The Government must overhaul the "closed shop" energy market by embracing community schemes, according to a new report.
The study by social and economic think-tank ResPublica warns that failure to support the community sector will have serious consequences on the Government's climate change, emissions and fuel poverty targets.
It sets out a series of recommendations to open up the market which is dominated by the big six energy companies.
The Friends of the Earth-backed study - entitled Re-energising our Communities: Transforming the energy market through local energy production - argues that local communities should be at the centre of new projects to harness renewable energy.
Ed Mayo, ResPublica fellow and director general of Co-operatives UK, said: "The beauty of renewable energy that is co-operatively owned and community level is that it solves the twin issues of social acceptance and economic efficiency.
"This report is right to call for intelligent nudges to make it easier for people to come together, reversing decades of energy policies limited to big is beautiful.
"Everyone benefits if we can draw community energy production into the centre of the new energy economy."
The report calls for the Department of Energy and Climate Change (DECC) to recognise the need for a co-ordinated support programme for community energy.
It said that schemes such as Torrs Hydro - the UK's first community-owned hydropower scheme in New Mills, Derbyshire - could be replicated across the country.
The report's authors, Caroline Julian, senior researcher at ResPublica, and Julian Dobson, a research associate at the think-tank, criticised the energy regulator for not doing more to support renewable energy.
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