Community Benefit Payments
Many developers of renewable energy projects, principally larger scale onshore wind to date, offer benefit payments as part of their development. In the Argyll and Bute Council area there are a number of community benefit funds providing more than £500,000 of funding per annum to local communities. These payments are voluntary.
For information on Community Benefit Funds being received by local communities have a look at our Windfarm Community Benefits table and interactive community benefit map. If you are interested future renewable energy development, you can find out more on our Interactive Renewables Map.
In 2005, Argyll and Bute Council approved its first community benefit policy recommending a minimum of £2,000 per MW installed capacity per annum. Over the period of ten years, community benefits have become more common and the terms on which they are offered has changed. Therefore in 2015 we reviewed and updated the guidance to increase the payment levels and provide advice to communities and developers when considering community benefits. The Argyll and Bute Guidance for Community Benefits from Onshore Renewables was approved in May 2015 following a period of public consultation; a summary of the consultation responses is also available.
The guidance continues to separate payments to the local community from the regulatory planning process which determines the acceptability or otherwise of individual renewable energy developments, community benefits are not considered as part of the planning process although socio-economic benefits can be.
The Scottish Government have also produced Scottish Government Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments which sets out guidance for the development of community benefit funds.
Payment into a community benefit fund is voluntary however where provided a community benefit of £5,000 per MW index linked then the potential income can be significant, as demonstrated in table 1.
Wind Farm Capacity
1st year community benefit
20 year lifetime
Community benefit payments are a low risk method for communities to generate income from renewable energy; communities can also investigate whether there are opportunities for community investment in a renewable energy scheme.
Each scheme will vary in the communities it applies to, how it is managed and how much the fund generates. To find out whether there is a community benefit in your area, view the community benefit funds map.
Community benefit funds will often be discussed early in the development process. Communities are encouraged to engage with these discussions but are also advised that they do not restrict their ability to object to proposals during the planning process as the community benefit package is not a material consideration in the planning process.
Management of community benefit payments of any size requires an appropriate level of governance to ensure that funds are spent and accounted for in an accountable and transparent manner.
Some developers will specify the model to be used or may manage the funds in house however many community benefit funds are managed wholly or partially by members of the relevant community.
In Argyll and Bute the following management structures are in place:
- Full management by a local community wind farm trust;
- Management by a local community council or wind farm trust under the Argyll and Bute Wind Farm Trust;
- Management by a third party – usually with a local decision panel;
- Management by the developer.
The structure of the organisation and the decision making process will vary dependent on the model used however in all cases decision making process should be transparent and open to public scrutiny. Support and advice is available to community councils and wind farm trusts on a number of matters online from the Governance department of Argyll and Bute Council.
Guidance on managing community benefit funds is also available from:
Community Benefit Guidance Package to guide communities through the process of establishing and managing a community development fund.
Investing in Your Community – A Guide to Managing Community Funds. The guide explains how communities can distribute income from contributions made by a commercial developer as well as from their own renewable energy projects.
Community Renewable Energy Toolkit provides guidance at section 7 regarding the management of community funds. The Toolkit also provides guidance on developing community owned renewables.
Maximising the benefit of funds
The provision of a community benefit fund over the lifetime of a wind farm can provide a unique opportunity for long term investment in local communities. It is important that funds are spent in a way which maximises the benefit for the community over the lifetime of the wind farm and beyond.
It is important to identify what is important to your community so that you can prioritise spend in that area. Does your community need jobs? Child care? Community facilities? Housing?
You could maximise the benefit of the funds by:
- Setting up a community company to provide a service which isn’t currently available but which is needed by local people, such as at Cairndow Community Childcare. This could also provide jobs for local people or offer the opportunity for apprenticeships for young people.
- Investing in a renewable energy project which will generate additional income for the local community.
- Setting up an endowment fund and investing so that funding is available after the lifetime of the wind farm.
A seminar for communities regarding community benefit was in June 2014 and considered how communities could make an impact with community benefit. Recordings of the presentations from this event are available on the Achieving Impact with Community Benefit Funds page.
Commercial developers of new, pre-planning proposals should also consider allowing the local community to buy a share in the windfarm which can bring additional revenue to the community - see Joint Ventures and Co-operatives for further information on this type of model.
The best way to identify your community’s requirements is through a community development plan which has been consulted on widely and which represents the views of the community.
Support is available from the following in relation to developing your plans:
- Community consultation and community plan development - Community Development Team
- Business Planning – Business Gateway
- Setting up a community business – Social Enterprise Team
- Workforce training and schemes for long term unemployed – Employability Team (Skills Development Scotland can also provide assistance in relation to modern apprentices and skills).
Community Renewable Energy Toolkit provides guidance at section 8 regarding the development plan process.
Development Plans section of the Community Benefit Guidance Package provides assistance in relation to developing a plan.
Evaluating the fund
Once the fund is up and running, evaluation should be undertaken to confirm that the money being spent in a way which is meeting the objectives identified by the community.