Community benefits and shared ownership for low carbon energy infrastructure: our response

1. Do you agree with the principle that developers must provide community benefit funds? Please explain why/why not.

We agree with the principle that developers must provide community benefit funds and the mandatory approach to community benefit funds proposed within the consultation. Local communities should benefit from hosting renewable energy infrastructure in their local areas, as this would enable them to experience tangible benefits as the renewables roll out accelerates to meet the Clean Power 2030 target.

From our experience supporting communities through the Scottish Government’s CARES programme, we know that while a voluntary approach to community benefit fund has worked well, it is open to regression.

For example, the Scottish community benefit register currently shows two windfarms in construction offering below the £5k per installed megawatt per annum as recommended in the Scottish Government’s Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments.

The two projects are Sneddon Law, which is offering £2,500/ MW per annum, and Kennoxhead Phase 2, which is offering £3,500/ MW per annum.

As the consultation document notes, the voluntary approach does not guarantee consistency or quality of community benefit funds, creating a postcode lottery for what communities receive. Research has found that a voluntary approach can create issues around public fairness and trust.

This is because outcomes for communities can be vastly different as they are dependent on the negotiation process with developers. A mandatory approach would ensure consistency, as well as help to streamline the process by making it clear to communities and developers what the expectations are and helping to reduce disputes.

2. Considering the policy parameters for the scope proposed above, what types of low carbon energy infrastructure should be included within the scope of the policy? Please provide your reasoning.

We are broadly supportive of the following low carbon technologies being considered within the scope of the scheme:

• offshore wind
• onshore wind
• solar panels
• tidal
• hydroelectricity
• battery energy storage systems
• long duration energy storage
• hydrogen to power

All these technologies will utilise local or regional resources and as such, should benefit the communities who are hosting infrastructure in their area. Including these technologies within the scope of the policy will also help generate community support for these projects as people will feel the benefits of projects on their doorstep.

However, we would stress that DESNZ should put further consideration (including additional analysis and research where appropriate) to understand the impact of including different technologies within the scope of the scheme, given their different business models and levels of commercialisation.

3. What would be the impacts on specific low carbon energy infrastructure technologies of bringing them into the scope of this potential scheme?

We do not have a view.

4. Do you agree that there needs to be provision for amending the scope of the policy in future to ensure that it can be adapted to fit future technological changes, and remains in line with the criteria set out above? Please provide your reasoning.

We agree that there needs to be provision for amending the scope of the policy to fit future technological changes, especially as several technologies are still in the process of reaching commercialisation.

5. Do you agree with the approach outlined for the provision of community benefits for co-located infrastructure? Please provide your reasoning.

We would recommend that co-located assets should only be considered separately where they are separate projects altogether, with separate revenue streams. However, if there are multiple energy infrastructure assets that are each part of the one project being undertaken by the same license holder, then they should be treated together. This is due to several reasons:

• Co-located technologies tend to complement each other (i.e. battery energy storage systems on a wind site can dispatch when the wind is not blowing).
• Treating all co-located infrastructure separately would increase the administrative burden on developers and communities alike.

6. Do you agree with the proposed mandatory community benefits threshold of 5MW for power generating and storage assets? Please provide your reasoning.

While the 5MW threshold will be proportionate for certain technologies, the threshold will likely need to vary by technology type due to the different costs and capacities associated with each. For example, if hydro schemes were to be included within the scope of the policy, we would recommend a threshold lower than 5MW due to their typically lower capacities.

We would recommend the UK Government give further consideration (including additional analysis and research where appropriate) to determining what thresholds may be appropriate for different technologies for a mandatory community benefit scheme.

7. Should the threshold vary by technology in order to accommodate nascent technology (such as floating offshore wind)? Please provide your reasoning.

As discussed in our response to Question 6, we would recommend the UK Government give further consideration (including additional analysis and research where appropriate) to determine where thresholds should be set for different technologies due to differing capacities and levels of financial viability.

8. How should shared ownership arrangements interact with any mandated community benefit fund contributions?

Any community owned shares in shared ownership projects should be exempt from the mandatory community benefit fund scheme. This is because all income from community shared ownership accrues to the community already. It would also mean less income for the community to pay off any debt they incurred to buy their share of the project.

We know from our work supporting communities to engage with shared ownership opportunities in Scotland that accessing finance at rates low enough to take up shared ownership is already challenging. Adding in a requirement to comply with a mandatory community benefit scheme on their share would create an additional and unnecessary barrier for communities.

As such, we would recommend that the requirement to pay into the community benefit fund should fall to the developer based on their share of the project. This should sit alongside a requirement for developers to offer shared ownership on all projects as discussed in our response to Part 2 of the working paper.

9. Are there any project types that should be exempt from a potential mandatory community benefits scheme?

We propose that wholly-community owned projects should be exempt from a mandatory community benefit scheme. While a threshold of 5MW would likely see a substantial proportion of wholly-community owned projects exempt, an exemption should be included regardless of size.

This is because wholly community owned projects already channel all benefits to the local community and are not for profit organisations. We would also be concerned around the level of administrative burden on community energy organisations if they had to comply with a mandatory scheme, as they are often reliant on volunteers and may have limited time and capacity.

10. For those developers already offering community benefits on a voluntary basis, how are these funded?

We do not have a view.

11. Recognising the need for flexibility, are there any impacts or considerations of funding community-led projects that should be taken into account?

We have highlighted several considerations in relation to funding community-led projects in our response to Question 19. In particular, many community organisations that will be delivering projects rely on volunteers and will be looking to fund core staff to support project development. We would not want to see this prohibited by the scheme.

12. Do you foresee any challenges for developers to fund mandatory community benefits? Does this differ between technologies?

While we recognise that affordability may pose a challenge for some developers, we cannot provide more than anecdotal evidence on this. As such, we think it would be beneficial for the UK Government to consider in more detail (eg by conducting additional research) the level of benefit that may be appropriate and how this may differ by technology.

13. How can significantly larger community funds be best managed (requirements to use regional funds, introduction of a cap on funding, limit on cap duration)?

We would recommend considering the use of regional funds to manage significantly larger community benefit funds. Regional funds are already being taken forward by the sector and as such, this is not a new concept for managing larger funds.

For example, in addition to their local funds, SSE runs the Sustainable Development Fund which aims to support projects operating in regional areas beyond those near their onshore wind farms. This helps to spread the benefits to a wider community beyond just those near renewable energy projects.

14. Do you have a preference for either of the proposed methods for calculating the level of contribution payable in respect of energy generating stations (i.e. by reference to either installed capacity or generation output)? Are there any further considerations relating to either option which require exploration?

We recognise there are potential benefits and risks with each approach, as has been outlined in the consultation document, and as such we don’t have a firm preference regarding the two options outlined. While Option 1 has the benefit of simplicity, Option 2 is likely fairer for developers as it better reflects their revenue streams.

However, there are several considerations we would raise in relation to Option 2. Firstly, it would potentially create lags in payments being made due to the time it would take to calculate the level of benefit dependent on generation output. In contrast, Option 1 is constant and predictable, making it easier to distribute funds in a timely manner.

Additionally, if Option 2 was taken forward, it would need to be set out how constraint payments made to renewable energy developers would interact with a mandatory community benefit scheme, which is not made clear in the analytical annex.

Given that constraint payments are part of the total revenue incurred by developers, there is an argument to be made around ensuring they are included within a mandatory community benefit scheme if Option 2 were pursued. This would not be a consideration if Option 1 were pursued.

As the level of benefit would likely need to vary by technology type, as they each have different costs impacting their financial viability, we would recommend getting additional data on this to support work to determine an appropriate level of benefit.

15. Do you agree with the principles of seeking to enable combining funds and utilising regional funds?

We are supportive of both principles and the need for flexibility depending on the projects and communities involved.

Combining funds

We agree with the principle of seeking to enable communities to combine community benefit funds. This would enable communities to benefit from larger funds which could be invested into more impactful and strategic projects within an area.

Regional funds

We agree with the proposal that the scheme should seek to enable utilising regional funds where appropriate. As noted in the working paper, offshore wind projects present an opportunity for regional funds to exist in parallel with a local fund and larger community benefit funds may be better managed at a regional level.

16. Do you agree with the outline proposals for a) when payments apply, b) index linking, c) changes to project lifespan/capacity/ownership, and d) suspension of payments?

We broadly agree with the outline proposals within the consultation documents. We would only highlight that when an asset is not operational, there needs to be clarity around what would constitute an ‘extensive period of time’ so that it is clear when payment suspension will apply.

17. Do you agree with the proposals to place the developer obligations for community benefits on the relevant licence-holder (e.g. a licence for generation of electricity under the Electricity Act 1989)? Are there any further considerations that should be taken into account regarding ownership and change of project ownership?

We agree with the proposal to place the obligation on the relevant licence-holder. This will make the process of switching to the new owner automatic, removing the burden of negotiation for the community.

18. Are there any other aspects on funding that should be considered?

We have no further considerations to raise.

19. Do you agree or disagree that we should not produce prescriptive guidance on what the fund can be used for? Are there any other factors that should be considered?

We agree that the UK Government should not produce prescriptive guidance on what the fund can be used for.

Decisions on how community benefit funds are used should be led locally and communities themselves should have the primary say in how community benefit funds are used. However, it is important to acknowledge that communities may not always be fully aware of what is possible, what opportunities are available within their area and how they could use funds in the most impactful way.

While we do not support a prescriptive approach, we would recommend providing guidance to help communities make informed choices. This could provide a list of indicators that the community benefit package should look to achieve, with energy-related projects (in the broadest sense) emphasised as a priority to support the wider transition to net zero. This could look like the indicators/objectives that have been developed as part of community action plans we have supported and we would highlight the 9CC groups community action plan as an example of this.

Sharing case studies, as we have done through Local Energy Scotland, can also be an effective tool to allow communities to see what would be possible within their area. It was welcome to see the UK Government’s commitment to launching targeted, regional communication campaigns from 2026 as part of the recently published Onshore Wind Strategy and we would recommend this as an avenue to share examples of good practice within a region.

With regards to potential limits on the use of funds, we know from our work supporting communities in Scotland that many community groups are looking for core funding to support project development and we would not want to see funding to hire staff within community groups prohibited by the scheme. This could hold back benefits with significant additionality such as community retrofit schemes.

We would also recommend that communities are given the flexibility to save and/or invest community benefit funds, rather than being obligated to spend them within a single year.

From our experience supporting community groups in Scotland, we know that currently developers often require these funds to be spent annually, with some community groups reporting that failing to exhaust these funds could result in reduced allocations in subsequent years. Allowing communities to save or invest the funds would enable more strategic, long-term planning and ensure that resources are used effectively to meet community needs. 

20. Do you agree with the suggested roles and responsibilities defined for the developer, fund administrator, administrative body, community representatives and community, and with the proposed governance structure? Would you suggest any amendments?

We would highlight that there is currently no proposed body responsible for delivering an impartial, expert support service in England to help communities engage with developers or provide support on how best to deliver community benefit funds. We know the importance of this function through delivering the Scottish Government backed CARES scheme, discussed further in our response to Question 30.

We would also highlight that from our experience supporting communities in Scotland, we know that some communities can resent a fund administrator being appointed and paid for by the developer.

As such, where possible it should be local community organisations who are responsible for engaging the community and co-ordinating how the fund will be delivered. An impartial, expert support service will be critical to supporting these organisations effectively deliver funds and as such, we see it is a key missing piece in the proposed administration of the scheme in England.

We welcome the consultation’s proposal for a community benefits register to be managed by a central administrative body. We would recommend that this aligns with the Scottish Government’s existing community benefit register that is hosted on the Local Energy Scotland website.

The Scottish Onshore Wind Sector Deal included a commitment for the register to be updated on an annual basis and it is the developers who are responsible for this. A similar approach should be taken for any register in England and Wales created to support a mandatory community benefit scheme, with set timelines for updating to ensure records are accurate and the true impact of the scheme is captured.

We also suggest that there should also be a shared ownership register alongside a community benefit register, which is discussed in more detail in Part 2 of our response.

21. Do you agree that some flexibility in the governance structure is needed? If yes, do you think that the suggested ‘truncated’ governance approach would adequately capture and reflect the needs of smaller funds or communities with less capacity?

We do not have a view.

22. Do you agree with the proposed approach to the decision-making process?

As discussed above in Question 20, some communities may resent key decisions around the community benefit fund being made by a fund administrator who is appointed by and paid by the developer. Additionally, communities may want to make decisions around the delivery of the community benefit fund themselves.

This issue needs to be considered within the proposed governance structure and can be overcome by passing funds directly to appropriately governed local community organisations who will already have existing knowledge of the local community and their needs.

23. Do you agree with the deadline of one year before payment is due for having governance structures in place?

We recommend that the one year deadline for having governance structures in place is flexible. This is because community benefit payments may be made in advance to pay for getting governance structures set up or to pay for urgent projects.

24. What would be an appropriate cap on spending from the fund for administrative functions? What costs can you anticipate the fund structure would entail? What costs have you incurred in setting up voluntary schemes? Do you think we should set out a sliding scale for larger projects?

We do not have a view.

25. Do you agree with the suggested approach to enforcement of this potential scheme? To what extent do you think the enforcement mechanism outlined above is appropriate and proportionate for this potential scheme? What other details could be considered?

Yes, we agree with that the suggested enforcement approach Is appropriate and proportionate.

26. Do you agree with the proposed chain for dispute resolution between communities and administrators? Is the proposed escalating chain for resolving disputes appropriate and proportionate? Do you think we should include any more specific instances or reasons for enforcement action to ensure the robustness of the scheme?

We would highlight that the current proposed chain for dispute resolution does not make it clear whether communities can escalate directly to the administrative body in the first instance or whether escalation must happen through the fund administrator.

We would recommend that it is made clear to communities that they can escalate directly to the administrative body during the dispute resolution process, as this makes it fairer for communities who may have a dispute or a breakdown in relationship with the fund administrator.

27. Should consideration be given to imposing any of the proposed enforcement actions on other persons or groups under the scheme? Please provide your reasoning.

We do not have a view.

28. What do respondents think would be a practical use for any additional revenue generated from civil penalties?

We propose that any additional revenue generated from civil penalties should be directed to communities that are geographically disadvantaged and less likely to benefit from the scheme due to lack of proximity to projects. For example, revenue could be directed to fuel poverty alleviation initiatives in dense, urban areas.

29. Do you think a case-by-case approach to defining the community is appropriate? Are there any other bodies or groups not listed above that should be part of the engagement process for determining eligibility?

We agree with a case-by-case approach to defining the community for a mandatory community benefit scheme.

One approach that we see from our work supporting communities in Scotland that may be of interest is offering community benefits to the community council areas (similar to parish and town councils in England) that are included in the planning consultation.

The community is defined as every community council in which the project is located in, as well as all adjoining community council areas. This approach is familiar to developers and would be easy to adopt across the rest of GB.

Another approach that may be of interest to the UK Government as an example of best practice is the ‘Local community fund matrix’ developed by the 9CC groups in Scotland, which aims to distribute funds more fairly. The matrix has three indicators to calculate each individual communities’ allocation, although this may be more difficult to adopt for every community:

• population
• distance from turbines
• Scottish index of multiple deprivation

30. Do you agree that capacity building will be required in communities? What do you believe this should look like and who do you believe is best equipped to carry this out? Please provide reasons for your answers.

We agree that capacity building will be required to enable communities to engage in the proposed community benefit fund scheme. As the working paper recognises, time, knowledge and resources are required of the community to consider community benefit proposals and develop fund governance. Without capacity building support, there is a risk that high capacity communities will benefit the most from the scheme

In practice, we would point to the Scottish Government’s Community and Renewable Energy Scheme (CARES), which provides impartial, expert advice and support for communities who have been approached by commercial developers. CARES can support with discussions between communities and developers, as well as provide support for Community Action Plans regarding the distribution of funds.

There is a need for a dedicated support service in England, which draws lessons from existing support available in the devolved nations, that acts as a key piece of infrastructure to support a mandatory community benefit scheme.

Standardising documents and agreements could also simplify and streamline the process for communities and developers alike.

Facilitating communication among communities could also support capacity building by enabling groups to ask questions of other groups, share knowledge and experience and solve problems collaboratively. Communication could be by region (i.e. community groups working in a particular region) or by developer (e.g. community groups working with a particular developer).

31. Do you agree that capacity building and engagement should be funded by the community benefit fund administration budget? What do you believe should be done in cases where the administrative cost of capacity building and engagement initiatives are too costly for smaller-scale projects?

We agree that capacity building and engagement should be funded through from the community benefit fund as part of the administration budget. In instances where the community benefit fund is insufficient, capacity building should be paid for through a dedicated support service, similar to the Scottish Government’s CARES programme, as suggested in our response to Question 30.

32. Do you agree community engagement should be led by the fund administrator? Do you believe our proposals have any unfair impacts on those with protected characteristics? If yes, which groups do you expect would be specifically impacted? Please provide supporting evidence.

As much as is reasonably possible, community engagement should be led by an existing local community group or organisation, as they are more likely to have the local knowledge to effectively engage the community as well as administer the community benefit funds effectively.

As discussed above, this is because communities may resent or be distrustful of a fund administrator paid for and appointed by a developer. There would need to be criteria in place for any existing local group to lead this process, including around appropriate governance structures and demonstrable reach into the community.

In instances where there is no existing local community group or organisation, we would agree that engagement should be taken forward by the fund administrator.

33. Are you aware of evidence which suggests that shared ownership has or has not delivered the benefits referred to above?

We agree that shared ownership can deliver the benefits listed within the working paper and have listed some supporting evidence below:

Accelerate Net Zero

• Research into community acceptance of projects in Scotland found that both fully community owned and shared ownership models had greater community acceptance than privately owned projects.
• Research into onshore wind in the Netherlands also suggests that projects with an element of community ownership face fewer objections and delays in the planning process, supporting the idea that community ownership can lead to greater acceptance of renewable energy.
• The idea that membership of community energy initiatives can motivate members and encourage pro-climate attitudes and behaviours is supported by recent research conducted for Power to Change. This work found that by being a member of a community energy group, 61% of those surveyed knew more about renewable energy and 45% knew more actions they could take to reduce emissions. Community Energy England’s State of the Sector report also found that 76% of those involved in community energy state that community energy supported them to get involved in other climate initiatives.

Provide an avenue for community ownership and promote a just transition

• Successful projects we have supported through CARES have demonstrated that shared ownership offers an avenue for the community to take a stake in a local project. This has included projects like Binn Eco Park Windfarm which took forward a shared ownership project after changes to the Feed-in Tariff made a wholly community owned project unviable. The profits are now directed to the Binn Wind Turbine Community Fund which distributes the fund across four local community council areas.

Potential for greater benefits than privately owned projects

• Research into both wholly community owned and shared ownership of wind projects in Scotland has found that they were both associated with more equitably distributed benefits compared to privately owned projects.
• Bodinglee Wind Farm is an excellent example of a proposal that will use both shared ownership income and community benefit funds to deliver warmer, affordable homes within the local area. Initial research on the impact of the project has estimated that the combined revenue could deliver a social return on investment of 130% from decarbonising homes. It is also estimated this project could deliver between 150 and 200 full time jobs in the local area.
• Shared ownership offers the potential for community energy groups to invest revenue from their share into wider initiatives within the community, often supporting carbon reduction or fuel poverty alleviation. For example, the Fintry Development Trust owns a share in the Earlsburn Wind Farm. In 2023, revenue from the community’s share was funnelled into grants for households to install energy efficiency measures to support them with the rising cost of energy. These types of initiatives have broader benefits on health and wellbeing in the local area too.

34. Are you aware of any evidence to support other benefits of shared ownership for either communities and/or developers?

While we have included several impactful case studies in our response to Question 33, we would point to the variety of shared ownership case studies we have supported through CARES that are hosted on the Local Energy Scotland website for further evidence of the impact shared ownership can have on communities.

35. Are you aware of any risks arising from encouraging shared ownership schemes?

The main risk we consider would be that only certain communities would benefit from shared ownership. This could be a result of community capacity or geographical proximity to projects. This is discussed in more detail in our response to Question 37.

36. What are the barriers to shared ownership in Great Britain?

There are several barriers to the expansion of shared ownership in Great Britain. This includes, but is not limited to, the following:

Lack of incentives for developers to engage in shared ownership

This means that developers do not see shared ownership as being beneficial for them and risks only the particularly keen developers who want an element of shared ownership taking it forward.

Communities struggle to access low cost finance to take up ownership of their share of a project.

For a project to be economically viable for a community, they will need to have a return on investment that covers their cost of funding as well as providing sufficient surplus to invest in community initiatives. To enable this, they need access to low cost finance.

However, this can be challenging as traditional lenders, like commercial banks, will often prefer larger scale investments or may be concerned by the voluntary nature of community organisations. We know from supporting communities engage in shared ownership in Scotland that there is a strong pipeline of communities interested in shared ownership but they will be unable to participate without access to low cost finance.

Lack of community capacity to engage

Many communities will not have the time, resources and money needed to engage in a shared ownership offer. A reliance on volunteers within the community energy sector also contributes to barriers around capacity to engage.

Lack of expert advice and guidance in England

Shared ownership projects are complex, requiring in-depth technical, financial and legal knowledge. To engage effectively in shared ownership opportunities, communities will require expert advice and guidance to navigate the complexities with a variety of administrative process, make informed decisions and successfully negotiate with developers.

In Scotland and Wales, communities have access to government backed advice and support services that include provisions for shared ownership support (through the Scottish Government backed Community and Renewable Energy Scheme). However, the type of comprehensive, in-depth support available in the devolved nations has been absent in England.

Increased complexity for developers

Shared ownership can bring about additional costs and administrative processes.

Lack of awareness and understanding of shared ownership

From our recent shared ownership market engagement report in Scotland, we found that there was a lack of understanding from funders not involved in shared ownership as well as developers who hadn’t yet seen through a shared ownership project.

Potential incompatibility with the Contracts for Difference Scheme

From our work supporting communities investigate shared ownership opportunities through the Welsh Government Energy Service, we are aware that there are potential compatibility issues with the Contract for Difference scheme. Community organisations will likely require a capital grant or low cost loan to make the shared ownership offer financially viable.

However, if this is funding is publicly sourced, such as a capital grant or low interest loan available through GB Energy, community energy organisations could be locked out in instances where a private developer has a CfD offer. This is because this would go against Section 3.1 in the Low Carbon Contract Company guidance on State subsidies, specifically the requirement that “Generators cannot receive any other or additional forms of Subsidy, State aid and/or Union funding in relation to the costs of the Project”. 

37. Do certain communities face barriers to shared ownership more so than others? If so, how and/or why?

We would highlight that low income and deprived communities may face greater barriers to engaging in shared ownership. This is because they may be more likely to lack the required financial, technical and legal experiences or skills needed to engage in shared ownership projects. As community energy groups often rely on volunteers, those who do not have the time and bandwidth to get, and stay involved, can be excluded.

The ability to invest financially can also impact the ability of low income and deprived communities to participate. For example, decision making structures within community energy initiatives may be restricted to those who can invest financially, limiting participation from those who cannot afford to do so.

Additionally, there may be geographical barriers for communities engaging with shared ownership. Given that shared ownership tends to only be available to communities around projects, we have seen in Scotland that certain communities can be largely excluded from shared ownership.

For example, dense, urban areas in the Central Belt and conservation areas, like the Cairngorms National Park, are less likely to be within proximity of projects.

38. How can government ensure that low-income communities, or those experiencing higher rates of fuel poverty, are able to engage with shared ownership offers?

There are several ways in which the UK Government could ensure that low-income communities are able to engage with shared ownership. This includes the following:

Assess the current capacity of these communities

Given that the UK Government is likely to know the communities that are most likely to be impacted by generation build out in advance, a mapping exercise could be conducted to identify low-income communities and assess their capacity to engage in offers.

This exercise could be conducted by GB energy or an associated community energy support service set up through the Local Power Plan. This should include identifying any existing community organisations that could be supported to engage with an offer. These organisations are likely to already be embedded within a community and have the local knowledge and expertise to conduct community engagement.

Provide early stage financial support

This type of funding is crucial to support communities organise themselves to be able to take advantage of the share offer, particularly as many communities will be reliant on volunteers. This should include grants as well as development loans that can be written off if a project does not go ahead, which has worked well in Scotland through CARES.

This would enable communities to work with experienced organisations to support with project management, fundraising and engagement with the developer in instances where capacity is low.

GB Energy could negotiate and lend on behalf of these communities, as discussed in our response to Question 41.

Raise awareness of shared ownership within these communities

This could be considered as part of the regional communications campaigns being brought forward from 2026, committed to in the recent UK Government Onshore Wind Taskforce Strategy.

39. Do certain developers and/or particular sectors face barriers to shared ownership more so than others? If so, how and/or why?

We would highlight that developers who have not previously taken forward a project with an element of shared ownership may be less confident with the process and less likely to understand the benefits of shared ownership. This can create a barrier around developer willingness to engage.

Additionally, larger developers are more likely to be more restricted with regards to what they can offer communities. This is due to limitations imposed by their commercial structures and processes. On the other hand, smaller developers are likely to be more agile and able to adapt their commercial model for the community, making take up easier.

40. Does a particular barrier represent more of a barrier to shared ownership than others? If so, which and how?

We would argue that unless it is mandatory for all projects to have an element of shared ownership (i.e beyond just a mandatory offer), the lack of incentives for developers represents a greater barrier to shared ownership than those listed in our response to Question 36. This is because if developers are not motivated to deliver shared ownership, it becomes very difficult to reach an agreement that works for communities, even when a community has the interest and capacity to engage with a developer.

41. What actions can the government take to address these barriers and promote further uptake of shared ownership, particularly in England?

There are several actions that the UK Government can take to address barriers and promote further uptake of shared ownership. This should be viewed as a holistic policy package. We recommend the following:

Set up a community energy support service in England

This would support communities navigate the complexities of shared ownership projects. This should include providing support for understanding technical, financial and legal terms and processes, as well as advising on structuring investments and partnerships.

This should be provided at a national level to ensure there is a consistent level of support for shared ownership across the country. The Scottish Government backed Community and Renewable Energy Scheme (CARES) presents a proven framework for shared ownership support that could be replicated in England.

Expand incentives for developers to engage in shared ownership

Developers need to see that shared ownership gives them an advantage if they are to willingly engage with the process. Expanding incentives also sends a clear signal that shared ownership is valued and is being prioritised by the UK Government. This could be taken forward in a variety of ways, including:

• Prioritising projects with an element of shared ownership in the grid connection queue.
• Prioritising projects with an element of shared ownership in government subsidies for renewable energy, such as the Contracts for Difference scheme.
• Recognise shared ownership as a material consideration in planning. Through our engagement with developers in Scotland, we know this is likely the strongest way to incentivise developers to engage in shared ownership. This was also highlighted as a key recommendation in the market engagement report conducted by QMPF for Local Energy Scotland in 2023.

Set out detailed model guidance and a more standardised shared ownership model, or models

This would form the basis of shared ownership offer structures, which could then be tailored to suit the individual needs of the stakeholders involved in each project, recognising that there is no ‘one size fits all’ approach.

Detailed guidance would reduce uncertainty for communities on what is expected of them and for developers on how it would commercially impact their projects. It would also make shared ownership more efficient and cost effective by reducing the time and cost burden for all stakeholders involved.

Provide access to low cost, affordable finance for communities

GB Energy should play a role in providing this by setting up a no/low interest loan scheme for communities entering into shared ownership agreements. A loan mechanism similar to that available through the Public Works Loan Board (PWLB) could be taken forward to support shared ownership.

The PWLB provides loans to local authorities to support investment and service delivery, including discounted rates for social housing investment. The PWLB has successful supported the financing of local solar projects, including the two solar farms acquired by Warrington Borough Council. GB Energy should also mitigate risk for communities looking to secure debt finance, such as by providing government backed guarantees or underwriting support to reduce perceived lender risk.

Provide grants and development loans that can be written off to communities for early stage work

Improve public awareness of shared ownership

The benefits of shared ownership should be included within wider nationwide awareness campaigns relating to the clean power mission and supported by engagement and outreach at a local level near proposed developments. For developers, the UK Government should work with industry bodies to raise awareness of shared ownership.

The UK Government should also set up a register of shared ownership projects to allow communities and developers alike see examples of what has worked elsewhere, as well as enable the UK Government track progress on expanding shared ownership. Local Energy Scotland already hosts a shared ownership register on their website and this register forms part of the Scottish Government’s onshore wind sector deal. The UK Government should build on this existing practice for England.

Increase uptake of shared ownership options being explored by the private sector

Through our work supporting shared ownership in Scotland, we know that there are several developers already implementing innovative financial offerings for communities. This includes the model being offered by Belltown Power, among others, who offer communities a 5% stake in all projects, with the first 1% being free to encourage uptake.

GB Energy could support this by providing communities with the finance to take up the remaining 4% or go a step further in instances where capacity is low and take on the 4% stake so that the community can still benefit from the 1% being offered for free. GB Energy stakes in such projects could also potentially contribute to a national fund that could be used to support geographically disadvantaged communities who have limited avenues to take advantage of shared ownership.

We would recommend that the overarching aim should be to make shared ownership as easy as possible for both communities and developers. We would highlight the Scottish Government’s Energy Investment Fund (EIF), which ran until 2021, as an example of good practice in doing the ‘heavy lifting’ for communities, by negotiating and lending on their behalf.

The Crossdykes Windfarm case study demonstrates the importance of support at all levels. Early stage enabling work and advice was provided through CARES and the EIF played a key role in providing finance and supporting the community to finalise the agreement. GB Energy could take on a similar role to that played by the EIF, which would make the shared ownership process easier for both communities and developers.

42. How successful has a voluntary approach to shared ownership been? Should the government continue with a voluntary approach or consider expanding shared ownership, possibly via a requirement for developers to offer shared ownership to eligible communities?

We recommend the UK Government take forward a mandatory approach requiring developers to offer shared ownership to eligible communities.

Given that the onshore wind ban was effectively in place until 2024, there is little evidence of the effectiveness of a voluntary approach to shared ownership in England.

However, Scotland has taken forward a voluntary approach, with the 2017 Onshore Wind Policy Statement setting a target for half of newly consented renewables to have an element of shared ownership by 2020. Good practice guidance has also been available in Scotland, yet to date, take up has been lower than anticipated, with only 0.2% of wind power in Scotland having an element of shared ownership.

Additionally, the online register that lists all the shared ownership projects CARES is aware of in Scotland shows that nearly half of all projects (15/32) were delivered by one developer and one community developer specialist, Nadara in partnership with Energy4All, and we have not seen widespread delivery by any other developers. This is significant as it demonstrates that under a voluntary approach, shared ownership is dependent on the willingness of the developer.

From our work supporting communities in Scotland, we are also aware of instances of developers offering unusual opportunities under the ‘shared revenue’ category that are not acceptable or are unworkable for the community. For example, one developer offered a time limited bond-like opportunity that the community did not agree was shared ownership.

Another developer offered the community the opportunity to be a junior lender, yet this was unworkable for the community because it would have had to borrow funds to invest at a similar interest rate they would receive from lending to the project. This would have meant no profit margin would have been created for the community.

We also know that there continues to be challenges with developers being unwilling or refusing to offer shared ownership. Pursuing a mandatory requirement for developers to offer shared ownership to communities would address this. A mandatory approach would also provide communities with a degree of certainty that there will be shared ownership offers available, allowing them to prepare adequately to engage.

However, we would note that setting a mandatory approach does not by itself address either the capacity of the community to engage or the willingness of the developer to negotiate and develop workable offers with the community. As such, we strongly recommend that it is pursued alongside a comprehensive policy package to unlock shared ownership, discussed in our response to Question 41. We would particularly emphasise the need to incentivise developers, as this is critical for them to engage productively in the offer and follow through on it.

43. If shared ownership is expanded, should regulations be made in accordance with the existing provisions relating to the ‘Community Electricity Right’ in the 2015 Act? If you consider that amendments should be made to the scope of the existing provisions, what changes should be made and why?

While the existing provisions relating to the ‘Community Electricity Right’ in the 2015 provides a strong starting point, there are several amendments that we believe should be considered, which are listed below:

The provisions should not be limited to onshore technologies and should also include offshore wind

This would future proof the regulation and align with the Scottish Government, who have recently consulted on the potential for shared ownership of offshore wind projects. We are also aware of the developer Nadara already developing three offshore wind projects in Scotland, working in partnership with Energy4All to deliver shared ownership on the sites, demonstrating that this is already being considered possible by developers.

The type of stake offered to communities should be joint venture, shared revenue or split ownership models

These are the existing shared ownership models that we have seen and supported in Scotland and there are not any others that stand out as working for developers and communities alike. These are also the three models cited in the Scottish Government’s Good Practice Principles for Shared Ownership Opportunities of Onshore Renewable Energy Developments.

The minimum stake offered to the community should be set at 5% and not below.

Consideration should be given to requiring shared ownership offers on all projects on public land

This has already been taken forward by Forestry and Land Scotland, who have included requirements around giving communities the opportunity to invest in renewable energy projects as part of their land auctions and lease agreements. This would help lead the way in the sector and set examples of best practice for industry to follow, helping to normalise shared ownership.

44. If shared ownership is expanded, how will communities and developers need to be supported for a mandatory shared ownership scheme to be successful?

There are several ways communities and developers will need to be supported for a mandatory scheme to be successful. Several of these policies are outlined in further detail in our response to Question 41.

• Set up a community energy support service in England to provide a single point of contact for communities looking to pursue a shared ownership offer, providing access to in-depth advice.
• Support communities to access affordable finance. This will be critical if communities are going to be able to afford to take up a share offer.
• Set out detailed model guidance and a more standardised shared ownership model, or models, to simplify the negotiation process for both communities and developers.
• Develop template legal documents, such as MoUs and NDAs to allow communities to engage quickly, as well as template documents to complete projects, such as shareholder agreements.

45. If shared ownership is expanded, should there be exemptions to the expansion?

We would recommend that 100% community owned projects should be exempt from the requirement to offer shared ownership, as they already provide an avenue for community involvement and create substantial local social and economic benefit to the communities they are located in.

A robust definition of community owned should be put in place, so this is not open to misuse, ensuring the project is owned by a community group with an appropriate legal structure, such as a co-operative or community benefit society.

46. If shared ownership is expanded, how should developers’ engagement with communities take place?

We see a potential role for GB Energy in facilitating developers’ engagement with communities, particularly in instances where capacity is low. If GB Energy were to facilitate the negotiation with developers, this would reduce the time and capacity required of communities.

It would also likely be preferable for developers who are not familiar with engaging directly with communities and may lack trust in the community’s capacity to participate in often large, complex projects.

We would also recommend that engagement is conducted as early as possible during the pre-planning application phase, aligning with the Scottish Government’s Onshore Wind Sector Deal. This would ensure the community has sufficient time to organise and raise funds to take up their share of the project.

The UK Government should also set out engagement principles for shared ownership opportunities, so both communities and developers understand how they should be approaching engagement and their roles and responsibilities. This has already been taken forward in Scotland, with the Scottish Governments Good Practice Principles for Shared Ownership of Onshore Renewable Energy Developments.

46. Are you aware of any risks or potential adverse impacts arising from expanding shared ownership either in line with the 2015 Act provisions or otherwise?

There are several risks that could come from pursuing a requirement of developers to offer shared ownership in line with the 2015 Act provisions. However, these could be mitigated against by viewing a requirement as part of a holistic policy package to unlock shared ownership and taking forward our recommended policy in response to Question 41.

Take up could remain low

The provisions made under the 2015 Infrastructure Act, if enacted, would only require developers to offer communities a share in their projects. This does not guarantee that an offer will be workable for the community or that it will turn into legally binding agreements with communities.

From our work supporting communities in Scotland, we know that having a developer who is willing to engage is key to getting workable shared ownership offers. This is why we recommend introducing a mandatory approach alongside key incentives to allow developers to see an advantage from shared ownership, as discussed in our response to Question 42.

Take up could be limited to high capacity communities

There is a risk that take up could be limited to communities who have the time and resources to engage and negotiate with developers effectively. This could potentially mean the benefits of the policy were not equitably dispersed across the country.

To mitigate against this, advice, support and capacity building will be critical. If the 2015 Act provisions are enacted, the UK Government should consider monitoring and reporting on the impact of the policy. This should include analysing the demographics of the areas that are participating in shared ownership.