I’ve been spending quite a bit of time recently thinking and talking about community benefits from renewable energy projects. It’s something I covered off in some detail in my Churchill Fellowship report, but also an area that (due to length constraints) I had to carve a fair bit out of for my final report. Enough that I am ambitiously calling this Part 1, as I anticipate I’ll have more than one blog post’s worth to cover. This post will really just be a summary of what is in my report.
Much of my discussion in the report related to Scotland, and the system that had been established there to manage community benefits from onshore wind energy projects. I also looked at some of the alternate models that I found in Spain and the Netherlands. For links to download the report and read the whole thing in context, go here.
For those who don’t want to have to rifle through the whole report, some of the key learnings around this were:
- Most communities tolerate wind farms (and renewable energy infrastructure generally), in large part because of the associated community benefit programs, not because they particularly like the projects themselves.
- Community benefits can take numerous forms, including project co-ownership, grants and benefit funds, scholarship programs, and community energy projects. Ideally, the community should be engaged to determine the model and outcome which is best for them.
- True community benefit schemes have communities at the centre, in decision-making roles. Not all communities can do this on their own and may need support to do so. In Scotland, for example, not-for-profit organisations like Foundation Scotland and Local Energy Scotland have been able to provide some independent assistance.
- Guidelines or legislation that spell out the expectation or requirements of industry to contribute to community benefit funds give clarity to both industry, who will need to factor in the costs, and communities, who generally desire a level of confidence that project benefits will be forthcoming.
- Every community is different; proscriptive one-size-fits-all models will not work. Whilst setting the quantum of benefits is helpful, locking communities into a given mechanism for managing, accessing, and disbursing funds will be counterproductive. There needs to be room for flexibility, and consideration given to support for communities that may lack the initial social or human capital to plan and engage meaningfully with proponents or funding streams.
- Community benefits can provide lasting legacies and address local and regional issues when communities maximise their potential. This means helping and encouraging communities to think beyond “sugar hits” like football jerseys or fireworks for the local show.
- Renewable energy projects can materially impact land values, including the value of important agricultural land. Landowners should be compensated for the use of their land, and this can provide an important economic diversification opportunity, but thought should be given to managing possible repercussions of this. (I have provided some thoughts of my own in this blog post.)
- Renewable energy projects are unlikely to directly result in large, long-term population increases in rural communities. Increases will typically be temporary, during the construction phase. For the many communities who are looking at the sector to address local population decline, indirect opportunities, such as utilisation of benefit schemes fund to build housing, or enhance local liveability, may be more likely to produce positive legacy outcomes.
- Regional cooperation, rather than competition, can provide better outcomes for regional communities.
- There is a possibility for government charges and community benefit payments to become intertwined. Proponents may see payment of local government rates, road use agreement fees, or other government charges as their contribution to regional communities, where those governments provide services to the communities they are based in. Whilst both can help drive social licence, they are not the same thing. This issue can become further muddied when local governments also manage community benefit funds.
I also put together this table of Key Considerations for Community Benefit Funds:
| Item | Rationale |
| Value | The renewable energy model is more like a utility, and generates small returns over a long period of time. As such, it generally seeks low operating costs, and community benefit funds, at the upper end, can impact project viability. One developer cited projects they have in South America, where 8% of revenue is paid out to the local community, which has impacted their ability to develop new projects. |
| Applicability | Those in wind energy in the UK often commented on the fact that they are expected to pay community benefits, but the same guideline-based expectations are not necessarily applied to oil and gas or battery projects. |
| Duration | Ongoing payments generally allow for longer-term planning and impact than one-off, lump-sum payments. |
| Eligibility | It can be hard to define ‘community’. As above, it is important to consider who can benefit – and be aware that there will often be disagreement based on who is eligible to access funding, and who misses out. |
| Accessibility | Just because the funding is there, does not mean eligible parties will be able to access it. Grant programs, for example, may require groups to prepare quotes or business plans. Likewise, they might only pay to reimburse for expenses incurred. In both cases, this limits some of the groups with the lowest capacity – possibly greatest in need – from even applying for funds in the first place. |
| Use | Some benefit programs are targeted at energy-related projects, such as energy efficiency measures or community energy infrastructure. Consider whether this aligns with the needs of those communities eligible. At a minimum, most proponents want to ensure the funding is not spent on anti-renewables or party political projects or messaging. |
| Coordination | What a project’s development team offer, the construction and operations team need to deliver on. It is important that there is consistency from proponents when devising and delivering programs. |
| Delivery | There are numerous ways to deliver funds, and flexibility is important as each community is different. Critically, community need to be at the centre of deciding how this happens. When industry or local governments seek to put the community in the back seat, it can reduce the impact of the funds, and acceptance of the project providing them. Likewise, when local governments manage funds there can be both internal challenges differentiating between ‘community projects’ and local government ‘business as usual’ and community wariness about the transparency and input they have into decision making. |
| Regulation | Is it a guideline or is it a regulation? Whilst industry may not always support paying community benefit funds, proponents generally appreciate knowing how much they will be expected to contribute, as it helps with their planning work. |
| Transparency | Community members want meaningful engagement in how funding is allocated and, visibility over the process. |
I’ll be using the next few posts to drill a little deeper into some of the items raised here. You can find Part 2 here, Part 3 here, and Part 4 here.