescribed services to community energy groups. This obligation will be placed on specified energy suppliers and seek that they offer contracts to CEGs that facilitate the purchase of electricity generated by community-owned projects and, where appropriate, support models that allow CEGs to supply electricity directly to end users.
The Bill also contains a statutory definition of an CEG.