Community benefits from net zero energy developments: consultation

3. Consultation section 2: Onshore net zero energy developments

3.1 Scotland’s onshore net zero energy landscape

Scotland is rich in net zero energy resources, supported by a well-established onshore wind sector, a growing solar industry, a strong emerging renewable hydrogen sector, a pipeline of battery energy storage projects and notable progress and innovation across our other low carbon technologies.

In the past decade, Scotland has nearly doubled its onshore renewable electricity capacity^[57]. By July 2024, we had 12.1 GW of onshore renewable capacity installed, capable of generating around 28 TWh annually^[58]—enough to power approximately 12 million homes each year. These figures highlight how essential clean electricity will be to the future of our energy system.

The economic contribution of the onshore renewables sector is equally substantial and wide-reaching. ^[59]According to estimates by the Fraser of Allander Institute (FAI), the onshore renewables sector supported more than 28,700 FTE (Full Time Equivalent) and £2.8 billion GVA (Gross Value Added) across the Scottish economy in 2021^[60].

Independent analysis commissioned by the Scottish Government indicates there could be significant future economic and employment benefits from renewables and suggests that with the right support, the onshore wind sector alone could support around 6600 FTE and £1.1 billion in GVA by 2030^[61].

While it is clear that net zero energy developments will bring significant socio-economic impacts and benefits to Scotland, these figures also show why we need to ensure that national guidance on community benefits from onshore developments enables greater outcomes and collaboration with the local and wider communities that host them.

3.2 Community benefits from onshore net zero technologies

The Scottish Government’s Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments^[62], which were published in 2019, were developed in close collaboration with industry and communities, putting communities at the forefront of Scotland’s renewable energy ambitions. These principles encourage developers to offer community benefit packages as standard for all onshore renewable energy projects, ensuring that the benefits of wind, solar, and other renewable energy projects are shared with local communities. They stress the importance of transparent, fair, and meaningful engagement, with communities actively involved throughout the project lifecycle.

Central to this is the expectation that communities play a leading role in shaping the benefits they receive, ensuring that the packages are tailored to local needs and sustained over the long term. The principles also act as an invaluable tool for communities with little or no experience of engaging with renewable energy developers.

However, since the Good Practice Principles were last updated in 2019, Scotland’s - and the global - energy system and policy landscape have evolved significantly. Changes in domestic and international markets, regulation, and the rise of technologies such as energy storage and hydrogen electrolysers are shaping our future energy mix and will influence how we can maximise the benefits flowing into our communities. This consultation seeks views on what the Good Practice Principles for onshore net zero technologies should look like in future and will be used to inform a refresh of the current version.

The following section sets out the different onshore net zero energy technologies which exist or are emerging in Scotland. These are at different stages of maturity and have different experiences of the use of community benefits.

3.2.1 Wind

As of Q2 2024, Scotland has 9.8 GW of onshore wind in operation^[63]. The Scottish Government’s position of support for onshore wind is long-standing, clear, and unambiguous – onshore wind offers a relatively low cost of electricity compared to other technologies. Scotland’s onshore wind sector has also led the way in provision of community benefits, contributing the majority of the reported £30 million flowing to communities in the last year^[64].

Our Onshore Wind Policy Statement^[65] introduced a new ambition for a minimum installed capacity of 20 GW of onshore wind in Scotland by 2030. To support this goal, the Scottish Government worked with industry to develop the Onshore Wind Sector Deal^[66]. The Sector Deal is a shared commitment between government and industry to grow onshore wind in a way that supports a just transition.

Onshore Wind Sector Deal: Community commitments

Recognising the importance of ensuring communities across Scotland feel the benefits of the energy transition, the Onshore Wind Sector Deal contained a range of commitments including:

• The sector committed to engage communities earlier in the development process, and to meet or exceed our Good Practice Principles for community benefits;
• The sector committed to ensure community benefit agreements become binding at the point of Financial Investment Decision, and ensure community benefit and shared ownership agreements are maintained as a condition of sale or transfer of a wind farm;
• A joint commitment to establish a standard approach to the management of community benefits funds, to ensure transparency and effective reporting on the impacts in Scotland’s communities; and,
• A joint commitment to develop practical approaches to support and encourage community shared ownership models to assist developers, funders, local government and communities to engage in these opportunities.

The Sector Deal also led to the new Community Benefits and Shared Ownership Register^[67], launched on 5 November 2024, which provides easy to access information about how these funds support communities.

3.2.2 Solar

Solar power is an established renewable technology in Scotland and will play an important role in the net zero energy transition. Currently, Scotland has 653 MW^[68] of operational solar capacity, with a further 2,117 MW of estimated pipeline capacity^[69].

The Scottish Government is clear on the importance of solar in contributing to the decarbonisation of Scotland’s energy supply, and on the potential of solar to help deliver flexibility and resilience for the electricity system. Solar power spans two main technologies; solar thermal (primarily used to heat water) and solar PV (used to generate electricity). Both forms of solar are traditionally roof mounted, with options for ground mounted solar for larger arrays and unsuitable roof constructions. Large scale, ground mounted solar arrays provide a scalable solution for renewable energy generation.

The Scottish Government is keen to see the number of solar installations offering community benefits increase and we are working with the sector to consider an approach that is reflective of the sector position and delivers a lasting legacy for communities.

3.2.3 Hydro power

Hydro power has the potential to play a significantly greater role in the energy transition – both at small-scale in co-operation with local communities, and at larger scale, providing flexible services to the grid and helping to ensure a continued resilient and secure electricity supply. There is currently 1.67 GW of installed hydro power capacity operational in Scotland^[70].

Pumped hydro storage (PHS) is also a well-established technology with a long lifespan, and is a critical contributor to enabling security of supply and providing flexibility. There is currently 0.74 GW of installed PHS operational in Scotland with a further 3 GW of PHS projects awaiting construction^[71]. According to a Biggar Economics report commissioned by Scottish Renewables^[72], six PHS projects currently in development in Scotland could potentially add 4.9 GW to the UK’s pumped hydro storage capacity^[73].

Projects like these can bring significant advantages to nearby communities. For example, SSE recently launched a new £10 million hydro community benefit fund^[74], aimed at supporting projects within areas that host its existing hydro power infrastructure across Scotland.

3.2.4 Hydrogen

Alongside renewable electricity and low and zero emission heat networks, hydrogen will play an extremely important role in contributing to the decarbonisation of key parts of Scotland’s domestic economy and energy system. Our ambition is to produce 5 GW of renewable and low carbon hydrogen by 2030, and 25 GW by 2045^[75]. We expect the majority of our 5 GW ambition by 2030 to come from renewables.

Establishing hydrogen production from onshore wind, and the development of regional hydrogen production hubs linked to offshore wind, will support achieving our ambitions. The opportunity for Scotland within the developing hydrogen market surpasses our borders and Scotland can play a role in exporting green hydrogen and hydrogen products to the rest of the UK and Europe.

The production and use of clean hydrogen is a new and emerging sector, and the Scottish Government is committed to ensuring that lessons learned, and best practise principles established, by mature energy sectors are applied as appropriate to this sector as it continues to develop.

As an emerging sector, hydrogen projects are not explicitly mentioned in the current Good Practice Principles for onshore renewable energy developments. There are also no current examples of community benefits practice by the sector in Scotland.

3.2.5 Battery storage

Scotland currently has 453 MW of operational battery electricity storage systems (BESS) and 1.6 GW under construction with 7.4 GW awaiting construction^[76].

As we move towards a net zero energy system, Scotland will need increasing levels of storage and flexibility to support greater diversity of demand and greater proportions of renewable and geographically distributed electricity generation. The National Electricity System Operator (NESO) Future Energy Scenarios (2024)^[77] estimates that Scotland could need storage capacity in the range of 7.5 - 10 GW by 2030 and 11.2 - 17.5 GW by 2045. The modelling suggests that of this overall level, between 5.9 - 6.4 GW of (short duration) non-domestic battery storage could be required in Scotland by 2030, and between 6.4 - 7.6 GW by 2045.

Although BESS projects are not explicitly mentioned in the current Good Practice Principles for onshore renewable energy developments, there is currently a strong pipeline of BESS projects in Scotland with emerging proposals for community benefits^[78].

Case study: The 9CC Group community benefit fund

The 9CC Group is a consortium comprising nine community councils in the Cumnock and Doon Valley area, established to become a dedicated single trust to manage, administer and distribute community benefits from newly consented and future wind farm developments in the area. The group also wanted to strengthen community participation.

The group believes that communities should have full control over the payments of community benefits to deliver long-term regeneration.

To date, the group has completed a Community Action Plan, managed a pilot funding round and awarded significant funding to transformative community projects across the nine areas.

3.2.6 Heat networks

The Scottish Government has a statutory target to see that heat networks^[79] supply 7 TWh of Scotland's heat (and cooling) demand by 2035. The deployment of heat networks in Scotland is supported through our Heat Networks Support Unit, capital support through Scotland's Heat Network Fund and by resourcing local authorities to identify opportunities as part of their Local Heat and Energy Efficiency Strategies (LHEES).

We are also working with the UK Government to implement a new regulatory regime for heat networks, building on the powers within the Heat Networks (Scotland) Act 2021 and exploring the potential for new laws to encourage connections to heat networks where feasible.

There are a wide range of existing and potential ownership structures for heat networks in Scotland^[80]. This includes those owned by not-for-profit organisations where the profits must benefit the people within the local authority area.

The majority of large low and zero carbon district heating networks built in recent years have received funding from the Scotland Heat Network Fund and Low Carbon Infrastructure Transition Programme^[81], or the Renewable Heat Incentive (which closed to new applicants in March 2021). Due to the capital-intensive nature of these developments, it can take many years before profits arise from any project. This alongside the wide range of ownership models and a developing regulatory regime in Scotland and wider GB^[82] make a consistent expectation of heat networks in relation to community benefit, or shared ownership, difficult at this point. However, it is important for the benefit to the local community to be considered.

Heat networks are not covered by the current Good Practice Principles for onshore renewable energy developments.

3.2.7 Bioenergy

When using sustainably sourced material, bioenergy can convert organic material into a renewable energy source. The organic material, often referred to as biomass feedstock, can be processed to give a direct energy output, such as producing heat from combustion, or refined to produce a liquid biofuel or biogas.

The bioenergy sector is currently a vital part of Scotland’s circular economy, generating value from waste and by-products. In 2023, bioenergy was responsible for 4,913 GWh of renewable heat generation, which was almost 88% of the renewable heat output^[83]. There was 2,124 GWh of renewable electricity generated from bioenergy and waste, around 6% of Scottish renewable electricity generation^[84]. The pipeline for bioenergy and waste projects has 486 MW of renewable electricity capacity in development^[85].

The Scottish Government recognises that the use of, and demand for, bioenergy will evolve as new technologies, market opportunities and evidence develop. In our draft Bioenergy Policy Statement^[86], we have set out an expectation that in the longer term the bioenergy sector will transition away from unabated use, where possible, and Bioenergy with Carbon Capture and Storage (BECCS) will become the priority role.

Bioenergy is not covered by the current Good Practice Principles for onshore renewable energy developments and there are no current examples of community benefits practised by the sector in Scotland.

3.2.8 Carbon Capture, Utilisation and Storage (CCUS) and Negative Emissions Technologies (NETs)

The Scottish Government views carbon capture, utilisation and storage as essential for capturing residual emissions in our energy system^[87]. CCUS will play a role in reducing emissions in industrial and other sectors that do not have an alternative decarbonisation pathway. CCUS is also a key enabler for Negative Emissions Technologies (NETs), which are critical for reaching net zero.

The Scottish Government remains supportive of these technologies as part of the energy transition and international efforts to decarbonise. We are committed to supporting the delivery of the Acorn Transport and Storage project^[88] and the Scottish Cluster^[89] which includes a range of CO₂ emitter sources.

CCUS is mostly reserved to the UK Government, with the Acorn project being part of the UK Government’s Cluster Sequencing Programme^[90]. While there will be significant employment created and retained for the construction and operating phases of the Scottish Cluster (including Acorn), a significant proportion of the cost will be met from the public purse. Both of these points will need to be considered in the potential for community benefits.

At present there are no substantial Negative Emissions Technologies projects planned in Scotland that will drive the scale and pace needed for meeting net zero by 2045. NETs are dependent on suitable storage and so the market is not expected to develop until Acorn has been given some certainty by the UK Government. Again, NETs will need considerable support from the public purse, which would need to be considered in the potential for community benefits.

3.2.9 Electricity transmission

Development and expansion of the electricity grid will play a crucial role in delivering our energy ambitions, and grid capacity is needed to bring on renewable sources of electricity generation and further decarbonise our economy by transporting electricity to where it is needed.

The Scottish Government is clear that improvements to our electricity transmission networks must deliver lasting benefits for the people of Scotland, and we are working with the UK Government on plans for new guidance and funding framework for community benefits from different types of transmission network infrastructure, such as overhead lines and substations.

Electricity transmission is not covered by the current Good Practice Principles for onshore renewable energy developments. Regulation and legislation relating to electricity networks is reserved to the UK Government and the regulator Ofgem.

The refresh of the Scottish Government’s Good Practice Principles provides an opportunity to explore community benefits practice for transmission networks in Scotland, aligned with the forthcoming UK Government guidance.

3.3 Onshore consultation questions

3.3.1 Extending the scope of the Good Practice Principles

a) Which of the following onshore technologies should be in scope for the Good Practice Principles? Select all that apply.

• 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 1b

b) Please explain your reasons for the technologies you have selected or not selected and provide evidence where available.

Should the same Good Practice Principles apply in a standard way across all the technologies selected, or should the Good Practice Principles be different for different technologies? Please explain the reasons for your answer and provide evidence where available.

3.3.2 Improving the Good Practice Principles

Do improvements need to be made to how eligible communities are identified? For example, changes to how communities are defined at a local level, and whether communities at a regional and/or national level could be eligible. Please explain your answer and provide supporting evidence if available.

Should more direction be provided on how and when to engage communities in community benefit opportunities, and when arrangements should take effect? Please explain your answer and provide evidence/examples of good practice where available.

How could the Good Practice Principles help ensure that community benefits schemes are governed well? For example, what is important for effective decision-making, management and delivery of community benefit arrangements? Please explain your answer and provide evidence/examples of good practice where available.

How could the Good Practice Principles better ensure that community benefits are used in ways that meet the needs and wishes of the community? For example, more direction on how community benefits should or should not be used, including supporting local, regional or national priorities and development plans. Please explain your answer and provide evidence/examples of good practice where available.

What should the Good Practice Principles include on community benefit arrangements when the status of a new or operational energy project changes? For example, reviewing arrangements when a site is repowered or an extension is planned, or when a new project is developed or sold.

Should the Good Practice Principles provide direction on coordinating community benefit arrangements from multiple developments in the same or overlapping geographic area? If so, what could this include? Please explain your answer and provide evidence/examples of good practice where available.

What improvements could be made to how the delivery and outcomes of community benefit arrangements are measured and reported? For example, the Good Practice Principles encourage developers to record and report on their community benefit schemes in Scotland’s Community Benefits and Shared Ownership Register. The register showcases community benefits provision across Scotland using a searchable map.

In addition to the Good Practice Principles, what further support could be provided to communities and onshore developers to get the most from community benefits? For example, what challenges do communities and onshore developers face when designing and implementing community benefits and how could these challenges be overcome? Please explain your answer and provide evidence/examples of good practice where available.

3.3.3 Setting a funding benchmark

Do you think that the Good Practice Principles should continue to recommend a benchmark value for community benefit funding? The current guidance recommends £5,000 per installed megawatt per year, index-linked (Consumer Price Index) for the operational lifetime of the energy project.

Yes

No

Don’t know

a) Should the benchmark value be the same or different for different onshore technologies? Please explain your answer.

b) How could we ensure a benchmark value was fair and proportionate for different technologies? For example, the current benchmark for onshore is based on installed generation capacity but are there other measures that could be used? Please provide any evidence or data to support your preferred approach.

3.3.4 Assessing impacts of the Good Practice Principles

Are you aware of any likely positive or negative impacts of the Good Practice Principles on any protected characteristics or on any specific groups in Scotland, particularly: businesses; rural and island communities; or people on low-incomes or living in deprived areas? The Scottish Government is required to consider the impacts of proposed policies and strategic decisions in relation to equalities and particular societal groups and sectors. Please explain your answer and provide supporting evidence if available.