Shared Ownership of Onshore Renewable Energy Developments

Executive Summary

Context

Community – People who are bound together because of where they reside, work, visit or otherwise spend a continuous portion of their time.
A community can be a neighbourhood, town, workplace, gathering place, public space, or any other geographically specific place that a number of people share, have in common, or visit frequently.

The Scottish Government want to see a Scotland in which everyone can play a full part in society, with empowered communities able to shape their individual and collective futures. We are committed to supporting our communities to do things for themselves, and to make their voices heard in the planning and delivery of services. Achieving our ambitions relies on stronger relationships between organisations, people and communities, drawing on our values in order to promote trust, collaboration and partnership. 

As we transition to a low carbon future, the renewables industry will play a key role in helping the Scottish Government achieve our high-level ambitions. That is why we want to see a significant increase in shared ownership opportunities being made available across all renewable energy projects in Scotland, helping to deliver lasting economic and social benefits to host communities across the country. 

Shared ownership - any structure which involves a community group as a financial partner over the lifetime of a renewable energy project.

To support our ambition in 2015, the Scottish Government published the Good Practice Principles for Shared Ownership of Onshore Renewable Energy Developments.

The aim was to provide guidance for the renewables industry, community members and groups, local authorities and other stakeholders involved in the development of renewable energy projects to deliver successful shared ownership schemes in Scotland.

The Scottish Government reiterated its commitment to shared ownership in our Energy Strategy and Onshore Wind Policy Statement published in December 2017. 

“Our ambition remains to ensure that, by 2020, at least half of newly consented renewable energy projects will have an element of shared ownership.

Shared ownership will form a key part in helping to meet our targets of 1 GW of community and locally owned energy by 2020, and 2 GW by 2030. We expect community involvement in onshore wind development to continue to play a vital role in reaching these targets.^[1]”

We accept that the renewables industry is in a period of transition, following changes to the UK renewable support schemes in recent years. However we are encouraged by the support to date for shared ownership from both the renewables industry and communities, with a number of such projects successfully delivered, and many renewable energy businesses willing to consider an element of shared ownership for their renewable energy project.

While a shared ownership opportunity tends to be led by the renewables industry, a community can take the initiative, and invite renewable energy companies to participate with them. This can be of benefit to both parties. 

However, there are risks associated with investing in a commercial venture and it is essential that a community takes its own professional commercial advice before making a decision. 

Shared ownership opportunities tend to be offered to communities geographically adjacent to renewable developments, as per the practice adopted by the renewables industry, for identifying the geographical area to receive community benefits. This has resulted in strong partnerships and economic benefits and we would encourage all such activity to continue. However the renewable energy business or the community may wish to extend the opportunity to a wider geographic area and these options can be explored. 

The Scottish Government made a commitment in the Onshore Wind Policy Statement published alongside the Scottish Energy Strategy in December 2017, to undertake a review of our suite of Good Practice Principles taking account of sector-wide developments over the last few years. 

This document provides updated guidance on the process of a renewable energy business making an offer, and a community accepting that offer. It does not include guidance on creating a lasting legacy with the income. Guidance on developing a community action plan is included in the Scottish Government’s Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments and we recommend that communities refer to Section 3 of this document for more information.  

We encourage communities to develop an action plan at the earliest opportunity (ideally at the same time as considering shared ownership options) but, ultimately, that is a decision for a community to take.   

The development of a community action plan is not a linear process; some communities may already have one in place, others may decide to wait until later in the process, or refresh an existing plan. What’s important is that the community has ownership of the plan, identifies key priorities to maximise impact and has a process in place to update the plan on a regular basis. A plan should be viewed as a “live” document that can be adapted to meet the current and future priorities of the community. 

More generally, we recommend that all parties make themselves familiar with the Good Practice Principles documents as each contains information that is relevant and transferable for both community benefits and shared ownership discussions. 

Review Process

The aim of the review was to ensure that Scottish communities continue to benefit from local projects in a manner that is appropriate for the current and future context in which renewable energy projects are developed.

The document has been updated to reflect the information submitted in response to Shared ownership of renewable energy developments – good practice principles: consultation, dedicated workshops held during the review process, and wider stakeholder engagement. 

The Review process was overseen by a Steering Group, which included representatives from community groups, the renewables industry and public bodies, and chaired by the Scottish Government. Full membership is attached as an annex. It is the intention to amend the guidance on a regular basis to ensure it reflects changes to policy or other relevant issues.  

Wind on remote islands

The UK Government’s response to its Contract for Difference consultation refers explicitly to the Scottish Government Good Practice Principles: 

Decisions on the details regarding how projects can deliver local benefits are best taken locally, but the (UK) government expects renewable energy business, and operators of remote island wind projects should seek to provide community benefits consistent with Scottish Government or other relevant guidance and Good Practice Principles. This includes providing an opportunity for communities or local people to invest in the project, with any offer additional to a community benefits fund. Community benefits are expected to last for the lifetime of a wind farm and it is our expectation that the operator, or subsequent owner if the project is sold on, will honour agreements with the local community.

The (UK) government also expects renewable energy business to register community benefits package on the relevant community benefits register (which for projects on the remote Scottish islands is on the Scottish Government’s Register of Community Benefits), so that delivery can be monitored.

This example highlights wider recognition of the value associated with our approach and principles. We will monitor progress to ensure that the application of the above is consistent with the UK Government’s intent. 

Section Summaries 

Overview

• Sets out the Scottish Government’s ambition for shared ownership and how it fits within the overall Scottish Energy Strategy. 
• Provides details on the rationale and key principles for engagement. 
• Sets out roles and responsibilities for the renewables industry and communities.       
• Sets out key investment risks.
• Provides details on extending shared ownership to a wider geographic area.
• Recognises that a community’s capacity to take forward a shared ownership project will vary, and outlines that tailored support is available depending on a community’s need.

Shared Ownership journey

• Identifies key milestones in a project’s journey, including details of an example shared ownership journey”.
• Identifies roles and responsibilities for industry and communities. 
• Sets out key investment points.

Planning System

• National context.
• Decision making process.
• Implications for communities, renewables industry and planning authorities.

Structure of investment

• Outlines details of current commercial models but states there is no standard model.
• Provides details of the most current models offered by renewables industry.

Support available

• Provides details of the wide range of support and advice available from the Scottish Government’s Community and Renewable Energy Scheme (CARES), which is delivered by Local Energy Scotland. 
• Encourages communities and renewable energy businesses to make contact with Local Energy Scotland to find out how they might help.

Glossary

• Provides a meaning for the key terms used in the document.