By participating in shared ownership of a renewable energy project, communities can share in a range of benefits including developing a sustainable income stream of which they have control, creating strong partnerships, and building resilience in their local area.
The picture below shows the increased financial benefit that a community group might expect to realise from greater involvement in a community renewable project. Community benefits are a renewable industry led voluntary initiative to support communities, often in the form of funds. The standard set by the Scottish Government is £5,000 per MW installed capacity per annum.
The Scottish Government’s Register of Community Benefits provides an indication of the level of benefit payments other community groups have received. With limited involvement from the local community, there is limited risk to the community.
At the other end of the scale is a project that is community owned and developed. The financial benefits to the community are significantly greater, as are the risks and responsibilities. More benefit is achieved if investment in the project is early, however, this has more associated risk. It is also important to note that investments have to be committed for 20+ years for some technologies, regardless of whether it is a commercial developer or a community led project.
In shared ownership opportunities, there are many case studies of the commercial developer leading the project and taking the development risk. Subsequently, the community is offered an opportunity to invest. There are no set criteria for the terms of the investment or the relationship between community and developer, with each project being unique, so each project should be evaluated individually on its own merits.
If a community were to invest in a project before a planning application is submitted by a commercial developer, there is potential to increase benefits, but at the same time this approach has greater associated risks. Opportunities for potential investments can be identified by approaching local landowners or reviewing local authority planning applications. Professional advice is strongly recommended before making any investment decisions.
Developers have also benefited from shared ownership, such as through increased community engagement, accessing incentives such as rates relief and potentially adding value to their planning application. Research has shown that projects with greater community ownership have also led to greater acceptance, particularly if the communities feel that they were fairly and inclusively involved in the project and that the benefits were fairly distributed (see ‘What makes local energy projects acceptable?’). Moreover, if a project has greater acceptance, it is also more likely to obtain planning permission (see ‘The role of community acceptance in planning outcomes for onshore wind and solar farms: An energy justice’. Further research into planning rejection rates has confirmed that the impact of community involvement is significant in certain local authorities, although not all local authorities (see ResPublica: The Community Renewables Economy – 2013.
There are more benefits to the community and the commercial developer to be realised from this shared ownership approach than simple financial benefits. The Scottish Government’s Climate Change Plan suggests community involvement in generating electricity, whether fully community-owned projects or part community ownership of larger commercial projects, can help achieve our goals of decarbonising the power sector with 2GW of community and locally owned energy by 2030.
As of the end of 2021, an estimated 869 MW of community and locally owned renewable energy capacity was operational in Scotland from a mixture of solar PV, onshore wind, and hydro projects. This is a 5% increase on the operational capacity in 2020. The operating capacity resulted from a total of around 25,830 individual renewable energy installations.
