Community Benefits from Net Zero Energy Developments: Analysis of responses to the consultation exercise

Section 1: Offshore renewable energy developments

Offshore wind communities

Identifying the community who will benefit is a key principle of designing and providing a community benefit package, as set out in the existing Good Practice Principles (the Principles). The guidance notes that there is no single definition of community that can be applied for every project and that dialogue and site-specific characteristics should be used by the developer to identify the most relevant stakeholders.

Question 1.1: In the context of offshore wind development, what or who or where do you consider the relevant communities to be?

Question 1.1 summary

A general view, including among some individual respondents, was that any communities experiencing negative impacts arising from offshore wind development should be considered relevant.

In terms of communities of place there were suggestions that relevant communities should include: those geographically closest to, or most impacted by, the development and the related onshore infrastructure; coastal and island communities; communities where the development has a visual impact; communities impacted by disruption, particularly during construction; communities experiencing noise or light pollution; and communities where existing local infrastructure, resources and services are impacted.

Suggestions relating to communities of interest included: users of the same marine environment as the offshore development including businesses where livelihoods are impacted, with fishing being the activity most frequently referenced. Respondents also mentioned: tourism; environmental/conservation groups involved in protection of wildlife or care for natural habitats that may be disturbed or destroyed; and heritage or cultural impacts.

A frequent view among local authority respondents, was that allocation of community benefits should be across a local authority area. While acknowledging that those communities most directly affected should receive most benefit, it was suggested that a regional approach would support a more strategic approach and the ability to undertake higher value projects.

There were also calls, particularly from national advocacy organisations, for communities across Scotland to share in community benefits from offshore wind, for example through a Scottish Community Wealth Fund.

A total of 330 respondents answered Question 1, including two national advocacy organisation respondents who noted a view that this section of the consultation paper should refer to all offshore renewables, not just offshore wind.

A general view, including among individual respondents, was that any communities experiencing negative impacts arising from offshore wind development should be considered relevant. Respondents also identified a number of relevant local communities based on their proximity to developments (communities of place), or in relation to potential impacts on economic or other concerns (communities of interest). A public body respondent offered their own definition in relation to community benefits from land, recognising first the local geographic community and then that communities of interest may also benefit.

Communities of place

In terms of communities of place there were suggestions that relevant communities should include:

• Those geographically closest to, or most impacted by, the development, not only the turbines, but also the related onshore infrastructure. Examples of the latter included: cable landfall points; overhead or underground cabling routes; substations; battery storage sites; and transmission infrastructure, including powerlines and pylons.^[1] There were also references to repair/maintain infrastructure, road construction and workforce accommodation.
• Coastal and island communities, including ports and harbours. A local authority respondent noted that the marine economy is proportionally more significant for islands.
• Communities where the development has a visual impact.
• Communities impacted by disruption, particularly during construction, but also ongoing operation/maintenance or decommissioning.
• Communities experiencing noise or light pollution.
• Communities where existing local infrastructure, resources and services are impacted – for example by adding to road traffic, reducing space for local people on ferries, or reducing availability of local housing.

There were differing positions with respect to visual impact, and by extension the distance of the development from the shoreline, when determining the host community. Although respondents across a range of respondent types considered visual impact an important factor, some local authority respondents expressed a view that that visibility should not be a material factor in defining a host community for offshore wind. However, these respondents were also clear that all developments, should yield community benefits no matter how far from shore. From a different perspective, energy developer respondents highlighted the potential for some sites to be so far offshore that they cannot be seen from the coast, suggesting that where there is no clear locally impacted community, no community benefit fund should be required. Distance from the development should thus be an important factor when defining the host community.

Communities of interest

Suggestions with respect to relevant communities of interest included:

• Other users of the same marine environment as the offshore development including businesses where livelihoods are impacted, with fishing^[2] being the activity most frequently referenced. Respondents also mentioned: tourism; recreational activities including water sports and diving; aquaculture; and research.
• Individuals and environmental/conservation groups involved in protection of wildlife or care for natural habitats that may be disturbed or destroyed.
• Heritage or cultural impacts, including where there are emotional ties to land or seascapes are a defining part of local identity and heritage.
• Local businesses impacted indirectly as a result of disrupted supply chains.
• Individual homeowners whose properties may have fallen in value.

Regional communities

A regional approach to identifying relevant communities was suggested, for example where developments are far offshore with no visual impact on coastal communities, where there are otherwise no obvious local impacts to mitigate, or where the scale of a project is such that impacts (including on existing infrastructure and services) are felt over a wide area. A frequent view, particularly among local authority respondents, was that allocation of community benefits should be across a local authority area.

While acknowledging that those communities most directly affected should receive most benefit, respondents saw a regional approach as allowing a whole local authority area to receive some benefits, coinciding with existing Community Wealth Building commitments. Other potential advantages suggested included the ability to adopt a more strategic approach and the ability to undertake higher value projects. The Shetland Community Benefit Fund was proposed as a potential template.

However, two place-based community organisation respondents specifically opposed allocation of funds at a local authority or national level, seeing removing local benefits from those most affected as an injustice or likely to increase feelings of disempowerment. Others were clear that they were not proposing that funds should be given to a local authority or used to cover statutory costs, with one suggestion that they should be lodged with independent organisation to distribute in consultation with local communities.

National communities

There were also calls, particularly from national advocacy organisations, for communities across Scotland to share in community benefits from offshore wind, for example through a proposed Scottish Community Wealth Fund. Although respondents taking this view often argued that communities most affected by an offshore wind project should receive a proportion of the community benefits, it was also suggested that there is a risk that the communities closest to a development benefit from funding irrespective of need and that existing inequalities should not be exacerbated.

Using scales or tiers

As noted above, respondents advocating regional and national approaches often agreed that the most impacted communities should continue to benefit most and it was suggested it could be helpful to identify relevant communities using a tiered model with local, regional and national scales.

A scoring system that recognises local impacts, but also awards points for climate vulnerability or equalities indicators was also suggested, as was separate consideration of impacts during the construction phase, where benefits would go to the closest, most impacted communities, and a wider regional or national fund to be used during the operational phase.

Variation between projects

It was noted that the size of offshore wind projects can make it more difficult for developers to identify and engage with relevant communities than is the case for onshore developments. Energy developer respondents were among those who suggested that each project will be different, meaning that a flexible approach is required, or that there is unlikely to be a one-size-fits all solution. This is discussed further at Question 1.2.

Question 1.2: When defining the relevant communities to receive benefits from offshore wind development, which factors should be considered, and by whom? Are there any factors which are most important, and why?

Question 1.2 summary

In terms of defining communities at a local level the factors identified most frequently were: proximity to the development; the visual impact of the turbines including on landscape/seascape, proximity to onshore/transmission infrastructure or the visual impact of onshore infrastructure; impacts on the natural environment; proximity to or the impacts of construction activities; impact on local economic/commercial interests; and impact on property prices.

Respondents advocating distribution of a portion of community benefit funds over a larger area highlighted the size/scale and dispersed nature of the developments, with an associated view that a large project would attract a large community benefit fund, which should be used to benefit more people over a wider area. Socio-economic needs and priorities were also cited as important reasons for defining relevant communities more broadly, and there was a suggestion that the principles of a just transition require benefits to be spread more widely or more equitably.

A total of 315 respondents answered Question 1.2, with answers tending to reflect those given at Question 1.1. As noted at Question 1.1, some respondents agreed with the consultation paper that defining relevant communities for offshore wind is more complex than in relation to onshore developments, with a related suggestion that flexibility is required to consider factors relating to the relevant community on a case-by-case basis rather than seeking to standardise the process. An alternative, less frequent view, was that a standardised approach to identifying the relevant communities is necessary. As a general point it was suggested that the starting point when defining relevant communities should be consideration of the nature, scale and duration of the benefits being offered.

There also were differing perspectives on the role of community benefits, both that these are important in generating public support for projects, particularly in communities that are negatively impacted and that, rather than a device to encourage acceptance, they should be seen as providing justice for communities that experience the negative impacts of renewable energy development with few or no positives.

Factors relating to defining local communities

Although the question asked both which factors should be considered, and which are the most important, relatively few respondents commented specifically on the latter. In terms of defining communities at local level the factors identified most frequently were:

• Proximity to the development, which was frequently seen as the most important factor.
• The visual impact of the turbines including on landscape/seascape, which a small number of respondents specified as the highest priority. There was also a suggestion that community benefits relating to developments that are not visible from the shore should be used at local authority level or paid into a national fund.
• Proximity to onshore/transmission infrastructure or the visual impact of onshore infrastructure. Again, this was specified as a priority by a small number of respondents.
• Impacts on the natural environment (including seabirds and fish populations) and stakeholders involved in conservation and research. It was noted that the project Environmental Impact Assessment (EIA) should identify these impacts.
• Proximity to or the impacts of construction activities. Related points included that these activities might attract short term or one-off benefits, and that a separate construction fund should be required.
• Impact on local economic/commercial interests, with most frequent references to fishing^[3] and to tourism.
• Potential impact on property prices.

Factors highlighted for consideration by smaller numbers of respondents included:

• Being directly affected/ most affected by the project and by loss of amenity.
• Impacts of noise from turbines.
• Impact on recreational activities such as angling water sports and walking.
• Impacts on existing local infrastructure/services for example from a new population or additional traffic. Potential damage to local roads or impacts on capacity of ferry services.
• Location of the ports and harbours used and impacts on their wider infrastructure/ operations.
• Cumulative impacts from multiple developments or over the lifecycle of a development.
• Cultural importance of, or connection to, landscapes or seascapes.
• Socioeconomic factors and communities in economic decline.
• Community capacity to engage or to undertake projects, for example evidenced by existing Community Action Plans (CAPs), Local Place Plans (LPPs) or wider development or community wealth building plans.

A matrix developed by a group of community councils was highlighted as one means by which community benefit funds might be distributed using three factors (population; distance from turbines; and Scottish Index of Multiple Deprivation) to calculate an individual community’s allocation. It was also suggested that community councils might be encouraged to group together to pool resources and aggregate benefits.

Factors relating to defining regional and national communities

Respondents advocating distribution of a portion of community benefit funds over a larger area highlighted the size/scale and dispersed nature of the developments, with an associated view that a large project would attract a large community benefit fund, which should be used to benefit more people over a wider area. Other geographical factors that could support a wider approach to defining relevant communities included:

• The extent to which a development affects multiple or dispersed communities or has impacts on infrastructure and services across a whole region.
• Distance of the turbines offshore and whether the geographically closest communities are small or experience minimal impacts.
• Scope for developers to group together where windfarms are clustered, creating a fund covering a larger area than for a single project.

Socio-economic needs and priorities (for example as indicated by deprivation indices) were also cited as important reasons for defining relevant communities more broadly, and there was a suggestion that the principles of a just transition require benefits to be spread more widely or more equitably. Scope to take a strategic approach to deliver benefits more effectively for a wider area was also highlighted. While local authority respondents were amongst those favouring a regional approach at authority level, for example to support their own Community Wealth Building or climate action plans, some other respondents took a view that at least a proportion of community benefits should be paid into a central fund and used to support national issues, allowing the whole of Scotland to share the benefits from a national resource.

However, there was also acknowledgement of concerns that a regional or national model could dilute funds for the most impacted communities with suggestions that broader regional or national funds might be negotiated over and above local community benefits, or that allocation of funds for local or wider use would need to be on a case-by-case basis, after detailed consultation to understand local priorities. There was also a view that the existing focus on community benefits being for the local community should be retained, with an option but not a mandate for diversion of funds to regional or national uses.

Factors that should not be considered

A small number of respondents highlighted elements that they thought should not be included when considering what are relevant communities. These included: visibility; onshore infrastructure covered by UK Government grid infrastructure payments; matters relating to consenting and compensation; and the views of absent property owners with no permanent residence in the affected area.

Process for identifying relevant communities

Energy developer respondents were amongst those noting their support for guidance in the existing Principles, arguing that developers are best placed to understand where impacts of their projects will be experienced and that the relevant community should be identified by the project developer in consultation with local stakeholders, with a focus on early, wide or meaningful engagement. It was noted that key factors that developers consider include the proximity of coastal communities to the site, the location of operations and maintenance bases and temporary onshore construction works. However, a local authority respondent expressed concern that placing the onus on developers to determine the relevant community might pit communities against each other or lead to inconsistent or unfair decisions, with a related suggestion that the guidelines should set out a clear methodology for determining recipient communities.

Other respondents argued that developers need to adopt a more proactive approach to engaging with a wide range of communities and stakeholders, rather than following a standardised process or set boundaries. On the last point there were differing views on whether community council boundaries should be used to define communities for benefits – both that this works well, and that it can exclude communities where there is a visual impact.

Further suggestions included that developers should contribute to the costs of community engagement.

There were also calls for the process to be:

• Community-led with opportunities for communities to self-identify.
• Collaborative, involving developers, local authorities and community representatives, or guided/monitored by an independent body with developers and communities as consultees.
• Transparent, using criteria agreed by or co-developed with communities.

With respect to how the process of identifying relevant communities and stakeholders should begin, ideas included:

• Starting with the list of communities consulted in the consenting process or as part of any planning procedures for the development. It was noted that Irish guidance specifies that the local community must include (although not be limited to) local stakeholders and the surrounding communities that were consulted on as part of the Maritime Area Consent process.
• Using project level EIAs for offshore wind developments, which will identify communities that will be significantly impacted at any stage of the project.
• Requiring energy developers to submit a community benefit statement as part of the ScotWind Leasing process.
• Drawing on information in existing CAPs, Local Outcome Improvement Plans and LPPs.
• Making early contact with community councils to help inform a list of community organisations for consultation.

In terms of those who might participate in engagement exercises suggestions included:

• Residents.
• Community councils.
• Development trusts.
• Incorporated community development bodies.
• Community anchor organisations.
• Other local community groups.
• Local businesses.
• Local authorities, Community Planning Partnerships and Local Community Partnerships.
• Relevant enterprise agencies.
• Voluntary sector/non-governmental organisations.
• Environmental scientists and conservation groups.
• Hard-to-reach groups (including the young and the elderly).
• Representatives of workers in the fishing industry.

A general point was that a single group should not be seen as representative of a community.

Maintaining level playing fields

A small number of respondents highlighted areas in which it will be important to avoid creating a competitive disadvantage for developers. First, it was noted that there will be circumstances where the onshore infrastructure associated with offshore wind projects in Scottish waters will be hosted in England. It was argued that, to avoid any disadvantage for Scottish sites, the UK and Scottish Governments should agree a common approach to the value of, and eligibility for, community benefit funds.

It was also suggested that a mechanism is required to ensure that developers offering higher levels of community benefit are not put at a competitive disadvantage relative to other projects.

Maximising the impact of community benefits from offshore wind developments

Community benefit arrangements in Scotland have typically followed a project specific application style fund, however other models have been put forward by local authorities and community stakeholders. These include proposals to use a portion of funds to support regional strategic funds, as well as for a nation-wide community wealth fund.

Question 1.3: Who should decide how offshore wind community benefits are used (decision-makers)? Are there any groups, organisations or bodies you feel should have a formal role in this?

Question 1.3 summary

Respondents commented on the principles that should underpin any decision-making process, including that it must be transparent, inclusive, representative, publicly accountable and aligned with local priorities, for example being guided by existing LPPs, CAPs or Local Development Plans (LDPs).

The most frequent suggestions were that decision-making should be led by the relevant community, with the community taking either a central role or control of the process or, specifically, should be led by community councils. However, there were also concerns that these bodies may be too small or lack capacity and resources to take on such a function.

Other local groups that respondents thought should be considered included development trusts, other local trusts and climate action groups and climate hubs. It was also suggested that a new body might be set up specifically to make decisions on use of community benefit funds, for example a fund management group made up of members of the local community or a new community development trust. There was also reference to a panel of local representatives, including members of groups such as community councils, development trusts and others listed above, along with local residents.

Among a broad range of other organisations that respondents suggested could have a role in local decision-making were charities and the Third Sector Interface, anchor organisations such as housing associations, local authorities, and enterprise agencies. Potential roles for professional, third-party fund administrators were also suggested, with Foundation Scotland and the Scottish Futures Trust both referenced.

Among respondents who advocated a regional approach, a decision-making panel or board with representation of community organisations, along with a range of regional stakeholders, was suggested.

Individual respondents in particular expressed views on organisations that should not be involved in decision-making, with developers, local authorities, the Scottish Government, development trusts and community councils all referenced.

A total of 325 respondents answered Question 1.3.

Organisations with a role in decision making

As at previous questions, respondents pointed to the extent of the variation between individual offshore wind projects and their associated communities. Energy developer respondents in particular argued that this means that no formal roles should be identified and that, as per the existing Principles, developers and local communities should work together to agree the organisations to be involved in decision-making.

Among other respondents, views on the type of organisations that should be involved in decision-making depended on whether a local, regional or national approach to distribution of community benefits was being considered. One suggestion was that a structured framework is required, to allow for decisions on direct use of community benefits to be taken at local level, while a more strategic approach operates with respect to regional or national spending.

Local decision making

The most frequent suggestions were that decision-making should be led by the relevant community, with the community taking either a central role or control of the process or, specifically, should be led by community councils. However, there were also some concerns that these bodies may be too small or lack capacity and resources to take on such a function.

Other local groups that respondents thought should be considered included:

• Development trusts which, it was suggested, may be better equipped to interface with developers and will have appropriate skills and governance in place to administer and manage funds.
• Other local trusts.
• Climate action groups and climate hubs, although there was also a suggestion that groups with a climate focus may lack broad insights across other topics.
• Local action groups.
• Incorporated community development bodies and social enterprises.

It was also suggested that a new body might be set up specifically to make decisions on use of community benefit funds, for example a fund management group made up of members of the local community or a new community development trust. An initial focus on capacity building, with creation of a suitable body as a first priority was also suggested as was that, if there is no interest in creating an appropriate group, the local authority should coordinate distribution of community benefit funds.

While a new body being set up to make decisions on use of funds was envisaged by some respondents, a more frequent expectation was that there would be a panel of local representatives including members of groups such as community councils, development trusts and others listed above, along with local residents. With respect to which community body might take the lead, there was a suggestion that, where an LPP exists, a recognised group that drew it up and is responsible for delivery actions should be the principal organisation. It was also reported that the Development Trusts Association Scotland (DTAS) might offer a form of accreditation for community organisations that would allow a suitable lead organisation to be identified. An alternative view was that membership of a decision-making panel should be independent of existing local community bodies, instead involving democratic elections.

While emphasising the importance of communities having a high level of control over community benefit funds, a national advocacy organisation respondent noted that not all will be aware of the potential opportunities available, meaning that it will be desirable to strike a balance between local decision-making and providing guidance to help communities make informed choices. Among a broad range of organisations that respondents suggested could have a role in local decision-making were: charities and the Third Sector Interface; anchor organisations such as housing associations; local authorities; enterprise agencies; independent advisors bringing specific knowledge and expertise of relevance to the fund; organisations such as Foundation Scotland that can provide guidance and support; local businesses or business groups; and representative bodies such as the Scottish Fishing Federation. However, that there were also reservations around a role for local authorities, which were seen as under pressure financially and potentially too distant to be sensitive to local issues.

Specifically with respect to administration of community benefit funds, it was noted that UK Government guidance promotes functional separation between bodies that decide how available funding will be disbursed and the administrators of the community benefit funds. Potential roles for professional, third-party fund administrators were suggested, with Foundation Scotland and the Scottish Futures Trust both referenced, and there was a view that energy developers should meet the costs of using such a service. It was also argued that providing training to support local organisations to create the required governance and administrative functions could keep the administrative budget in the local economy and create opportunities for skilled local employment.

Limited resources and capacity within some communities were seen as issues by a range of respondents, with one request that the Principles should provide guidance on how to upskill decision-makers. It was also suggested that community benefit funds could be used in part to support capacity building, and an energy developer respondent noted that community benefits from onshore wind projects have already been used to create community planning structures or roles where these do not exist. Alternative suggestions included that communities that lack capacity should be provided with interim third-party support and that the Scottish Government should fund part-time staff for community councils affected by offshore developments. The value of learning from the experiences of other community organisations was also highlighted.

Following on from capacity issues – and at what might be considered a ‘sub-regional’ level – it was noted that groups of community councils could come together to administer community benefits in a more strategic way while pooling administrative capacity, as has been done with respect to onshore wind projects. A related suggestion was that organisations such as local development trusts and community councils representing distinct areas might come together to form steering groups to address strategic funding priorities.

Regional decision-making

Individual and community council respondents were amongst those who were clear that they would not support distribution of community benefit funds at regional or national level, or that any regional or national spending must only use additional funds contributed by the developer. Energy developer respondents suggested that while regional bodies might be involved in discussions around community benefit funds, their views should not supersede those of host communities.

Among respondents who did advocate a regional approach, it was envisaged that regional use of community benefits would require establishment of a decision-making panel or board with representation of community organisations along with a range of regional stakeholders. If it were not possible for all relevant community organisations to be represented on such a panel, it was suggested that best practice would require representatives to be democratically elected from the community. Suggestions with respect to other stakeholders included: local authorities; community planning partnerships; public bodies; enterprise agencies; community energy and development trust associations; third sector organisations; net zero delivery bodies; and renewable energy companies.

Arguments in support of the role of local authorities included that they are elected and accountable and have the expertise to ensure best use of community benefit funds. Potential advantages of a central community benefit pot in each local authority area were noted, including a view that it should be possible to use community benefits for the ‘common good’, including providing community services. However, there was also a view that local authorities should not have a formal role in delivery and concern that community benefit funds could be used to cover statutory responsibilities, leaving little funding available for community focused projects.

With respect to potential models, a local authority respondent reported that they are currently considering options for governance of a strategic fund, following a partnership approach involving the Council, public agencies, renewables companies and community representatives. Other suggested approaches included: setting up regional trusts governed by community representatives; using Local Action Groups (which already have a role in dispersal of Community Led Local Development (CLLD) funding); and amalgamating the steering groups mentioned above to form regional bodies.

National decision making

Turning to using community benefit funding at a national level, there was again a view, from a small number of respondents including a national advocacy organisation, that offshore energy developers should be asked to contribute to an additional fund, to support community wealth building across Scotland. It was also suggested that local communities might be given a choice to opt in to a national fund. With respect to potential decision-makers at national level suggestions included: the Scottish Government; an independent board, led by community representatives, including representatives from the Convention of Scottish Local Authorities (COSLA) and developers, along with fund management expertise and financial experts; a National Renewable Energy Community Benefit Board with representatives of relevant geographical, recreational, commercial and political communities; and an independent committee representing Scotland’s diverse geographies and population groups, tasked with funding community projects, particularly from marginalised communities.

Organisations that should not be involved in decision making

Individual respondents in particular expressed views on organisations that should not be involved in decision-making, with developers, local authorities, the Scottish Government, development trusts and community councils all referenced. There was also a view that no single organisation should make a decision on behalf of the community.

Energy developer respondents were among those envisaging that renewable energy companies should have a role in the decision-making process, although other respondents, including some community councils, felt that developers should not be involved in any administration or distribution of funds, with an associated position that developers should not place any restriction on use of community development funds. In particular, a national advocacy organisation and a public body respondent proposed that communities should be able to accumulate funds over several years rather than being pressured to spend funds within a single year.

Question 1.4: What are the best ways to ensure that decision-makers truly reflect and take into account the needs and wishes of communities when determining how community benefits are used?

Question 1.4 summary

It was argued that, to ensure that the views of the community are taken into account, decision-making bodies must be community-led. Other suggestions included that they should also be properly constituted bodies and democratically representative of the relevant area, with transparent election of board members.

A frequent view was that the needs and wishes of the community will already be reflected in existing local plans such as LPPs and CAPs that are drawn up after community-led consultation so, where these exist, they should guide the priorities for use of community benefit funds. Where no suitable plans exist, it was suggested that communities should be provided with support and resources to produce them.

While energy developer respondents referenced their own early, widespread, inclusive consultations there were also calls for greater engagement and more direct consultation with all members of the local community. The importance of engagement at the earliest stages of project planning was also highlighted.

In terms of the engagement methods that might be used, there were suggestions that there need to be meetings, focus groups, workshops and surveys.

A total of 320 respondents answered Question 1.4 including, as a general point, that policy development in this area should take account of the findings of current research being carried out on the role of CLLD^[4].

The framing of some answers was influenced by who the respondent considered the ‘decision-makers’ and the ‘communities’ to be. In particular, place-based community organisation and national advocacy organisation respondents were concerned that the question implies ‘decision makers’ and ‘communities’ are separate groups when, in their view, relevant communities should be decision makers, with full control over how community benefit funds are used. Energy developer respondents also noted that communities are best placed to decide how funds are used, seeing the role of other decision makers as to empower community decision making and enhance their capacity to deliver strategic change.

Important features of local decision making-organisations

Individual respondents were among those arguing that, to ensure that the views of the community are taken into account, decision-making bodies must be community-led. Specific suggestions included that they should also:

• Be properly constituted bodies, such as Scottish Charitable Incorporated Organisations, community benefit societies, community trusts, development trusts and community councils.
• Be democratically representative of the relevant area with transparent election of board members.
• Have defined roles, an induction/training process, an agreed code of conduct and a limited term for board members.
• Have clear guidance/criteria on allocation of funds, including that funds are used for community benefit not individual gain.
• Have procedures for resolving disagreement as communities in an area may not share a common perspective. It was noted that there may not always be a representative view.
• Avoid the same body making decisions and implementing projects.

Several examples of existing good practice were referenced.

Potential for use of participatory budgeting or deliberative panels was also highlighted as a means of ensuring that an element of funding is available for direct community investment, even if some funds are used at regional or national level. Participatory budgeting was also seen as an engaging way of bringing communities together to share ideas.

There were also references to the importance of capacity building and to the benefits of sharing information. However, one concern with respect to community capacity was that activities associated with renewable energy should not displace other important local activities.

Aligning priorities with local plans

A frequent view was that the needs and wishes of the community will already be reflected in existing local plans such as LPPs and CAPs that are drawn up after community-led consultation so, where these exist, they should guide the priorities for use of community benefit funds. Where no suitable plans exist, it was suggested that communities should be provided with support and resources to produce them.

Community consultation

While energy developer respondents referenced their own early, widespread, inclusive consultations there were also calls for greater consultation and more direct consultation with all members of the local community. Respondents emphasised the importance of engagement at the earliest stages of project planning but there were also calls for decision makers to consult members of the community to inform spending priorities if the local plans referenced above are not available, and to explore potential options that align with existing plans.

In terms of the engagement methods that might be used, there were suggestions that there need to be meetings, focus groups, workshops and surveys. Using a range of communication methods was also seen as important, for example because a single route could inadvertently exclude sections of the community, and because strategies tailored to align with local customs and values can increase the relevance and acceptance of projects. There were calls for consultation exercises to be conducted by external, professional facilitators and it was suggested that the Principles could enhance the guidance on effective consultation and signpost to best practice examples.

Monitoring and reporting

Respondents highlighted the importance of ongoing monitoring and review of funding decisions with suggestions that either other members of the community or central government might be involved in such a process. A specific audit role for the Scottish Government to assess whether community benefit arrangements comply with the Principles and the principle of community control was also proposed.

Regular reporting on funding decisions was seen as important to ensure accountability, with suggestions that reporting should be both to the community and to the Community Benefits Register. Opportunities for communities to give feedback should also be provided.

Regional/national issues

Local authority respondents suggested examples of their own policies and strategies that reflect the needs and wishes of the wider community and could be used to identify overarching priorities for investing community benefits for the common good. It was sometimes noted that such documents will already have been subject to extensive public consultation.

As well as facilitating a more strategic approach to spending, it was suggested that a single community benefit pot for a local authority area could reduce administrative burdens, and offer a more efficient way for community voices to have an input, avoiding the need to respond to multiple consultation exercises organised by different developers.

Other points made with respect to management of a regional or national fund included that there could or should be:

• Community representation in decision-making, either directly as part of decision-making bodies or on committees overseeing allocation and management of community benefits. One suggestion was that a such bodies must have meaningful numbers of community delegates.
• Scope for projects meeting eligibility criteria to be led directly by communities, but also by third sector or public bodies if more appropriate.
• Regional trusts governed by community representatives, operating independently of public sector bodies but able to draw on them for advice and support.
• Regional/national boards with representatives of communities of place and of interest.

Question 1.5: What could be done to help maximise the impact of community benefits from offshore wind? What does good look like?

Question 1.5 summary

Suggestions for specific types of projects that should be supported to maximise impact included: acquiring assets to generate long term income; investment in training and upskilling to address current skills gaps; sustainable development projects; energy retrofit projects; and reduced electricity prices.

A frequent topic was the current voluntary basis of community benefit payments, with a view that these should be made mandatory, with penalties for non-compliance.

Providing opportunities for community ownership or shared ownership of renewable energy projects was also seen as a way of maximising impact, and it was suggested that shared ownership, either as a joint venture or shared revenue, should be included as an integral part of the Principles for offshore wind.

A total of 320 respondents answered Question 1.5 with responses tending to summarise points made at other questions in this section, and to reflect the differing approaches being advocated. Respondents highlighted the importance of: early, extensive and ongoing engagement and consultation with affected communities; capacity building; and real community involvement in decision making, including that projects should be community-led. Taking a strategic approach, targeting projects that make long term strategic difference, and aligning spending with local needs and priorities were also seen as important.

There were also suggestions with respect to specific types of project that should be supported to maximise impact including: acquiring assets to generate long term income; investment in training and upskilling to address current skills gaps; sustainable development projects; energy retrofit projects; reduced electricity prices and regulatory conditions to facilitate use of locally produced electricity; nature restoration; and projects to develop tourist infrastructure or safeguard the future of fishing industry. To support community wealth-building initiatives it was suggested that all projects should use local contractors and suppliers where possible.

Other actions to maximise the impacts of community benefits from offshore wind

Nature and scale of community benefit obligations

A frequent topic was the current voluntary basis of community benefit payments, with a view that these should be made mandatory, with penalties for non-compliance. Specific suggestions included that Crown Estate Scotland could write a binding community benefit agreement into leasing contracts, and that elements of the Scottish Futures Trust model for community benefits could be adopted, including a clear distinction between contractual obligations and aspirational targets. There was acknowledgement that adopting a mandatory approach to community benefits would require action from the UK Government.

It was also proposed that community benefits should be payable:

• For the full life of development, including construction and decommissioning.
• At a higher rate than the present £5,000 per installed megawatt (MW) per year payable for onshore wind, with suggestions that this should be: increased to £7,500; should be based on a percentage of turnover and should not be capped; or that it should be the same as paid in relation to onshore wind.

A further proposal was that the planning process could be used to incentivise developers, for example by making community benefits a material consideration when deciding planning applications.

From a different perspective, one energy developer respondent sought clarity on how the refreshed Principles will align with local energy and social charters being developed by some local authorities, raising a concern that renewable energy projects could become unfeasible in these council areas. Another noted that they would welcome a common approach being adopted across each local authority.

Encouraging Community Ownership and Shared Ownership

Providing opportunities for community ownership or shared ownership of renewable energy projects was also seen as a way of maximising impact, and it was suggested that shared ownership, either as a joint venture or shared revenue, should be included as an integral part of the Principles for offshore wind. Public ownership of energy resources was reported to have been shown to deliver more revenue to communities than any other model of community benefit.

Potential opportunities and barriers in relation to shared ownership are considered at Questions 11 and 12.

Flexibility in release and use of community benefit funds

Points were also raised with respect to the ways in which community benefits are released by developers, or restrictions on the way they can be used including that:

• Multi-year funding can have more impact than an annualised grant.
• Early-stage funding should be provided for capacity building and governance development.
• No limitations or conditions should be placed on how benefit payments are used (within government guidance) and they should not be time bound.
• Revenue grants should be available to support paid community support roles.
• There should be freedom to use community benefits as seed funding for larger projects and for core costs that can be difficult to fund elsewhere.

It was also suggested that community benefits should be used to leverage additional funding and thereby create greater impact.

Providing additional resources for communities

As noted above, building the capacity of communities to undertake projects was seen as a way of maximising the impact of community benefits. There were also suggestions with respect to additional support or resources that should be provided to communities, including:

• Paid roles – for example Community Benefit Champion posts, created or funded by the Scottish Government – individuals who could support negotiations with developers, engage communities, and build local capacity. It was noted that employing staff who live locally would be preferable to use of consultants, who do not improve capacity.
• Free/affordable legal advice.
• Forums for community groups to communicate with each other, share experiences, ask questions and solve problems. This could be organised by region or by developer.
• Collaboration between support agencies to share best practice with their members and networks, helping to standardise approaches and ensure that successful strategies are replicated across different projects. Signposting to the Scotland Community Benefits and Shared Ownership Register so that communities new to community benefit can gain insights into projects that other communities have undertaken.

It was also suggested that, if a Community Benefit Advice Service is established, its remit should include offshore wind projects.

What good looks like

In terms of ‘what does good look like?’, answers included that good is:

• Anything that makes a positive and wanted contribution to the local area and is supported by local people.
• Delivering long-term, sustainable benefits to communities.
• Openness and transparency by developers and community benefits organisations.
• Measurable outcomes – clear metrics for success, such as the number of jobs created, skills developed, or infrastructure improvements realised.
• Local communities having the financial expertise to evaluate and take up community ownership offerings at scale.
• Less opposition to offshore wind developments, and long-term support for affected communities.
• Local communities feel that having the project in their region has been a net benefit and that the project is ‘part of the community’ and not something thrust upon it.

Question 1.6: How do you think directing community benefits towards larger scale, longer term, or more complex projects would affect the potential impact of community benefits from offshore wind?

Question 1.6 summary

Many respondents considered that using community benefits for larger, longer term or more complex projects could have positive effects, with the potential to bring transformational change. In particular, respondents anticipated that larger, more strategic projects could bring major infrastructure improvements, including in relation to transport, housing, energy retrofitting and climate adaptation and resilience projects. Significant opportunities in relation to skills and workforce development were also predicted.

However, others disagreed in principle with directing community benefits to larger or longer-term projects or predicted negative impacts. These included reduced agency/voice for local communities and less funding for small projects or the most impacted communities. A particular issue raised, by respondents from a range of respondent types, was that community benefit funding should not be used to fund statutory duties, either of local or national government.

A range of respondents, including most of the energy developers who commented, suggested that the capacity of local communities to undertake larger projects will be important, with a view that larger funding pots will require greater capacity along with third party support and knowledge exchange. There was a related concern that communities requiring help to deliver large projects could risk being dominated by large organisations.

There were also calls to balance any use of community benefits for larger, longer-term projects with a proportion of funds being protected for local, community-led initiatives, including smaller projects that deliver benefits over shorter timeframes.

A total of 315 respondents answered Question 1.6, including some who stressed that use of community benefits should be directed only by the local community.

Potential positive impacts

A frequent view was that using community benefits for larger, longer term or more complex projects could have positive effects, with scope to amplify the impact of community benefits, or the potential to bring transformational change. In particular, respondents anticipated that larger, more strategic projects could bring major infrastructure improvements, with examples including, transport; housing; energy retrofit initiatives and other work to reduce energy bills or tackle fuel poverty; and climate adaptation and resilience projects. Significant opportunities in relation to skills and workforce development were also predicted.

Among other potential benefits suggested were that:

• Investment of community benefits could help to secure larger scale projects.
• Such projects could provide communities with a secure, long-term income stream and reduce dependency on short-term funding.
• Large projects would bring economies of scale.

Scope for large or long-term projects was seen as illustrating the benefit of taking a collaborative or regional approach to community benefits and using benefits to support projects that align with local authority or regional investment priorities. Below local authority level, it was suggested that pooling benefits between community councils can also enable larger initiatives, while keeping a closer link with the priorities of individual communities.

While seeing positive impacts, respondents often added caveats or challenges that would need to be addressed, as outlined below.

Potential negative impacts

Other respondents disagreed in principle with directing community benefits to larger or longer-term projects, or predicted negative impacts, including noting that they would oppose use of community benefits for larger projects if this also implied creation of a regional or national fund, with which they disagreed. It was also argued that large infrastructure projects should be funded by the Scottish Government or by local authorities.

Among the potential negative impacts suggested if community benefits were to be used for larger or longer-term projects were:

• Reduced agency/voice for local communities.
• Less funding for small projects or the most impacted communities.
• A risk that projects will be dependent on private sector actors who could withdraw at any time.
• A risk that project management is too top-down and loses sight of local needs.

Caveats and challenges

Funding issues

Respondents highlighted a requirement for secure and long-term community benefit funding in order to undertake larger or longer-term projects or argued that communities should be supported to build reserves where larger projects are most appropriate. However, it was noted that energy developers may face challenges committing to long term benefits, especially those using Contracts for Difference (CfD).

One proviso, raised by respondents from a range of respondent types, was that community benefit funding should not be used to fund statutory duties, either of local or national government.

An alternative suggestion was a cap on the proportion of community benefit spending relative to other infrastructure funding from general taxation. Energy developer respondents suggested that the Principles should highlight a risk that, if a community does take on the delivery of a public service, statutory funding may not be forthcoming in the future should public finances improve.

Capacity issues

A range of respondents, including most of the energy developers who commented, argued that the capacity of local communities to undertake larger projects will be important, with a view that larger funding pots will require greater capacity along with third party support and knowledge exchange. There was a related concern that communities requiring help to deliver large projects could risk being dominated by large organisations.

A further suggested risk was that smaller or marginalised communities with limited capacity could be excluded, and there was a specific concern that voluntary community groups could be sidelined in favour of organisations such as development trusts with paid staff. It was suggested that the Principles should encourage developers and communities to prioritise capacity building, especially in early funding, including using small scale projects help to build capacity and putting a focus on using community benefits to leverage wider funding opportunities.

Implications of larger, long-term projects

It was noted that the benefits from larger and longer-term projects are likely to take longer to realise and may be of less direct benefit to the communities most affected by an offshore development, with an associated risk that these communities may feel short changed. The importance of clear communication on the long-term nature of the benefits involved and why benefits are being spread more widely were highlighted.

It was also observed that both communities and projects may evolve over the lifetime of a longer-term project, necessitating a flexible approach to priorities and support.

Retaining community control

Respondents saw the process of engagement and consultation with local communities as vital with a suggestion that contributing community benefit funds for larger and longer-term projects would need the community’s agreement. A local authority respondent reported their experience that collaboration or pooling of benefits may be more acceptable to communities who have already received such funding and have either built capacity or acknowledge their lack of capacity. In contrast, communities accessing funds or support for the first time may choose a more localised approach or small projects.

Others argued that larger scale or longer-term projects delivered at a regional level should only be acceptable if they provide clear benefits to the communities directly impacted by offshore wind development. It was also suggested that communities should retain full control of community benefits and could, with support, manage larger projects if sufficient funds were available. Indeed, it was suggested that communities can, and already are, delivering larger projects.

A mix of projects

An alternative perspective was that, to balance any use of community benefits for larger, longer-term projects, a proportion of funds should be protected for local, community-led initiatives – potentially smaller projects that deliver benefits over shorter timeframes. A Scottish Community Wealth Fund was proposed as a mechanism that would allow communities to benefit from larger scale, longer-term projects, while still being able to use local community benefit funds for other projects.

Question 1.7: The development of offshore wind is often geographically dispersed with multiple communities who could potentially benefit. To what extent do you agree or disagree that a regional and/or national approach to delivering community benefits would be an appropriate way to address geographical dispersal of development and multiple communities?

Question 1.7 summary

Respondents were most likely to disagree with a regional or national response. Amongst those who were supportive, levels of support for a regional or national approach were broadly equivalent.

Respondents from a range of respondent types either supported a regional approach or indicated circumstances where they might do so subject to certain caveats including that regional funding should be separate from, and additional to, local funding pots. Other provisos included agreement with a regional approach only where a portion of funding is retained at a more local level, where allocation of funds remains community-led or where a significant number of projects are concentrated in the same area.

Local authority respondents were amongst those indicating that they would welcome a regional approach, and there was a view that the approach to delivering community benefits should sit at local authority area level, but no higher. Reasons given for supporting a regional approach included offsetting challenges relating to geographical dispersal of offshore wind communities, enabling a strategic approach to bigger projects and projects extending across local community boundaries and sharing funds more equitably.

Among reasons for disagreeing with a regional approach was a concern that community benefits might be used to fill local authority funding gaps. Other reasons for opposing a regional approach included risks that benefits are diverted away from, or have less impact for, the local communities that are most affected by offshore wind projects.

Among respondents who would either support or consider a national approach to delivering community benefits, the most frequent reason was that this would be the most inclusive and equitable.

Reasons given for opposing a national fund included that it would divert funds away from most the most impacted communities and regions and would undermine the principle of local decision-making.

A total of 320 respondents answered Question 1.7.

The most frequent answer was that the respondent disagreed with a regional / national response or that community benefits should be restricted to communities that are local to offshore wind projects.

Among respondents expressing support for regional or national approaches to delivering community benefits, there was sometimes an expectation that these funds would be additional to the existing pot for local spending. In contrast, energy developer respondents pointed to the levels of revenue from offshore wind projects already being paid in to the public purse, with an associated concern that disproportionate costs in relation to community benefits will reduce competitiveness in UK-wide CfD auctions and risk developers not meeting investment criteria. One view was that additional obligations would be unsustainable.

Energy developer respondents were also among those who highlighted important advantages of a local approach that they felt could be lost. This included that community benefits help local community acceptance of renewable energy projects, and that a perception of benefits being redirected is likely to isolate the project from the local community and erode the relationship between developer and community. A place-based community organisation respondent highlighted significant benefits brought to their community by relatively small amounts of funding, noting that these would not have happened without local control of community benefit resources.

As at other questions, there was also an observation that individual situations are so variable that a flexible approach is required, allowing benefits to be tailored to local needs. Hybrid or tiered models involving combinations of local, regional and national approaches were proposed.

Regional approaches

There was apparently differing understanding of what is meant by ‘regional’ – as one respondent observed, ‘agreeing what is meant by ‘regional’ is challenging’.

Reasons a regional approach is supported

Respondents from a range of respondent types either supported a regional approach or indicated circumstances where they might do so, subject to certain caveats including (as noted above) that regional funding should be separate from and additional to local funding pots. Other provisos included agreement with a regional approach only: where it is not possible to deliver benefits at local level; where the approach is agreed by the local community; where a portion of funding is retained at a more local level; where allocation of funds remains community-led; or where a significant number of projects are concentrated in the same area.

While a number of local authority respondents indicated that they would welcome a regional approach, others were among respondents expressing a view that the approach to delivering community benefits should sit at local authority area level, but no higher. Explaining this position, two respondents argued that since the Scottish Government retains revenues from ScotWind lease options, community benefit payments should stay linked to host communities at local authority level. An alternative perspective, voiced particularly by national advocacy organisation respondents, was that an approach where different regions or local authorities create their own funds risks some areas not being covered by any regional fund, so consideration and consultation on the appropriate scale and boundaries of regional funds would be needed.

Reflecting points made in the consultation paper, reasons given for supporting a regional approach included:

• Offsetting challenges relating to geographical dispersal of offshore wind communities.
• Enabling a strategic approach to bigger projects and projects extending across local community boundaries.
• Sharing funds more equitably, including as part of just transition, and mitigating the cliff edges that can occur when neighbouring communities have access to very different levels of funding.
• Acknowledging that impacts associated with offshore wind projects extend over a wider area and affect more communities than those who are geographically closest to the development.

Respondents who saw merits in a regional approach also felt that it could:

• Maintain local connection and decision making, ensuring strong local input.
• Provide funds at a scale where there can still be impact and clear benefits to local residents, as long as the size of the region is proportionate to the available funding.
• Assist individual communities with access to shared development staff or shared reporting structures.

A number of examples of successful regional approaches were referenced. It was also suggested that a fund might be lodged with an organisation such as Foundation Scotland, to be distributed on a local or regional basis as appropriate.

Reasons a regional approach is not supported

Among reasons for disagreeing with a regional approach was a concern that community benefits might be used to fill local authority funding gaps. Other reasons for opposing a regional approach included risks that:

• Money is diverted away from or has less impact for the local communities that are most affected by offshore wind projects.
• Funds are spread too thinly to have real impact. This view was often expressed by energy developer respondents.
• Local authorities would not be sufficiently responsive to the needs of communities. A community council respondent reported their experience of an existing local authority-run scheme as being that, although communities are supposed to have a say in how money is spent, in practice this does not happen, and decisions are made by council officers.

National approach

Reasons a national approach is supported

Among respondents who would either support or consider a national approach to delivering community benefits, the most frequent reason was that this would be the most inclusive and equitable approach. It was also suggested that, in effect, all electricity payers contribute to Community Benefit Funds. Again, there was an expectation that a national fund should be additional to rather than in place of existing local funds.

Suggestions with respect to a national fund included:

• A Scottish Community Wealth Fund, delivered by an organisation independent of the Scottish Government and with a board led by community representatives. This was described as ‘a national fund for local community projects’.
• A National Wealth Fund for projects that do not impact specific communities. In particular, it was suggested that Scotland could learn from the experience of the Dutch North Sea ‘Transition Fund’ which provides an integrated approach to community benefits in coastlines of intense offshore development.
• A model similar to the Norwegian Sovereign Wealth Fund, investing in long term initiatives rather than distributing piecemeal funding.

Reasons a national approach is not supported

There was some strength of feeling among respondents who did not support a national fund. Reasons given for opposing a national fund included that:

• It would divert funds away from most the most impacted communities and regions. It would also fail to embed the principle of Community Wealth Building that wealth from natural assets should be recirculated locally.
• A national fund would undermine the principle of local decision-making and the link with the fund addressing local concerns and benefiting local residents. It would also fail to take sufficient account of local priorities and opportunities for collaboration.
• As an incentive for deployment of renewables, there needs to be a close link between community benefit funds and the communities that experience negative impacts. Such impacts are not experienced nationally and, by extension, benefits managed or delivered nationally are no longer ‘community’ benefits.
• Benefits would be diluted; with a risk they are spread too thinly because available funds are not of sufficient scale to have impact at a national level.

Question 1.8: Are you aware of any likely positive or negative impacts of the Good Practice Principles on any protected characteristics or on any other 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.

Question 1.8 summary

There was a view that the Principles provide an opportunity to deliver genuine positive impacts for communities, including with respect to those with protected characteristics and other groups. Respondents suggested that fairer allocation of funds that is aligned with local needs and priorities will have a positive impact on communities of place and interest – such as those in remote rural locations, areas of deprivation, people on low-incomes and protected characteristics.

Rural and island communities were frequently referenced, with the Principles seen as a key opportunity to benefit the rural, island and coastal communities most affected by net zero projects. These communities were described as experiencing significant deprivation linked to low incomes. Intersection with other groups, including with a higher prevalence of older people, was also highlighted.

In terms of specific impacts for rural, island and coastal communities, there was reference to economic development and enhancement of infrastructure, and reduced energy costs if community benefits support local renewable projects or energy efficiency improvements. Discussion of potential negative impacts included concerns around the extent to which rural, island and coastal communities are able to shape decision making, especially if decisions around use of community benefits are too centralised.

Economic development and employment opportunities were viewed as an area of potential positive impact for rural and island communities, with investment in training programmes linked to offshore wind seen as providing scope for well-paid jobs in the renewable energy sector. Possible negative impacts for businesses included a risk small local businesses might lose out to larger external contractors with respect to either capacity to deliver or costs.

A total of 290 respondents answered Question 1.8.

There was a view that the Principles provide an opportunity to deliver genuine positive impacts for communities, including with respect to those with protected characteristics and other groups. Examples were provided of community benefits already supporting services and activities that are essential to meet local needs, and it was reported that the Principles have helped to encourage more inclusive practices around the calculation and allocation of community benefit funds. Respondents suggested that fairer allocation of funds that is aligned with local needs and priorities will have a positive impact on communities of interest and place – such as those in remote rural locations, areas of deprivation, people on low-incomes and protected characteristics.

The approach to implementation of the Principles and management of community benefit funds was a focus for a range of respondents, who saw this as critical in terms of ensuring potential positive impacts can be realised for specific groups. It was suggested that marginalised groups or those with protected characteristics may be overlooked without effective implementation and engagement.

There was also concern that poor implementation could result in unintended negative impacts and exacerbate existing inequalities. It was proposed that independent research should be commissioned into the impact of community benefit funds to date, to identify learning around how funds can address the needs and priorities of communities.

Inclusivity was identified as a key focus for implementation of the Principles, especially for those who may face barriers to participation. Specific groups identified as at risk of exclusion from community benefit processes included those affected by visual impairment, language/literacy barriers, older populations, low-income households, those in areas of deprivation, disabled people and digitally excluded populations.

Comments around implementation of the Principles also included issues discussed at earlier questions regarding the potential role of regional or national management of community benefit funds. It was suggested that local communities could be disadvantaged by community benefit funds being redirected regionally or nationally, or alternatively that a national fund could ensure that community benefits can reach all those in need regardless of proximity to development. Other points raised in relation to allocation of funds included:

• How communities of interest are defined for community benefit purposes, including a call for guidance on how to balance geographical proximity with specific groups.
• The role of communities, including those who are already marginalised or excluded, in decision-making around use of community benefit funds and the importance of decision-making processes being accessible to local communities and businesses.
• A proposal for community benefit processes to incorporate Equality Impact Assessments.

Impact for specific groups

Rural and island communities

Rural and island communities were frequently referenced, including the requirement on public bodies to consider impacts for island communities and coastal communities. Rural and island communities were thought particularly likely to be impacted by the Principles due to their proximity to offshore wind development. This was noted both in terms of communities being likely to receive a larger share of benefits and being at higher risk of negative impacts.

The Principles were seen as a key opportunity to benefit the rural, island and coastal communities most affected by net zero projects. These communities were described as ‘fragile’, as having received historical under-investment, and as experiencing significant deprivation linked to low incomes, fuel poverty and high housing or transport costs, which may not be evident through measures such as the Scottish Index of Multiple Deprivation. Respondents suggested that some activities and organisations in rural and island communities are already reliant on community benefit funding to provide important services and funds were seen as having potential to further support the socio-economic resilience of these communities.

Intersection with other specific groups was also highlighted. For example, it was reported that rural and island communities typically have a higher prevalence of older people and specific forms of deprivation such as higher rates of fuel poverty. It was proposed that management of community benefits should consider the particular demographics and protected characteristics of rural and island communities.

In terms of specific impacts for rural, island and coastal communities, positive impacts anticipated in relation to economic development, included job creation and skills development, enabling rural businesses to participate in net zero supply chains, and enhancement of infrastructure, especially improved transport and digital connectivity. Other potential positive impacts included:

• Reduced energy costs if community benefits support local renewable projects or energy efficiency improvements.
• Increased tourism activity as a result of improved transport infrastructure, although it was acknowledged that higher visitor numbers can also have negative consequences.
• Potential to support population retention and repopulation in rural communities.

Discussion of potential negative impacts included concerns around the extent to which rural, island and coastal communities are able to shape decision making, especially if decisions around use of community benefits are too centralised. Respondents also suggested that communities may lack the capacity – in terms of skills, knowledge or time – to engage with developers and navigate complex application processes without additional support, and that some communities can be overwhelmed by the volume of renewable project proposals affecting their location.

Other negative impacts included:

• Potential for communities to be disadvantaged if community benefit funds are redirected to regional or national funds.
• Potential for rural, island and coastal communities to be disproportionately impacted if key industries are adversely affected by offshore development, primarily with reference to marine industries and tourism.

Low incomes and deprivation

It was suggested that low-income households and those affected by deprivation could benefit from a range of community benefit-funded initiatives such as support for: local renewable or energy efficiency projects; affordable housing initiatives; educational opportunities; small businesses; and community capacity building. However, there was also a view that more targeted measures may be required to deliver tangible benefits for low-income households and deprived communities.

In terms of specific positive impacts, respondents suggested that community benefits could be used to:

• Secure reduced energy costs or energy efficiency improvements that could be of particular to benefit low-income households and those in fuel poverty.
• Invest in local infrastructure and services or provide targeted support for affordable housing or creating employment opportunities.

Potential negative impacts identified in relation to low incomes and deprivation included:

• A risk of unintentional exclusion from participation in decision-making or grant application processes.
• A risk of unintended consequences if higher costs to developers result in higher energy prices – disproportionately impacting those in fuel poverty.

Protected characteristics

A local authority respondent suggested that it may be challenging to address protected characteristics directly since community benefits typically have a geographic focus. However, they saw the Principles as an opportunity to promote the issues in local partners’ Equality Outcomes and LPPs. Another suggested that a gender-based accounting approach could be used to ensure that benefits are distributed among different gender groups, and by extension, other protected characteristics.

Other positive impacts included:

• Potential for capacity building and community resilience to have a particularly positive impact for protected characteristics.
• Calls for age-based targeting of community benefits.

Potential negative impacts included a risk older people and those with disabilities could be excluded if the approach to participation and information sharing is not inclusive. It was suggested that a tailored and targeted approach is required to ensure processes include all protected characteristics.

Business impact

Economic development and employment opportunities were viewed as an area of potential positive impact for rural and island communities, with investment in training programmes linked to offshore wind seen as providing scope for well-paid jobs in the renewable energy sector. Other specific positive impacts identified for businesses included:

• Opportunities for businesses to benefit from community benefit funded activities, most directly through participation in supply chains, where community-based groups reinvest funds locally. It was also argued that investment in local ‘anchor’ businesses and services can extend the local impact of funds.
• Potential for capacity building and other community benefit funded activities to increase tourism activity and footfall for local businesses.

Possible negative impacts for businesses included:

• A risk that small local businesses might lose out to larger external contractors with respect to either capacity to deliver or costs.
• A suggestion that community benefits could provide a competitive advantage to some local businesses – thus disadvantaging others – or that community benefits could be too focused on community and third sector groups, missing opportunities to support businesses.

Determining appropriate levels of community benefits from offshore wind

A fundamental of community benefits, as set out in the existing Good Practice Principles, is that each package should be tailored to reflect the characteristics of the development, allowing communities and developers to agree an approach which delivers the best outcomes for the circumstances at hand.

Question 1.9: In your view, what would just and proportionate community benefits from offshore wind developments look like in practice?

Question 1.9 summary

Respondents reiterated views set out at earlier questions in relation to whether community benefits from offshore wind should be paid only to the local communities most directly impacted by a development or whether an element of redistribution of benefits at local authority/regional/national level would be appropriate.

With respect to features of community benefits, the most frequent suggestion was that payments should be mandatory, with arguments that they should also be index-linked, paid annually and paid over the whole life of the project.

The need to set benchmarks for all offshore technologies as they develop was suggested, with an expectation that levels might differ. A benchmark for offshore wind was seen as important, providing clear expectations and creating a level playing field between developers. However, energy developer respondents in particular highlighted the extent of variation between individual offshore wind projects suggesting the need for flexibility and for funding levels that are based on the actual impact on communities.

Respondents, across a range of respondent types, suggested that a benchmark for offshore wind should be in line with that set for onshore wind (i.e. £5,000 per installed MW per year, index-linked). However, energy developer respondents noted that offshore wind projects are inherently more challenging and more expensive, so an equivalent level of community benefits should not be expected.

A wide range of values for benefits based on capacity or share of revenue were proposed. It was also proposed that developers should offer opportunities for shared ownership as a mechanism for providing more significant levels of benefit for communities.

A total of 305 respondents answered Question 9.

In terms of what would be just, respondents reiterated views set out at earlier questions, with respect to whether community benefits from offshore wind should be paid only to the local communities most directly impacted by a development or whether an element of redistribution of benefits at local authority/regional/national level would be appropriate. There were also references to procedures for decision-making or priorities for use of community benefits including: improving energy efficiency and reducing energy bills; infrastructure improvements; a focus on skills development and local employment.

Determining a proportionate level

A general suggestion was that to be proportionate a community benefit package should take account of the scale, duration, and intensity of the development and the degree of impact experienced by different communities at different times.

Mandatory payments

With respect to features of community benefits, the most frequent suggestion was that payments should be mandatory, with arguments that they should also be index-linked, paid annually and paid over the whole life of the project. In some cases, it was suggested this should include the construction phase, or that benefits should be made available to communities from very early engagement with developers, prior to the fund being agreed, for example to cover professional services.

An alternative perspective was that community benefit should remain voluntary. It was also suggested that they remain outside of the planning process.

Setting a benchmark

The need to set benchmarks for all offshore technologies as they develop was suggested, with an expectation that levels might differ.

Respondents saw setting a benchmark for offshore wind as important, providing clear expectations and creating a level playing field between developers. It was reported that setting a benchmark for onshore funds had freed communities from the need for individual negotiations over the value of the fund and allowed them to plan and budget. Scope to vary any minimum value upwards based on community needs, local socioeconomic context, and the extent of infrastructure or landscape impact was also proposed.

In contrast, energy developer respondents in particular highlighted the extent of variation between projects, noting the need for flexibility and funding levels that are based on the actual impact on communities. Rather than setting a benchmark, it was proposed that the size of community benefit packages should be at the discretion of an individual developer, based on their project’s business model.

A further issue, again raised primarily by energy developer respondents, was that elevated expectations around community benefit should not reduce Scotland’s competitiveness in the offshore wind market. There was concern that community benefit costs could require Scottish developers to increase their CfD bids, both increasing prices for UK consumers and disadvantaging Scottish projects if the same costs are not replicated elsewhere in the UK. An associated suggestion was that community benefits should be seen as part of wider package of benefits brought by renewable energy projects including supply chain investments, skills development and training programs, job creation and lease payments to Crown Estate Scotland. One view was that these lease payments – effectively economic rent collected by Crown Estate Scotland as the landowner – should be used to provide community benefits.

Parity with onshore wind

Respondents, across a range of respondent types, suggested that a benchmark for offshore wind should be in line with that set for onshore wind (i.e. £5,000 per installed MW per year, index-linked). However, energy developer respondents observed that offshore wind projects are inherently more challenging and more expensive, so an equivalent level of community benefits should not be expected. Additional points in support of this position included that:

• Developments which are far offshore will not have the same visual impact on communities as onshore wind farms can do.
• While CfD contracts provide developers with a guaranteed price for the electricity they generate, recent increases in commodities costs and grid charges have both reduced profitability and increased risk levels.

A requirement for research to assess the relative profitability of offshore and onshore wind was suggested in order to help to make an informed decision on an appropriate level of community benefit for the offshore sector, as was the need for transparency from energy developers around project finances. In light of the commercial sensitivity of such information, a potential role for the Scottish Government in determining an appropriate level of benefits was highlighted.

Issues relating to setting a benchmark value for onshore renewable energy technologies are discussed in Section 2, Questions 2.11 and 2.12.

Methods for determining community benefit rates

Respondents suggested various criteria for determining community benefits based on the quantity of energy produced (either installed capacity or actual generation) and/or on the revenue or the profits made by the developer. A specific proposal was that revenue should be inclusive of constraint payments.

Benefits based on capacity

Respondents proposed a wide range of values for benefits based on capacity, varying from £1,000 per MW for the lifetime of a project (suggested by an energy developer respondent) to figures of £10,000 per MW or more (suggested by respondents including place-based community organisations and individual respondents). More typical suggestions were £5,000 per MW, £7,000 per MW, or £7,500 per installed MW.

Benefits based on a share of revenue

It was noted that this approach means that the community benefits if the developer does well. Again, a range of values was suggested including: 2.5% generated value; 2.5% gross profit; 5% gross revenue and 5% gross profits. Respondents suggesting the last value typically supported a breakdown of 1% gross profit going to the local community and 4% to a Scottish Community Wealth Fund.

Combination models

The advantages of a ‘floor and ramp’ model, involving a guaranteed minimum based on project capacity and additional returns linked to revenue were noted, and it was suggested that a fixed amount plus a top-up depending on performance might be more affordable for developers. Among specific combinations suggested, respondents proposing a Scottish Community Wealth Fund also suggested a guaranteed minimum of £2,500 per MW per year, while two local authority respondents noted that they would like to see 2.5% gross revenue or generated value with a guaranteed minimum of £5,000 per MW per year.

Offering shared ownership

It was argued that developers should offer opportunities for shared ownership as a mechanism for providing more significant levels of benefit for communities with some suggestions that such shared ownership should be over and above other community benefits.

Opportunities and barriers associated with shared ownership are considered further at Questions 1.11 and 1.12.

Question 1.10: What processes and guidance would assist communities and offshore wind developers in agreeing appropriate community benefits packages?

Question 1.10 summary

There was a view, expressed particularly by community council, place-based community organisation, and national advocacy organisation respondents – that a mandatory benchmark figure would help communities, both by providing a clear indication of the benefits that can be expected and removing the need for negotiation with the developer.

A requirement for earlier or more meaningful engagement between developers and communities to shape schemes was a frequent theme, with an associated view that existing consultation exercises can be superficial. There was a call for discussions to start at an early stage of project planning.

The importance of providing advice and support to help communities when negotiating with developers was also noted, with reference to professional services (such as facilitation, legal, planning and financial expertise) and signposting to existing organisations such as Local Energy Scotland or Community Energy Scotland. Creating Community Benefit Champion posts, to bring specialist knowledge of the renewables industry, along with skills in facilitation and community development was also proposed, along with expanding the Scottish Government’s Community and Renewable Energy Scheme (CARES).

Respondents also emphasised the importance of community-led decision making, and particularly a view that developers should not impose predefined ideas with respect to appropriate uses for community benefit funds.

A frequent request from energy developer respondents was for a greater emphasis on the broader socio-economic benefits brought by offshore wind projects, not only supply chain and job opportunities but also the delivery of more affordable energy. There was an associated view that work is needed to better inform communities about both the challenges and limited returns from offshore wind to avoid creating unrealistic expectations on the scale of funds that the industry can deliver.

A total of 305 respondents answered Question 10, with many answers reflecting themes raised across previous questions. As general points, the current onshore Principles were noted as a good starting point, and it was suggested that a voluntary industry standard for developers could embed the good practice encouraged in the Principles. While most respondents focused on guidance for individual communities agreeing packages with developers, there were also comments on how regional or national funds might be agreed.

Standardising payment levels and periods

There was a view, expressed particularly by community council, place-based community organisation, and national advocacy organisation respondents – that a mandatory benchmark figure would help communities, both by providing a clear indication of the benefits that can be expected and removing the need for negotiation with the developer. A local authority respondent proposed that agreements should be legally binding to prevent a voluntary commitment from being altered or withdrawn once planning approval is granted.

It was also suggested that payments should be: at a higher rate than at present to better reflect the impact on communities; index linked and uncapped; for the full operational life of a wind farm; and for periods outside operation – prior to construction and during both construction and decommissioning.

Earlier and more meaningful engagement and consultation

A requirement for earlier or more meaningful engagement between developers and communities to shape schemes was a frequent theme, with an associated view from some respondents that existing consultation exercises can be superficial. An energy developer respondent noted that they would welcome clear guidance on engagement expectations in terms of timing, depth and inclusivity.

Respondents’ suggestions with respect to timing included that discussions should start at an early stage of project planning, including before consenting, to allow communities and agencies to raise concerns and expectations during the project scoping stage.

Issues raised at Question 1.1 were also emphasised, including the need for:

• Clear methodology for identifying relevant communities.
• Open and transparent consultation.

Providing comprehensive information in accessible format

Other comments concerned the nature of the information presented to communities at the early stage, including that it should be sufficient to allow informed decisions to be made, including in relation to associated onshore infrastructure, and that it should be provided in a format that is easy to understand.

Providing support and guidance

The lack of relevant experience in many communities was also highlighted, with one suggestion that it may not be viable for communities to agree their own community benefit packages with developers. Other respondents noted the importance of providing advice and support to help communities when negotiating with developers, with suggestions including:

• Access to professional services – for example facilitation, legal, planning and financial expertise.
• Signposting existing organisations such as Local Energy Scotland or Community Energy Scotland or the Community Chartering Network for advice and support.
• An independent body to ensure that communities have an advocate in negotiations.
• Expert advice to assist in drawing up short- and long-term CAPs.
• Creation of Community Benefit Champion posts, to bring specialist knowledge of the renewables industry, along with skills in facilitation and community development.
• Expanding CARES.
• A more consistent community benefits advice and support service.
• A mechanism for peer-to-peer engagement to share experiences and solve problems.

Other ideas included a standard template for benefit agreements, as well as a standardised guidance pack for communities. Suggestions regarding content included: an explanation of how community benefits are separate from the planning process and the roles and responsibilities of all those involved; what to expect and things to think about; feedback from communities that have been in receipt of benefits and lessons learned from previous projects; clear, step-by-step instructions and checklists; clear methodologies for determining funding levels if benchmarks are not set; information on where to get help – as listed above; and case studies and good practice relating to different sizes of energy projects and community benefit packages.

An energy developer respondent highlighted the need for any examples of good practice to be relevant to the Scottish sector noting that economics, energy markets, cost of capital, and government subsidies can all very between countries.

General features of the guidance provided include that it should be:

• Written in clear concise language understood by all stakeholders.
• Visually appealing and laid out to enhance readability.
• Developed after engagement with a wide range of stakeholders. (The process followed by Visit Scotland to develop the Visitor Levy Guidance was suggested as a good example of a structured and inclusive approach.)
• Structured, but flexible enough to adapt to different situations.
• Updated regularly.

While most comments on support and guidance related to the needs of communities, there were also suggestions with respect to provision for developers, for example training about community benefit or additional support for developers to navigate community engagement and benefit agreements.

Deciding how funds can be used

Respondents also emphasised the importance of community-led decision making, and particularly a view that developers should not impose predefined ideas with respect to appropriate uses for community benefit funds. A related suggestion was that making local, regional and national plans available in one place would allow communities and developers to find and use this information to inform and enhance plans for spending community benefit funds.

Communication about wider benefits and challenges in offshore wind

A frequent request from energy developer respondents was for a greater emphasis on the broader socio-economic benefits brought by offshore wind projects, not only supply chain and job opportunities but also the delivery of more affordable energy. There was an associated view that work is needed to better inform local communities about both the challenges and limited returns from offshore wind – still a relatively new technology – and to avoid creating unrealistic expectations on the scale of funds that the industry can deliver. The need for consistency was also highlighted with requests for a common approach to community benefits across Scotland’s local authorities and between Scottish and UK Governments.

As at other questions, energy developer respondents also pointed to the wide variation between offshore projects, suggesting that this means there should be no benchmark value, with the scale of individual community benefit funds instead being determined by the developer, based on their project’s business model.

Shared ownership of offshore wind developments

Shared ownership is distinct from community benefits, however opportunities for shared ownership of offshore wind developments have the potential to deliver long-term economic and social benefits. Shared ownership is not included in existing good practice principles, however, there is an increasing interest from both communities and industry in how shared ownership could increase the distribution of wealth generated through offshore wind assets.

Question 1.11: What do you see as the potential of shared ownership opportunities for communities from offshore wind developments? Please explain your answer.

Question 1.11 summary

Those respondents who saw potential benefits in shared ownership anticipated some significant opportunities, including providing a direct, secure, regular, long-term or sustainable income to fund community projects, with greater financial returns than provided by traditional community benefit funds.

However, potential problems and challenges were also highlighted including by energy developer respondents who noted that, although supporting the principle of shared ownership, they considered opportunities in relation to offshore wind to be limited or to require major challenges to be overcome first.

Issues limiting the current potential for shared ownership, highlighted by a range of respondents, included the large scale and high costs of offshore wind projects, the complexity of offshore development and the long timescales involved.

While it was acknowledged that the Scottish Government does not have powers to mandate a shared ownership option, national advocacy organisations were among those who suggested that the Principles should state that shared ownership up to 20% is expected as good practice.

There was a clear view of shared ownership as something to complement rather than replace community benefits. There were also suggestions that, rather than host communities raising finance to invest, developers should gift them a small percentage of the project, with 2% the most frequent suggestion.

A total of 300 respondents answered Question 1.11.

Potential opportunities

Those respondents who saw potential benefits in shared ownership anticipated some significant opportunities. It was suggested that, excepting entirely community owned energy projects, shared ownership provides the strongest benefits to communities and that it can be more accessible for communities than taking sole responsibility for developing their own projects.

Suggested advantages of shared ownership included providing a direct, secure, regular, long-term or sustainable income to fund community projects, with greater financial returns than are provided by traditional community benefit funds. Other potential benefits could include:

• Greater control and financial independence for communities, including flexibility in directing funds.
• Improving resilience, diversifying local sources of income and creating opportunities for Community Wealth Building with wealth staying in the community and profits being reinvested locally.
• Opportunities for reducing energy costs for local households and businesses, including a peer-to-peer electricity trading arrangement.
• Opportunities to build capacity within communities.
• Social benefits in terms of inclusion, accessibility and responsibility.
• Opportunity for an ethical investment and a stake in the energy transition to net zero.
• The possibility that shared ownership could increase community engagement or increase support for renewable energy projects.
• The chance to influence project decisions – for example in relation to environmental protection.

Respondents also highlighted potential opportunities for ownership to be shared by wider communities beyond those in closest geographical proximity to the offshore development with suggestions including: local authorities; regional funds sharing benefits across multiple communities; organisations linked by geography or interest coming together to create vehicles to invest; urban communities; and the Scottish Government. One suggestion was that local communities could be given priority in the form of earlier share offers or shares at a lower price than those released in subsequent rounds.

While most respondents focused on opportunities for communities it was also suggested that, for developers, shared ownership could help to finance projects, reduce objections and appeals and enhance their reputation.

Potential problems and challenges

However, potential problems and challenges were also noted including by energy developer respondents who noted that, although supporting the principle of shared ownership, they considered opportunities in relation to offshore wind to be limited or to require major challenges to be overcome first.

Issues seen as limiting the current potential for shared ownership, highlighted by a range of respondents, included:

• The large scale and high costs of offshore wind projects (proportionately greater than for onshore developments) and hence the high level of investment that would be needed for shared ownership. As an illustration, DTAS research was reported to have found that a 1% revenue stake in a 1GW offshore wind project would require an investment of around £16 million^[5].
• The complexity of offshore development, meaning that community bodies would require a level of capacity and expertise that is likely to be challenging.
• The long timescales involved meaning that communities might have to wait a number of years before receiving any returns.
• Current issues relating to Transmission Network Use of System charges and Offshore Transmission Owner requirements could pose challenges for investment.
• The willingness of developers to explore opportunities for shared ownership.
• The interest of community members in a financial association with infrastructure seen as harmful to the community and the environment.
• The risk, uncertainty and potential liabilities associated with shared ownership. An associated point was that the level of risk and responsibility involved in shared ownership may not be sustainable for a community body run by volunteers.

It was reported that, for both offshore and onshore wind developments, communities that have been keen to explore opportunities for shared ownership have been less likely to proceed when the risks and uncertain income are better understood. Two community-based respondents reported their own experience:

• A community council respondent noted that legal costs and ongoing insurance and maintenance requirements had made it hard for small communities to take up the offer of a share in a turbine.
• A place-based community organisation respondent noted that, for them, the borrowing required did not provide a good investment opportunity.

Examples and potential models

While it was acknowledged that the Scottish Government does not have powers to mandate a shared ownership option, national advocacy organisation respondents in particular proposed that the Principles should state that shared ownership up to 20% is expected as good practice. It was also suggested that conditions on planning applications could be used to ensure that shared ownership options are built into projects at an early stage.

Examples of shared ownership of offshore wind farms elsewhere in Europe were cited and Project Collette, being developed off the Cumbrian coast, was seen as offering potential insights for Scotland. It was also reported that a consortium of energy developers is already working on a framework to extend shared ownership to offshore projects, building on an existing collaboration that has established onshore wind co-operatives in Scotland. Development of Local Power Plans, which will allow communities to co-invest in renewable energy solutions with GB Energy could also provide an opportunity to invest community benefit funds to secure a higher or longer-term return.

In terms of models, it was argued that split ownership or joint venture^[6] should be considered as best practice as they provide a voice in decision making at all stages of operation. However, it was also reported that shared revenue is the more common approach, and it was suggested that, where this is the only option provided, communities should be supported to negotiate a fair deal and embed community control where possible.

There was also a view that, before any guidance is considered, the potential commercial models should be considered to ensure community investors are adequately protected from risk.

Issues to clarify

Who bears the risks?

There were differing views on how the risks associated with offshore wind development might be managed in the context of shared ownership – both that communities must be protected from risk and that they would need to share it. For example, a local authority respondent argued that the developer should bear the entire development risk, offering shared ownership to the community only 6 months after successful commissioning. In contrast, an energy developer respondent noted that the development phase alone can cost millions with no guarantee that the project will proceed, suggesting that a community investing in the project would need to shoulder a share of the risk.

Relationship to community benefits?

There was a clear view of shared ownership as something to complement rather than replace community benefits, and it was suggested that the Principles should make clear that the developer should still provide community benefits on the privately owned part of the development, even when the community takes up a shared ownership offer. However, an energy developer respondent expected that shared ownership could be sustainable for developers because there would be a lesser requirement for community benefit payments coming from the total project costs.

A gift rather than an investment?

Other respondents proposed that, rather than host communities raising finance to invest, developers should gift them a small percentage of the project, with 2% the most frequent suggestion. An opportunity to increase investment beyond the donated level of ownership could be encouraged. It was also suggested that developers could be incentivised to allocate shares to communities, for example via tax rebates or rates reductions, or that doing so could be a condition of planning approval.^[7]

Access to finance, advice and support

Respondents also highlighted the extent of the support and access to specialist advisors that communities would need to explore or proceed with shared ownership opportunities. These aspects are considered further at Question 12.

Question 1.12: Thinking about the potential barriers to shared ownership of offshore wind projects, what support could be offered to communities and developers to create opportunities and potential models, and for communities to take up those opportunities?

Question 1.12 summary

High capital cost was often identified as a potential barrier to shared ownership requiring support for communities to access affordable finance, for example via government-backed loan and grant schemes. The need for long-term (patient) capital was also highlighted. Suggestions with respect to potential sources of funding included the Scottish National Investment Bank (SNIB) and GB Energy.

A number of mechanisms were also suggested including low interest or interest free loans and grants, democratic finance models and match funding using public funds.

The complexity of the legal and financial structures associated with shared ownership were highlighted, with resulting concerns around either the confidence or capacity of communities to negotiate these issues. Requirements for access to sources of expert, technical, financial and legal advice and guidance and for capacity building within communities were noted. There were calls for any expert advice to be independent and either free of charge or subsidised.

A requirement to manage or reduce the level of risk for communities was suggested, for example via a risk-sharing framework that includes government-backed revenue guarantees or minimum return commitments.

Suggestions were also made with respect to incentivising developers to offer shared ownership, for example by making seabed leases for development or repowering conditional on partial community ownership or enhanced CfD bidding for projects with shared ownership. Adding shared ownership to the list of material considerations when planning applications for new and repowering energy developments are considered was also proposed.

A total of 290 respondents answered Question 1.12, with the barriers identified tending to reflect the challenges noted at the previous question. As in respect of community benefits, some envisaged shared ownership being available to communities beyond those in geographical proximity to offshore wind developments.

Addressing capital costs

High capital cost was often identified as a potential barrier to shared ownership requiring support for communities to access affordable finance, for example via government-backed loan and grant schemes. The need for long-term (patient) capital was also highlighted. Suggestions with respect to potential sources of funding included:

• The SNIB.
• Local Energy Scotland/CARES.
• The Scottish Government’s Just Transition Fund.
• GB Energy.
• A potential Community Wealth Fund, National Wealth Fund or Community Offshore Wind Investment Fund.

A number of mechanisms were also suggested including:

• Low interest or interest free loans and grants.
• Democratic finance models to raise finance through community shares, community bonds and local philanthropy.
• Matched funding models, with public funds matching community contributions and so reducing the financial burden on local groups.
• Pooling resources across communities and jointly investing in offshore wind projects.
• Strategic joint ventures with public or private partners, where communities partner with national public bodies to co-invest without bearing full financial risk.
• Revenue guarantee mechanisms to enable better loan conditions or derisk community investments.
• Deferred payment models or communities paying back the capital costs of shares over the length of the agreement.

It was suggested that the Scottish Government should partner with potential funding organisations, developers and communities to research, develop and test different offshore shared ownership models.

Noting challenges around raising large amounts of capital, an energy developer respondent suggested that the Financial Conduct Authority might provide guidance on community investment models and their structures to help communities and developers navigate the regulatory landscape while retaining flexibility to accommodate diverse community energy investment models.

Support to understand complex issues

The complexity of the legal and financial structures associated with shared ownership was highlighted, with resulting concerns around either the confidence or capacity of communities to negotiate these issues. Requirements for access to sources of expert, technical, financial and legal advice and guidance and for capacity building within communities were noted.

There were calls for any expert advice to be independent and either free of charge or subsidised. Suggestions with respect to possible sources of such advice or support included:

• Regional energy advisory services offering legal, financial, and technical expertise to communities interested in shared ownership.
• Local Energy Scotland/CARES.
• A politically and commercially independent body.

It was also suggested that third-party advisory bodies might be asked to negotiate fair ownership agreements between communities and developers, and that the Local authority should lead on arrangements to ensure capacity, credibility and accountability.

Suggestions with respect to increasing capacity within communities included funding training and skills development for community councils, development trusts and community members to better understand the complexities of shared ownership or to provide knowledge and confidence to engage with developers. There was a particular concern that, at present only very high-capacity community organisations are able to secure shared ownership, with a risk that the gap between poor and wealthy communities will widen. Specific suggestions included:

• Targeting support to areas likely to be prioritised by developers.
• Establishing protocols to analyse the capacity of communities that have shared ownership opportunities to identify gaps for targeted support.
• For communities with limited capacity, providing funding for ‘hands on’ assistance to project manage a shared ownership workstream.

The importance of maintaining community capacity in the longer term was also highlighted.

Standardising documentation – for example ownership models, legal agreements and financial templates - was also seen as a means of reducing complexity for any community bodies considering shared ownership.

Managing risk exposure

A requirement to manage or reduce the level of risk for communities was suggested, for example via a risk-sharing framework that includes government-backed revenue guarantees or minimum return commitments. Other suggestions included reassurance about what would happen if a community no longer wished or was unable to be involved in shared ownership. From the developer’s perspective it was suggested that the Scottish Government should provide guarantees in case of community default or other unexpected events.

Providing incentives for developers to offer shared ownership

Suggestions were also made with respect to incentivising developers to offer shared ownership, for example by:

• Introducing regulations to require developers to offer a proportion of community ownership in all large-scale offshore wind projects.
• Making seabed leases for development or repowering conditional on partial community ownership or enhanced CfD bidding for projects with shared ownership.
• Adding shared ownership to the list of material considerations for new and repowering energy developments when planning applications are considered.
• Priority consenting or priority grid connection for projects offering shared ownership.
• Tax incentives and subsidies for developers who offer shared ownership opportunities.
• Positive publicity for developers via publication of an annual list of the companies who provide shared ownership (and community benefits) on the highest proportion of their projects in Scotland.

Promoting opportunities for shared ownership

Respondents who proposed wider opportunities for shared ownership were among those who suggested a national awareness raising campaign, including case studies of successfully implemented shared ownership projects. The Principles should also set shared ownership in context.

A further suggestion that access to information on potential opportunities for shared ownership should be made available – for example via a map or portal to flag planning applications for renewable developments or teams reaching out to specific communities who have the opportunity to take part in shared ownership schemes. Potential to match communities who have funds to invest with projects that are seeking investment was suggested.