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Stakes and incentives are needed to ensure communities support the development of the UK’s energy infrastructure, say Angus Evers and Juliet Munn of SJ Berwin.
The development of the UK’s energy infrastructure is an issue that stirs up strong opinions in communities all over the country, with renewable energy (particularly onshore wind farms), onshore oil and gas exploration and production (especially if fracking is involved), and nuclear power all coming in for criticism.
This is partly because the wider benefits of energy infrastructure are not always felt at a local level. Many developers and operators therefore offer benefit packages to host communities. Under RenewableUK’s Community Benefits Protocol, for example, operators of onshore wind farms make a voluntary contribution of £1,000 per megawatt of installed capacity annually for wind farms of 5 megawatts (MW) and above, for the life of the wind farm. Local people decide how the funding will be spent.
The Government is now calling on RenewableUK to increase its recommended voluntary contribution to £5,000/MW, focus on how to give communities more of a say over hosting onshore wind farms, and generate greater economic and wider social benefits through their development. Renewables aside, the Government is also expecting operators using hydraulic fracturing to drill for shale gas to provide £100,000 in community benefits per well site at the exploration stage, and pay a further 1% of revenues to communities once production starts. And in July this year it announced that local authorities in areas hosting new nuclear power stations will be able to retain 50% of the business rates they collect, together with the growth on that share, for up to 10 years. Extra Government funding will also be made available for a further 30 years to account for the scale and lifespan of nuclear power stations.
Community benefits can range from community funds and benefits in kind – such as local facilities or environmental improvements – to profit sharing or community ownership stakes in projects. Critics claim these incentives are nothing more than legalised bribery to get planning permission. While this is not strictly true – community benefits are voluntary and fall outside the planning system – beneficiaries of community benefits may be less inclined to object to planning applications. In all parts of the UK, decisions about planning proposals must be based on planning issues alone and must not be influenced by unrelated benefits offered by developers. Unacceptable development therefore cannot be ‘bought’.
While benefits may be welcomed by communities hosting energy infrastructure, communities can also develop energy projects themselves. Such an approach is common in northern Europe, particularly in Scandinavia, Germany and the Netherlands, where wind power enjoys high levels of public support. In fact, more than 51% of Germany’s 50,000 MW of renewable energy capacity is now reportedly owned by individuals.
A number of community wind energy projects have also been developed in the UK, mainly in Scotland. The 800kW Udny Community Wind Turbine, which began operation in 2011, was the first wind turbine on the Scottish mainland to be wholly owned, built, financed and operated by the local community. Since June 2012, the Udny Community Trust Company Limited, whose main income is the operating profits from the turbine, has provided over £70,000 in grants to the local community. Fewer examples of community-owned projects exist in England, but they include a five turbine site at Watchfield in South Oxfordshire, which is 100% community-owned and provides electricity for over 2,500 homes.
According to a recently-published report by the think tank ResPublica, titled ‘The Community Renewables Economy’, such projects could become more widespread in future. The report reveals that the total capacity of community-owned renewable energy projects has grown from just over 4 MW in 2003 to nearly 60 MW in 2013, and it estimates that this could expand further to at least 550 MW by 2020.
Forum for the Future has also convened the Community Energy Coalition in 2011 to encourage communities to generate and save energy together for the benefit of all. The member organisations, including the Church of England, National Trust and The Co-operative, have over 15 million members and ran the inaugural Community Energy Fortnight this summer with 30 events across the UK showcasing community energy projects.
The debate over the development of new energy infrastructure in the UK is unlikely to end any time soon. But communities across the UK would do well to exploit the opportunities presented by taking ownership stakes and profit shares in both community-sized and larger-scale energy projects. By doing so, they’ll be able to reap any resulting financial benefits, and have a stronger say in their operation.
Angus Evers is a partner and Juliet Munn is an associate in the Planning & Environment Group at international law firm SJ Berwin LLP.
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