An energy provider is promising to shave £200 off people’s annual electricity and gas bills by putting control into the hands of communities.

Ovo Energy, in partnership with Community Energy South, is pledging to “cut out the middle man” to save consumers cash when the Sussex Energy Tariff is launched in spring next year.

It will source electricity from community projects in Sussex as well as buying electricity and gas direct from producers to reduce the energy bills of an estimated 10,000 households in its first year.

Community Energy South pulls together volunteer-run community energy projects across the county and will help to provide energy services and advice.

Ovo will buy energy from grassroots groups and pass it on to consumers across the county. Money made by community groups from selling their power will be reinvested back into building infrastructure for more locally sourced energy projects.

Ollie Pendered, chairman of Community Energy South, said the system will help keep prices down.

He said: “The Sussex Energy Tariff will offer residents across Sussex competitive local energy bills specially designed to meet our community’s needs.

“The tariff will provide a huge boost to support the work of the Community Energy South groups which are representing our communities across the region, promoting local community-owned renewable generation and helping vulnerable households with their energy costs.”

Ovo said 10,000 homes in Sussex are predicted to sign up and save a total of £2 million in the project’s first year.

Ovo will offer a normal tariff alongside a green tariff, a key metre tariff and a tariff specifically for small businesses and people can switch provider after the project’s launch next year.

Amber Rudd, MP for Hastings and Rye and energy and climate change minister, said Sussex is “leading the way” on community energy and she hopes “the rest of the country will follow suit”.

It will be only the second scheme of its kind in the UK after Plymouth Energy Community launched last month.

The Sussex project is also supported by Your Energy Sussex, a partnership of Sussex’s three local authorities working to promote energy saving and renewable energy.

The six energy giants – British Gas, EDF Energy, Eon, Npower, Scottish Power and Scottish and Southern Energy – control 95% of the market and are being investigated by the Competition and Markets Authority.

Ovo provides power to 400,000 customers across the country in comparison with British Gas, which provides power to about 20 million customers.