Shared Ownership of Onshore Renewable Energy Developments
Guidance on good practice principles for businesss, communities, local authorities and others.
Shared Ownership Journey
This section sets out:
- Example of a shared ownership journey
- Roles and responsibilities
- Timing of the investment
Context
This section aims to set out the key milestones, including roles and responsibilities for an “example of a shared ownership journey” as highlighted in the diagram below. Please note that each project will be different, the milestones and timings identified below are purely to give those involved a benchmark, and all parties should bear this in mind when reading the guidance.
Example of a Shared Ownership Journey
It is important that both communities and renewable energy businesses are able to understand key milestones in a project’s journey, including when they will be required to make decisions.
The following key issues are worth highlighting:
- All parties should acknowledge the length of time it may take to conclude the process. Those provided are indicative and subject to variations from project to project.
- It may be some time before the community sees a financial return from any investment.
- Recognition from all parties that the complex nature of developing the project, may result in setbacks and delays.
4.3 Roles and Responsibilities
The main roles and responsibilities are summarised in the Executive Summary.
The following tables provide guidance on key project milestones: from the pre-planning stages of the development to the commissioning of the project (along with the roles and responsibilities of the renewable energy industry and community at each stage). As advised above this is only a guide.
| Stage |
Roles, Responsibilities and Milestones |
|
|---|---|---|
| Renewable energy business |
Community |
|
| Pre-planning application: Preparatory Community engagement |
√ Identify geographical boundary and applicable community, seeking support from local authorities where required. √ Present development proposal to community and potential shared ownership models, appoint a single, key point of contact to liaise with the community throughout the project duration. |
√ Establish a single community group with advice assistance from Local Energy Scotland. √ Consideration of widening the geographical area to include additional communities. √ Agree a willingness in principle amongst community members to pursue opportunity. √ Discuss shared ownership experiences with other communities who have been involved in process to gain a greater understanding of what shared ownership entails in practice. √ Identify a project team ready to engage with the renewable energy businesses post consent. Engage in discussions with the renewable energy business in an open and amicable manner. |
| Post-planning/ consent Seek independent professional advice |
√ Different models will suit different communities – use this time to explore options and determine a preference. √ Clearly convey the terms and conditions of the offer and any risks associated to the community. √ Must comply with all relevant Financial Conduct Authority (FCA) rules and regulations. √ Timescale, structure and financial proposal should be realistic and on a commercial basis. √ Timescales should be reasonable, while respecting commercial and/or regulatory restrictions and community groups should be given adequate time to consider and evaluate any potential offer (explored in Section 5). |
√ Open discussions with Local Energy Scotland to explore potential funding options through CARES and for signposting to other funders:
√ Seek professional, independent financial advice to determine whether the offer works on a commercial basis as well as advice to manage any liability risks. √ If the offer does not work on a commercial basis, end pursuit of the shared ownership agreement. √ Any commercially sensitive information given to communities by renewable energy businesses should be treated as such, and should not be publicised on any public platforms. |
| Pre-Financial Close: Source financial modelling Financial Agreements |
√ Seek professional advice to manage any liability risks. √ Agree investment offer with community ahead of financial close to enable them to give comfort to advise their funder/s. √ Facilitate engagement between their renewable funder/s, and community funder/s, so all parties can work closely during the diligence process to help maximise efficiency and minimise costs and ensure there is appropriate information flow. √ It is important to remember that opportunities are additional to community benefits provisions. (Community benefits should be provided in line with Scottish Government Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments.) It should be made clear if local communities can convert any existing or forthcoming community benefits payments into a carried equity stake where the recipient groups are also the proposed partner community group. |
√ Agree investment offer ahead of financial close and advise funder/s accordingly. √ Community can withdraw at any point from option to invest discussions up until investment is made. |
| Financial Close: Community Action Planning |
√ Financial agreements in place. √ Ensure all legal arrangements are in place. √ Establish way of working from financial close onwards that will facilitate flow of information to community and their funders on the project’s progress. This will help the community to fulfil reporting obligations to funders. |
√ Financial agreements in place. √ Ensure all legal arrangements are in place. √ If a community action plan is not already in place, consider developing one over the longer term, to ensure income from the shared ownership proposal when it is available, can be spent accordingly: √ Establish a purpose statement, and identify resources required to achieve purpose. √ Seek professional support, if required (with assistance available through Local Energy Scotland). √ Consult with the wider community to establish the community’s priorities. √ Analyse findings from the consultation, and produce the community action plan. √ Ensure that community has appropriate expertise, skills and capacity to fulfil funder’s reporting requirements. √ Provide a point of contact to funders. √ Comply with covenants and obligations within finance agreements. |
| Commissioning: Investment Management (if applicable) |
√ Provision of regular information to community on project progress. |
√ Comply with covenants and obligations within finance agreements. |
| Post Commissioning: Community Action Plan Implementation |
√ Provide a point of contact. √ Provision of regular information to community on project performance.
|
√ Implement action plan in line with agreed governance arrangements. √ Comply with covenants and obligations within finance agreements. √ Provide annual updates. √ Review investment. |
The role and responsibilities of Planning Authorities are explained further in Section 4.
Timing of the investment offer
Each renewable energy business will have its own policy on the timing of an investment offer to a community. For example, some investment opportunities may be available to communities pre-planning (these are higher risk), while others may enable the community to invest later in the development process, for example, after consent, financial close or post commissioning.
Project Development – Process:
If the community is interested in the investment opportunity, it should make this clear prior to consent wherever possible which may be followed up with an agreement of intent between both parties. Clear and transparent public meeting minutes may suffice where both parties are content. Early dialogue with all concerned to explore the timing of the investment is encouraged.
As advised previously, developing a renewable project is complex, and communities should seek independent professional advice as necessary. For example, where a community is considering a joint venture (private limited company), there are legislative restrictions on the detail of early discussions. Awareness of these restrictions and other issues should help to reduce unexpected issues delaying a project.
Local Energy Scotland can help support communities to explore opportunities, and appoint relevant professional advisors, as required. Further details at section 6.
Contact
Email: lorne.frew@gov.scot
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