Our response to the Scottish Government’s consultation on community benefits from net zero energy developments

As a partner in Local Energy Scotland, a consortium that manages and administers the Scottish Government’s Community and Renewable Energy Scheme (CARES),we have significant experience in community benefits derived from large scale onshore wind development.

We believe that the communities who are currently consulted in the consenting process should serve as the starting point for identifying the relevant communities for offshore wind development. The consenting process requires that relevant communities are identified and it is this process that we believe could be extended and adapted for offshore wind projects. We acknowledge, however, that offshore wind projects come with differences in scale and complexity that may require adjustments of additional considerations.

We also think that the review of the Good Practice Principles for offshore wind, together with the recent UK Government announcement on establishing a National Wealth fund as mentioned in the consultation, could provide the opportunity for community benefits to benefit broader groups across Scotland, particularly those not covered by the current approach.

We think that the starting point for defining the factors which should be considered when defining the relevant communities to receive benefits from offshore wind development should be the factors that are currently considered as part of the consenting process.

One approach that it might be useful for the Scottish Government to consider is ‘‘The Local community fund matrix’ developed by the 9CC group to distribute the funds more fairly. The matrix has three indicators to calculate each individual communities’ allocation: population; distance from turbines; Scottish index of multiple deprivation.

In line with existing good practice principles which state that decisions about the details of how community benefits are used should be led locally, communities themselves should have the primary say in how offshore wind community benefits are used.

However, it is important to acknowledge that communities may not always be fully aware of what is possible or what opportunities are available in their areas. Therefore, a balance needs to be struck between local decision making and providing the necessary guidance to help communities make informed choices.

When considering who should decide how offshore wind community benefits are used, it might also be useful to look at approaches taken under programmes such as LEADER which engaged local actors in the design and delivery of strategies, decision-making and resource allocation for the development of their rural areas.

While local communities and organisations, such as development trusts, should be at the forefront of decision-making, there is a role for other organisations such as Highlands and Islands Enterprise and South of Scotland Enterprise to offer support and guidance and to help communities build ambition, identify opportunities and offer expert advice on strategic planning.

We also think it is important that the use of community benefit funds is not restricted by local developers. Community benefit funds should be administered by incorporated local groups and used or distributed for activities that further the purposes in their governing document.

Ideally, communities should also be given the flexibility to save and/or invest community benefit funds, rather than being pressured to spend them within a single year. Currently, developers often require that these funds be spent annually, with some community groups reporting concerns that failing to exhaust the funds within one year 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.

There are a number of things that can be done to help maximise the impact of community benefits from offshore wind, including:

• Collaboration between support agencies. Support agencies such as Community Energy Scotland, Development Trust Association Scotland, and Local Energy Scotland should collaborate to share best practices with their members and networks. Such collaboration could help to standardise approaches and ensure that successful strategies are replicated across different projects.
• Encouraging offshore wind developers to submit annual reports to the community benefits register. While the online community benefits and shared ownership register includes offshore wind projects, more could be done to encourage offshore wind developers to submit annual reports to the register. This would help to ensure that a wider variety of experiences and good practices are captured and shared, providing an even more valuable resource for communities and developers.
• Facilitating communication among community groups. Community groups need easy and effective routes to communicate with each other in order to ask questions, share experiences, 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).

Directing community benefits towards larger scale, longer term, or more complex projects has the potential to deliver truly transformational impacts, rather than smaller, shorter-term impacts. Such projects have the potential to provide lasting improvements to local economies and to local infrastructure.

However, to ensure their success, it is critical that funding is secure and guaranteed for the long term. Communities need to be confident that financial resources will be available so they can plan effectively over extended periods. To provide this certainty, secure benefit agreements between developers and communities for each project need to be in place.

We agree that local, regional and national approaches all have roles to play in delivering community benefits from offshore wind developments.

While it makes sense for onshore wind projects to focus benefits on local communities where the projects are situated, offshore wind projects present an opportunity for broader regional and national funds to exist in parallel with a local fund.

All bill payers pay for Community Benefit Funds, so having wider regional and national funds would help to ensure fairness in terms of access to and benefit from Community Benefit Funds. We therefore suggest allocating some of the community benefit funds from offshore wind projects to local communities, while also making a portion available at regional and national levels.

There is a risk that community benefit funds primarily benefit high-capacity communities (i.e. communities that have the ability to access these funds effectively, along with the skills, and organisational structures to manage and utilise the community benefit funds for local development projects), leaving others at a disadvantage. In this context, we recommend that the Scottish Government commissions an independent study on the impact of community benefit funds to date.

This study should explore how these funds have been used and whether they are addressing the needs and priorities of local areas and having positive impact on the lives of community members. Additionally, it should analyse the demographics of the areas receiving funds. If funds are not reaching areas of high deprivation or not improving outcomes in those areas, the study should investigate why.

We do not have a firm view about what just and proportionate community benefits from offshore wind developments look like in practice. However, we believe that communities should benefit from improvements to their quality of life as a result of these developments.

One potential approach could be to structure community benefits on a part-performance basis, with a fixed amount plus a top up depending on the performance of the wind development. Such an approach might be more affordable for developers than alternative approaches and akin to profit sharing for communities.

We also note that it might be helpful for the Scottish Government to commission research on the profitability of offshore wind projects and the affordability of providing community benefit funds to inform its consideration of what just and proportionate community benefits look like in practice.

We think that the following would be helpful in assisting communities and offshore wind developers in agreeing appropriate community benefits packages:

• Encourage developers to make use of existing available support from Local Energy Scotland, the TSI network, HIE, SoSE etc.
• Consider the provision of additional support for developers to navigate the complexities of community engagement and benefit agreements, as they are often not community development specialists, but are being asked to take on this role.
• Support developers to improve their understanding of community-level governance and charity regulation in Scotland so that they feel more confident in awarding funds to community bodies.
• Standardising documents and agreements could also streamline the process and ensure consistency, making it easier to compare and evaluate community benefits packages across different projects. We note the ongoing efforts of the Scottish Government and Scottish Renewables in this space and look forward to seeing continued progress in this area.
• Make local, regional and national plans available in one place so that communities and developers can easily find and use this information to inform and enhance plans for spending community benefit funds.

We also note that getting Memoranda of Understanding (MOUs) in place early on can help lay the groundwork for community benefits agreements and ensure that both parties are aligned from the start. As noted in the Scottish Onshore Wind Sector Deal, early engagement between developers and communities is key to establishing clear, fair and actionable community benefit commitments.

Offshore wind developments present significant potential for shared ownership opportunities for communities. However, the scale of offshore wind, with large-scale turbines generating substantial amounts of energy, means that it may be challenging for individual communities to be involved in such projects.

For shared ownership opportunities from offshore wind developments to become a reality, communities will need substantial support, particularly with raising finance. In this context, we note that organisations such as the Scottish National Investment Bank (SNIB) or GB Energy may have a pivotal role to play here.

We think that the following support could be offered to communities and developers to create opportunities and potential models, and for communities to take up these opportunities:

• The availability of affordable financing options. If communities need to take on debt, the terms must be manageable. Long-term patent finance is required to support community investment and we think that GB Energy could have a role to play in providing such finance. The Scottish Government should therefore consider working with the UK Government and GB Energy to determine the role that GB Energy could play in providing such finance.
• Expert advice and guidance. Communities require expert advice and guidance to navigate the complexities of offshore wind projects. This could include support for understanding technical, financial, and legal aspects, as well as advice on structuring investments and partnerships. Providing funding for project advisors would ensure that communities are well-equipped to make informed decisions and successfully engage with developers.
• Grant funding should be available to help communities to develop propositions.
• Support to help communities access funds so that they have the financial means to participate once an agreement with a developer is in place. This support could include helping communities navigate available funding options or access low-cost financing.

• Wind
• Solar
• Hydro power (including pumped hydro storage)
• Hydrogen
• Battery storage 
• Heat networks
• Bioenergy
• Carbon Capture, Utilisation and Storage (CCUS) 
• Negative Emissions Technologies (NETs)
• Electricity transmission
• Other – please specify in question

We think that all of the onshore technologies listed should be in scope for the Good Practice Principles.

We think that all of the onshore technologies listed should be in scope for the Good Practice Principles. Each of these technologies will utilise local resources and should benefit local people. Ensuring that each is in scope for the Good Practice Principles will help to maximise community involvement and support.

We note that each technology comes with different costs, capacities, etc. and therefore different levels of community benefit are likely to be required for each. While the £5k per megawatt model works well for wind, it may not be appropriate for other technologies. We recommend that the Scottish Government undertake appropriate research and analysis to ensure the right levels of benefit can be recommended for each technology.

Ideally, any Good Practice Principles should be set at a high enough level to ensure that they cover all of the technologies selected.

It will be important that there is sufficient flexibility within the principles to account for hybrid projects for example wind, solar, and battery combinations which might require a different approach than a single technology project.

We also think it will be important to develop a general principle regarding the calculation of community benefit in terms of pounds per megawatt that can cover all of the technologies selected.

Yes, improvements need to be made to how eligible communities are identified to ensure broader and more equitable access to community benefits.

Some communities, especially those near onshore wind farms, may be slightly outside the area of benefit, and therefore miss out on community benefit funds. While the Good Practice Principles already allow for the widening of these communities, and developers have the discretion to decide on the allocation of community benefit funds, the reality is that most communities prefer that community benefits remain local and developers generally aim to prioritise the local communities that are consulted during the planning process.

SSE has addressed this issue by dividing community benefit between local communities and a regional strategic fund. This model could be replicated, aligning with local, regional, and national allocations, as well as the Community Wealth Building (CWB) strategies suggested elsewhere in this consultation.

We also think that an independent study to determine the impact of community benefit funds to date, as we recommend in our response to question 8, would be useful in this context.

Yes, more direction should be provided on how and when to engage communities in community benefit opportunities, as well as when arrangements should take effect. This would help to ensure consistency across the sector and encourage early, meaningful engagement with communities.

The onshore wind sector deal offers a useful starting point for defining community engagement timelines and processes. It outlines when communities should be consulted, how they should be involved in decision-making, and when benefits should begin to flow to the community.  We think that this should be built on to develop clear and detailed guidance on how and when communities should be engaged and updated throughout the development stages. Any new event, such as changes in planning status or staff, should trigger an update for communities, for example.

We also recommend that any new guidance developed considers early payments as best practice to ensure communities receive timely benefits and maintain engagement throughout the development process.

There are a number of ways that the Good Practice Principles could help to ensure that community benefits schemes are governed well, including:

• Encourage the use of existing community groups or organisations to manage community benefit funds. These groups are more likely to have the necessary experience and local knowledge to administer funds effectively, reducing the need to setup new groups to undertake this task. Continuously creating new groups to manage funds can slow down the process and add complexity.
• Encouraging local autonomy in fund management. Developers have an opportunity to provide funds that can be transformative to communities. By utilising the experience of established community organisations and allowing them to undertake larger scale projects, these funds could create a lasting legacy.
• Encourage developers to improve their understanding of community-level governance and charity regulation in Scotland. Some developers lack of understanding of the structures of community bodies prevents effective and efficient engagement and set up of community benefit funds. Providing developers with a clearer understanding of these local governance structures, including how decisions are made and the importance of community autonomy, can improve collaboration and ensure that community benefits are managed in a way that is both effective and respectful of local needs and practices. Developers can ensure that funds are administered by groups that are incorporated as charities meaning that they will be regulated by OSCR and produce annual accounts that have to be independently examined.
• Encourage the set up of regional forums for sharing experiences. These forums offer a platform for sharing experiences, challenges and solutions, promoting learning and collaboration. They can also help identify common issues and solutions.
• Encourage community groups to be given the flexibility to save and/or invest community benefit funds, rather than being pressured to spend them within a single year. Currently, developers often require that these funds be spent annually, with some community groups reporting concerns that failing to exhaust the funds within one year 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.

To ensure that community benefits are used in ways that meet the needs of the community, the Good Practice Principles should encourage flexibility and community-driven decision making.

The Good Practice Principles should also encourage developers to engage with communities and support experts earlier in the process to help guide the development of community benefit funds. By doing so, developers can better understand local needs and align the funds with regional or national priorities and development plans.

In addition, and as noted in our response to question 5 above, communities should be encouraged to learn from each other and share experiences. As well as promoting learning and collaboration, this can increase ambition and capacity.

It is important that developers understand the positive impact the funds can have on communities. To this end, there should be greater flexibility in how funds are used. Rather than an expectation that they will always be used for small, short term grants communities should also have the option to use funds for larger scale projects to achieve aims agreed in community action plans or other strategic plans. Community benefit funds are primarily to meet the aspirations of local areas and while developers may recognise the opportunity this offers for positive PR, the funds use should not be influenced by this purpose.

The Good Practice Principles should include clear guidelines for community benefit arrangements when the status of an energy project changes, such as repowering, extensions, or when a project is sold or transferred to a new owner.

Community benefit funds are often limited to a finite term and may not extend throughout the whole lifespan of a project. Additionally, these funds do not always carry over to repowered developments. Repowered projects are new projects and, as such, repowering provides an opportunity to review community benefits. We think that the process followed for community benefits for repowered projects should be the same community benefit process as for original projects.

Furthermore, any extensions, changes in scale or technological advancements during a project’s lifespan should prompt a review of community benefits. Such reviews should fully involve the community rather than being conducted unilaterally by the developer.

Yes, the Good Practice Principles should provide direction on coordinating community benefit arrangements for multiple developments in the same or overlapping geographic areas. The Good Practice Principles should be clear that where there are overlapping areas in receipt of community benefits and where communities have decided to collaborate, developers should support this and work with the community collective. Developers must also be clear that this should be led by the community.

Finally, we think it is important that any existing community benefit arrangements continue for each development and that any review of benefits fully involves the community.

There are a number of improvements that could be made to how the delivery and outcomes of community benefit arrangements are measured and reported, including:

• Undertake in-depth evaluations of the impact of community benefit arrangements. There is currently no comprehensive evaluation undertaken of the real difference these funds make to communities. Such evaluations should assess how well the funds address local needs, gather feedback from communities, and measure both short-term outcomes and long-term social and economic benefits.
• Report on collaboration. Developers and communities could report on their collaboration and collective efforts, particularly in areas where multiple projects overlap. This could help showcase the strategic benefits of working together and improve the coordination of community investments.

To help communities and onshore developers get the most from community benefits, we think that there is a need to:

• Establish a comprehensive list of available support. The Scottish Government should compile and make available a detailed list of support resources for communities dealing with community benefit funds. This list should include the TSI Scotland Network for support with governance, Foundation Scotland for intermediary services, Local Energy Scotland for the Community Benefits Toolkit etc.
• Encourage and facilitate the sharing of knowledge and experience between communities so they can learn from each other.
• Encourage and facilitate the sharing of knowledge and experience between developers to allow them to learn from each other.
• More comprehensive support for communities. Whilst we note that LES and Foundation Scotland provide some assistance to community groups to get the most from community benefits, there is currently no organisation with a remit to guide community groups throughout the process of agreeing a fund with a developer. We think that this gap needs to be addressed to ensure communities receive comprehensive support throughout.
• Provide support to help improve developers’ understanding of community groups and the processes that govern them. A key challenge is that developers often don’t fully understand how local community organisations operate which can result in developers retaining more control over community development funds than is necessary. Regular training sessions on community governance and the role of community groups would help developers better understand how local organisations work, including development trusts, their governance and how funds are managed.

Yes, we think that the Good Practice Principles should continue to recommend a benchmark value for community benefit funding.

The benchmark value should be different for different onshore technologies. While the same principles should apply across all technologies, the benchmark value should be adjusted based on factors such as profitability, capacity and costs.

To ensure a benchmark value is fair and proportionate for different technologies, as well as installed generation capacity, it should take into account factors such as profitability and affordability.

We note that it will be important to ensure transparency in the process for arriving at benchmark values for different technologies. The Scottish Government should provide clear, accessible explanations of how any benchmark figures are calculated, ensuring that both developers and communities fully understand the rationale behind these values.

As noted in our response to question 8, there is a risk that community benefit funds primarily benefit high-capacity communities (i.e. communities that have the ability to access these funds effectively, along with the skills, and organisational structures to manage and utilise the community benefit funds for local development projects), leaving others at a disadvantage. In this context, we recommend that the Scottish Government commissions an independent study on the impact of community benefit funds to date.

This study should explore how these funds have been used and whether they are addressing the needs and priorities of local areas and having a positive impact on the lives of community members. Additionally, it should analyse the demographics of the areas receiving funds. If funds are not reaching areas of high deprivation or not improving outcomes in those areas, the study should investigate why.