The number of people generating their own power has almost flatlined, with only one new group formed in the UK last year, according to the body representing grassroots energy organisations.

Cuts to subsidies for homeowners to install solar panels and a “hostile planning approach” that has in effect banned new wind turbines are behind the “wholesale decline”, Community Energy England (CEE) said in its 2018 State of the Sector report.

Grassroots schemes can slash electricity bills in half at a time when the “big six” energy companies have raised their prices so that the average household is paying £1,150 to £1,200 a year.

But setting up a project is risky, with the cost of installing solar panels or constructing turbines paid up-front, and nearly 30% of community energy groups saw some of their schemes fail last year, the report said.

Subsidies can hedge the risks, but in 2015 the government cut them for green energy, including the “feed-in tariff” households get for supplying excess energy back to the national grid, capping the total at £100m by 2019. Fossil fuel subsidies are more than 30 times higher – companies running oil or coal-fired power stations received more than £3bn last year through the capacity market, funded partly by household fuel bills.

“There is a clear link between recent subsidy changes and an increasing number of failed or stalled community projects,” said CEE’s chief executive, Emma Bridge. “If government is serious about creating a new renewable energy industry to meet the nation’s power needs it has got to embrace the community energy sector and restore the modest support that it needs to thrive.”

Community energy groups were growing by 30 a year until 2015, but only one was formed last year, bringing the total to 228, serving 48,000 members. One of the successes is Energise Barnsley, which has installed solar panels and batteries in 321 council homes, municipal buildings and schools, focusing on people at risk of fuel poverty.

Elaine Marsh, a retired NHS secretary, used to pay £350 a year for her electricity, but now her annual bill is only £185. “The battery stores what I don’t use during the day so I can use it at night,” she said. “So I do all my laundry at night when it’s free. I use as much of my utilities at night as I can.”

Grossbardorf FC’s stadium is powered by solar panels paid for by fans who get free sausages, or season tickets, in return. Photograph: Micha Will/Bongarts/Getty Images

Other big projects include Drayton Manor solar farm in Warwickshire, Newton Downs solar farm in Devon and Mean Moor wind farm in Cumbria, but campaigners say Britain is falling behind other European countries. Emily Rochon, an energy lawyer with ClientEarth, said: “Pouring public money into fossil fuels while slashing support for community energy makes no economic sense. Homegrown renewable energy has the potential to mitigate rising and volatile electricity prices by decreasing reliance on fossil fuels.

“The government’s pennywise but pound-foolish approach will only cost the economy in the long run. Getting our power from fossil fuels makes it overly expensive to keep the lights on and failure to support clean energy will drive technological innovation and job creation in this sector abroad.

“Other countries have recognised that community-owned renewable energy delivers greater economic, social and environmental benefits and will reap the rewards as a result. The UK, on the other hand, will miss the opportunity.”

The Bavarian village of Grossbardorf has been entirely converted to solar energy and biogas from crops grown by local farmers. Grossbardorf FC’s new stand is covered in solar panels, paid for by fans who receive a season ticket or a free sausage at home games. The homes of the village’s 950 inhabitants are connected to a district heating network, where water is heated at a local power station, then pumped directly into the radiators of the 120 houses.

In Stockholm a new development of 10,000 homes will be heated by computer servers in a data centre operated by DigiPlex, according to Fredrik Jansson, its chief strategy officer. “When my five-year-old daughter does stuff on her iPad, a process starts in the data centre, heat comes up from the servers,” Jansson said. “It’s captured and put out into the central heating system, so when she’s sitting on her bed, looking out on to a snowy Stockholm landscape, the data is heating the radiator.”

BeauVent in the Belgian port of Ostend will also be capturing heat from a waste incinerator, while in Spain, the Catalan government is planning to let householders with solar panels sell electricity to each other directly via peer-to-peer trading. And Respond, a project funded by the EU’s Horizon 2020 programme involving five countries, will look at ways to automate smart household appliances so they come on at times when demand for energy is low.

Although the cost of solar panels has fallen significantly in the past few years, large-scale renewable energy projects have also stalled in the UK. Last week, the trade body Solar Power Europe revealed that the number of new solar power installations in Britain had fallen by half for the second year in a row.