By DARA BUTTERFIELD
The UK’s renewable energy industry yesterday launched a new initiative to give local communities the opportunity to invest in local renewable energy projects such as onshore wind farms, as well as solar and hydro power.
Under a voluntary new scheme developers working on significant new schemes will consult with local people to ask if they would be interested in community ownership and investment in commercial projects.
The stakes offered by developers are expected to vary in size and type and from scheme to scheme, but could range between 5% and 25% by value of a project.
These proposals are detailed in the Shared Ownership Taskforce report, led by RenewableUK on how the renewable energy sector and communities can work together to ensure that local people have a real and valuable stake in the projects.
Maria McCaffery, chairman of the task force and chief executive of the trade body, said the move was intended to cement goodwill with existing supporters of wind power but to win over vocal opponents as well, adding:
“We hope with this vehicle to attract some of those that haven’t liked us in the past. There will be people motivated by a financial return, and under present economic circumstances there are not many risk-free ways of getting a decent return.
“We’ve knocked ourselves out to make it an affordable thing. There was a very strong message from the outset that this wasn’t just to be for the wealthy, not just for those who could afford new share certificates for £250.”
The ownership offer will only apply to projects of £2.5m and up, which in the case of onshore windfarms is around 80-90% of developments.
Share ‘certificates’ could be purchased for as little as £5 and will be available on new onshore windfarm developments in mainland GB (but not N. Ireland).
This ‘community gain’ tactic is similar in principle to that being developed by the onshore oil and gas industry – which also faces strong pockets of environmental opposition.
Onshore wind developers will continue to pay community benefit funds ‘as usual’, with newly approved projects offering £5,000 a year for every megawatt of energy installed.
The Shared Ownership Taskforce report provided the following examples of community investments and benefits under different equity vehicles:
Split ownership: Baywind Energy Co-operative Ltd owns 1 turbine out of 4 at Haverigg II wind farm in Cumbria, pooling costs and income, so Baywind at this site receives 25% of the income and meets 25% of the operating costs, regardless of individual turbine performance.
Shared revenue: Falck Renewables and Energy4All have completed 6 projects in Scotland involving a co-operative, where the co-op invests and gets a return, but doesn’t physically own anything. The Co-operative’s investment is equivalent to typically around 4% of the capital cost of the project.
Joint venture: Neilston – Carbon Free and Neilston Development Trust (NDT) created a Limited Liability Partnership in 2009. Carbon Free agreed to develop the Neilston wind farm project to the south west of Glasgow. NDT raised 28.3% of the equity required. Governance of the development is shared jointly.
Crowd funding: Working with Abundance, REG Windpower sourced the majority of the finance for their 0.5MW Cornish wind project, High Down, from the local community and broader UK community. The Debenture has a minimum investment level of £5, ensuring that the significant majority of community members who wanted to invest could do so regardless of wealth.
Ed Davey, UK Energy Minister, said: “Community energy is revolutionising renewable energy development in the UK, and shared ownership will offer people the opportunity to buy in to the green energy that their own communities are producing.
“By giving communities the opportunity to buy in and benefit from renewable energy developments in their area, they can play their part in generating power at a local level which could supply enough electricity for 1 million homes by 2020.”
Maria McCaffery added: “The report we’ve published today shows how the renewable energy sector and communities can work together to ensure that local people have a real and valuable stake in the projects we’re bringing to fruition in partnership with them.
“We’re democratising the benefits of the renewable energy revolution even further, giving people a stake in generating clean electricity at grass roots level. It’s clear that local authorities will look more favourably on projects where local people are fully engaged and wholeheartedly supportive.”
Rebecca Willis, Taskforce Vice-Chairman and an Associate of Pure Leapfrog and Co-operatives UK, said: “We know from our experience at grass-roots level that there’s a substantial appetite among local communities to invest in renewable energy – and that’s increasing as people become more aware of the pressing need to do their bit to tackle climate change, and to generate a secure supply of electricity from clean, local sources.
“The community sector is pleased to back this agreement, which gives community groups the chance to work with commercial developers and increase the deployment of renewable energy, as it’s important to generate a secure supply of electricity from clean, local sources”.