The Scottish Government chose energy companies over communities again

Yesterday, in a move that hasn’t been well reported outwith dedicated energy news channels, the Scottish Government published its update to recommended benchmarks for renewable community energy benefit funds but have set new rates at far less than what the old rate would be if it had simply been uprated by inflation – essentially meaning that communities will be locked in to lower real-terms rates of compensation for hosting renewable energy assets.

In 2014, the Scottish Government recommended that owners of onshore wind turbines pay into local community benefit funds at a rate of not less than £5,000 per year per Megawatt of capacity. These payments are considered voluntary but are taken up by a relatively high number of developers. It’s easy to see why. £5,000/MW is a paltry sum compared to the typical revenues generated by onshore wind turbines in Scotland. It has been shown that a fully community owned turbines generate an average of 34 times as much revenue for the community as this community fund contribution.

Worse, while uptake on the voluntary standard is high, it is not universal. Just this week, The Ferret found that local communities across Scotland are losing out on around £2 million each year due to developers who either don’t pay into community funds at all or pay less than the £5,000/MW benchmark.

Most crucial though was that when the benchmark was set in 2014, it was not uprated for inflation so that new developments built since 2014 paid the same cash rate as earlier ones. If inflation had been accounted for, the benchmark in 2026 would be closer to £7,750/MW.

Which brings us to the new announcement. The Scottish Government has announced that new onshore wind developments should pay not less than £6,000/MW into community benefit funds. This means that communities stand to lose out on £175,000 per year for a 100MW wind farm or nearly £4.4 million across the typical 25 year lifespan of that development.

The story isn’t much better with other forms of onshore renewable energy. Before yesterday, there was no equivalent benchmark for community funding for solar farms or for battery systems – two of the major growth areas in renewables at the moment with solar now THE largest form of energy generation on the planet as of last year.

The lack of a community fund benchmark has led to communities being exploited, with at least once community being initially offered just £100/MW, only later upgraded to £500/MW for a solar farm proposal and nothing at all from the batteries on the site.

Under the new benchmark, solar developments should contribute between £700-£1,000 per year per MW and battery storage assets should contribute £150/MW. This is still a pittance, but is an upgrade from zero.

In Common Weal’s response to the consultation preceding this announcement we stated that these voluntary baselines were both far too low and were fundamentally flawed calculations that didn’t account for the excess profits generated when electricity prices increase. Instead, we recommended that a condition of planning permission being granted would be the donation of a certain percentage of the development to community ownership. This call has evidently been ignored and the Scottish Government has sided with big business and their profits over communities and their development. This announcement is particularly galling coming as it did in the week when Parliament passed the Community Wealth Building Bill which was supposed to guide decisions like this.

And in a week when the Just Transition Commission has called out the government for its continued lack of a just and fair transition strategy for energy workers trying to move from the fossil fuel sector into renewables.

The problem sometimes with the Scottish Government is the gap between the good things it says and the actual actions it takes. It’s one thing to make promises to build wealth in communities and to justly transition vulnerable workers, but if they then don’t go on to do it it’s no wonder that people become disillusioned with politics. The Green Transition was supposed to transform the lives of everyone in Scotland. If we keep getting policies like the ones we’re seeing, all it will do is continue to concentrate our wealth into the pockets of the already far too wealthy.