Lack of policy support is now the key barrier to the wider uptake of community energy schemes, a leading ethical investor has warned.

Colin Baines, investment engagement manager at the Friends Provident Foundation, told the launch last week of the Green Alliance’s new report, Community Energy 2.0, that there is appetite for community energy projects among ethical investors.

But policy support for the sector is the “missing bit of the equation”, he said: “While economics and technology are so favourable to community energy, policy isn’t. Unfortunately, public policy is becoming quite an insurmountable barrier. It’s the piece of the jigsaw that is creating the problem.

“There have been very few genuine investment opportunities over the last couple of years. That needs to change and unfortunately it is the policy environment that is holding it back.

“Community energy is the kind of high impact investment that these funds are looking for but unfortunately the pipeline isn’t there and until the policy environment is in a better shape those sort of investment opportunities aren’t going to be coming through. We need to get over this short term barrier of policy.”

Baines, who was a co-founder of the Community Energy Coalition, said that without a more supportive policy framework, the grassroots- led energy projects would remain reliant on affluent individual angel investors.

Other factors stacking the odds against community energy are the influence that the big incumbent energy companies enjoy within government and Whitehall’s tendency to favour large scale projects as opposed to the smaller scale initiatives that grassroots groups can bring forward.

But Baines said that community energy has a potentially “vital” role to play in helping to deliver a fair energy transition for those poorer individuals who could be left behind on an increasingly expensive and under-used grid.

Agamemnon Otero, co-founder and chief executive of Repowering London, called for greater aggregation of community energy projects.

He said that due diligence on each project is around £100,000, meaning that they have to be worth at least £10 million to become meaningful investment propositions.

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