Onshore renewable energy - refreshing the good practice principles for community benefits: working paper

Section 3 – Governance and Distribution

Summary

• This section sets out proposals for how the refreshed Good Practice Principles could strengthen guidance on the governance and distribution of community benefits.
• We are proposing updates to the 2019 guidance in key areas:
  • Principles – core expectations for good governance and fair distribution.
  • Indicators – examples of how to demonstrate the Principles in practice.
  • Tools – templates and resources to support more consistent practice.
  • Governance structures – clearer options and expectations for how community benefit arrangements could be governed.
  • Distribution – a clearer local-first process for deciding how funds are shared.

Key Terms:

Governance: How community benefit arrangements are organised and overseen, including who makes decisions, how they are made, and how these arrangements are managed and reviewed.

Distribution: How community benefits are shared within the Area of Benefit.

Area of Benefit: The geographical area a community benefits package is intended to support, agreed with the local community through consultation.

Repowering: The renewal of existing energy supply developments at the end of their lifespan.

Community Benefit Agreement: A formal agreement between the developer and the community group(s), detailing the community benefit arrangements.

Lifecycle: The four broad stages of community benefit arrangements: Early Engagement and Preparation; Set‑Up and Agreement; Operation; and Delivery, Review and Adaptation.

Community Benefits Register: The Scottish Government’s public register where community benefits packages from renewable energy developments are recorded.

Community Action Plan: A community‑led plan that identifies local needs and priorities and can guide decisions on how community benefits are used.

Purpose

This section proposes updates to the Good Practice Principles on how community benefits could be governed and distributed. The aim is to ensure these arrangements are transparent, proportionate and community‑led, with a clear and consistent local‑first approach across all technologies covered by the final updated Good Practice Principles.

Consultation feedback, Community Conversations, and engagement with the Onshore Review Advisory Group showed strong support for the core foundations of the 2019 guidance – early and open engagement, alignment with community priorities, community‑led decision making, and flexibility to reflect local context. At the same time, people identified the need for clearer governance structures, clearer roles and responsibilities, and greater transparency. Many also highlighted challenges relating to community capacity and representation, particularly the limited involvement of young people and seldom‑heard groups and the need for clearer support for communities at an early stage.

People also wanted to keep a local‑first approach but asked for clearer, evidence‑based approaches to widening distribution, more consistent arrangements for co‑located developments, and better documentation of decisions.

The proposals in this section aim to address these asks.

What the refreshed guidance could mean in practice

• Community‑led decisions on local priorities, governance arrangements and fund design.
• A clear local‑first approach with a guaranteed share for the host community; any wider distribution would require clear reasoning and community agreement.
• Alignment with community‑led plans, with support available to develop or refresh these where needed.
• Independence and trust through separating decision‑making and fund administration wherever practical, or recording proportionate mitigations where full separation is not feasible.
• Clear, accessible information, including a short annual public update, periodic evaluation, and routine updates to the Community Benefits Register.
• A transparent public view of all relevant community benefits across projects within the Area of Benefit.
• Communities equipped with the tools, support and information needed to participate confidently.

Approach

We propose a range of updates to make the refreshed Good Practice Principles clearer and easier to use. This includes:

• setting out Principles that describe what good governance and fair distribution could look like;
• providing practical examples – Indicators – to illustrate how the principles might be demonstrated;
• updating and expanding the Community Benefits Toolkit (Section 4) so communities can access clear and practical support throughout the lifecycle of a community benefit fund;
• grouping governance arrangements into flexible structures with minimum expectations, and,
• introducing a clearer local‑first distribution process supported by simple tools.

These proposals are designed to remain workable across different development scales, co‑location scenarios, and levels of community capacity.

Policy proposals

Principles – what good looks like

Feedback from the consultation, Community Conversations and the Onshore Review Advisory Group showed the need for clearer and more consistent governance expectations. In response, the refreshed Good Practice Principles would set out seven Principles for good governance and fair distribution of community benefits. These build on the Good Governance Principles in the 2019 guidance, strengthening and updating them to reflect how practice across Scotland has evolved. Together, they set the standards expected of everyone involved in agreeing, designing, and delivering community benefits.

1. Community‑led and inclusive

Governance is designed with communities. Engagement starts early, is meaningful and accessible. It is also representative, including young people and seldom‑heard groups.

2. Local-first

Local communities receive a guaranteed local share of benefits, aligned with community‑led plans (such as Community Action Plans). Local communities shape priorities and fund design before any wider sharing is considered, and funds from multiple energy developments are coordinated where feasible.

3. Independent and fair decision‑making

Decision-making is clear and fair, with steps in place to manage conflicts

of interest. Fund administration is separate from decision-making. Where this is not possible, proportionate mitigations are recorded and published.

4. Open and transparent

Decisions and reasons for these are clear and published promptly. Arrangements are routinely updated on Scotland’s Community Benefits Register.

5. Clear roles and responsibilities

Responsibilities for proposing, deciding, administering and reporting are publicly documented. Recruitment to decision‑making panels is transparent and panels are supported by induction training and succession planning.

6. Supported communities

Communities have access to clear information, practical tools, and support, enabling confident participation from before construction through to decommissioning.

7. Continuous improvement

Governance arrangements undergo annual reviews and five‑year evaluations, with earlier reviews where major changes occur (for example, repowering, sale or persistent delivery issues).

Indicators – how to show it

Consultation feedback highlighted that the 2019 guidance is too high‑level, and that communities and developers would benefit from clearer, practical examples. We propose introducing a new set of Indicators to show what good governance and fair distribution look like in practice.

These Indicators would act as prompts that communities, developers and partners can use to evidence good practice in ways that suit the local context. Because community benefit arrangements vary in scale, complexity and structure, the refreshed Good Practice Principles would include multiple Indicators under each Principle or stage of the community benefit arrangement lifecycle, ensuring the range of good practice is properly reflected.

The final set of Indicators would be developed with communities, developers and partners, informed by feedback on the preferred structure. The refreshed Good Practice Principles would also provide guidance on how the Indicators can be used to support transparency, empower communities, and build confidence throughout the process.

Example Indicators:

• Community ‑ led and inclusive: Engagement summaries show who took part and how feedback informed decisions.
• Local ‑ first: Area of Benefit Record shows boundaries, rationale and guaranteed local share.
• Independent and fair: Register of Interests for decision-makers and records of when someone stepped back from a decision because of a conflict of interest are documented and publicly available.
• Open and transparent: Decision Notes are published within agreed timelines.
• Clear roles: Roles and responsibilities are documented and publicly available.
• Supported communities: There is evidence of capacity support from developers, use of Toolkit resources and access to independent advice during site construction.
• Continuous improvement: Annual review is completed and made public.

Options for structuring Indicators:

• Principles‑led (the example approach used above): Indicators arranged under each Principle.
• Lifecycle stage: Indicators grouped by stage of a community benefit arrangement (Early Engagement and Preparation, Set‑Up and Agreement, Operation and Delivery, Review and Adaptation).
• Hybrid model: A small set of core Indicators for all situations, with additional lifecycle‑matched or optional Indicators for co‑location or more complex contexts.

Tools — what to use

People told us in the consultation that they want clearer, more practical tools to support good governance and distribution of community benefit funds, especially for volunteer‑led groups. We propose to update the existing Community Benefits Toolkit, hosted by Local Energy Scotland, so that it reflects the refreshed guidance.

Updates to existing Tools

• Governance Pack: Roles map, decision and minute templates, conflicts‑handling templates, simple complaints and appeals routes, review planner.
• Five‑year Evaluation Pack: Annual review; optional three‑year check (where proportionate); five‑year evaluation template.
• Annual Outcomes Summary: Standardised, plain‑language public reporting on decisions, spend and outcomes.

We also propose adding some new tools to further support governance and distribution to the toolkit as below.

Proposed New Tools

• Area of Benefit Record: Boundary, local share, rationale and review date.
• Distribution Decision Pathway: Evidence-based case for change, including community agreement, when widening or pooling is considered.
• Coordination Note: Roles, responsibilities and contributions across co‑located or multiple developments, including options for consolidated funds while protecting the local share.

See Section 4: Supporting Communities for more detail on how we propose to update the Community Benefits Toolkit.

Governance structures and roles

Stakeholder feedback showed that while many existing governance arrangements work well, people want clearer options, more consistent standards, and greater transparency, while still retaining the flexibility needed to reflect local contexts. The 2019 guidance referred to different types of governance arrangements, but it did not set out example models or minimum expectations that should apply across all approaches.

To address this, we propose two key changes:

• Introducing a small set of flexible governance structure options that communities can adopt or adapt to suit their context.
• Setting clear minimum expectations that apply to all governance arrangements, regardless of the structure chosen.

These changes are intended to provide communities, developers and partners with clearer guidance on what “good governance” looks like in practice, while still enabling local choice and variation.

Proposed governance structures (flexible)

Communities could adopt or adapt any of the following:

• Single ‑ place model: An incorporated community‑led body manages a fund for the local area.
• Multi ‑ place (sub ‑ regional) umbrella model: Neighbouring communities jointly govern shared or pooled arrangements, with local shares protected.
• Third ‑ party administrator model: An independent administrator supports a community‑led decision panel.
• Developer ‑ administered model: The developer administers the funds based on community priorities. Used where a community chooses this approach, supported by clear standards and a path to increasing independence.

Proposed minimum expectations (applied to all governance structures)

While some expectations were implied in the 2019 guidance, we propose establishing minimum expectations for all governance arrangements. This would support transparency and accountability.

• Legal incorporation (for example, a Scottish Charitable Incorporated Organisation, (SCIO), a Company Limited by Guarantee (CLG), or community benefits society).
• Separation of decision‑making and administration, or proportionate mitigations.
• Transparent documentation (Decision Notes, Register of Interests, Roles Map).
• Transparent panel recruitment.
• A simple complaints and appeals route.
• Scheduled reviews of the Roles Map and governance approach.

Roles (high-level expectations)

We propose that detailed roles and responsibilities continue to be set out in Community Benefit Agreements, with broad expectations as follows:

• Communities lead on priorities and governance.
• Developers support early‑stage engagement and capacity, and uphold community‑led decision‑making.
• Fund administrators deliver agreed processes and reporting.
• Partners and intermediaries provide training, guidance and independent support or coordination.

Distribution

The 2019 guidance asked partners to define the Area of Benefit and to consider widening the area with community support. Feedback shows strong support for maintaining a local‑first approach, but also a need for clearer decision-making processes for wider sharing, co‑located developments and construction‑phase benefits.

In response, we propose the following steps to set out a clearer approach to distribution, supported by practical tools and stronger expectations. This approach would help communities and developers make fair, evidence‑based decisions aligned with community‑led plans:

• Local‑first starting point: The Area of Benefit would begin with the local community (those closest to the energy development), informed by consultation with communities. Boundaries, local share and rationale would be documented using the Area of Benefit Record. Community‑led plans (e.g. Community Action Plans) would guide decisions. Where a such a plan is not in place, communities would be supported to create a plan, or a short needs assessment could be supported.
• Wider sharing (by consent and evidence): We propose that wider sharing to sub‑regional areas (neighbouring communities with strong functional ties such as shared services, facilities, or a common travel‑to‑work area), or regional areas (wider functional area with demonstrable ties across multiple communities such as a local authority or island area), occurs when:
  • local needs are met;
  • the local community agrees;
  • there are clear functional ties (e.g. shared services or travel‑to‑work areas); and,
  • decisions align with community‑led plans and are recorded on the Distribution Decision Pathway.
• Co‑location: Where energy developments are co‑located or overlapping, we propose that:
  • developers engage communities jointly and early;
  • pooled or coordinated funds should be explored;
  • local community shares are protected;
  • roles, contributions and timelines are documented in a Coordination Note; and,
  • joint arrangements are reviewed at scheduled points.
• Construction‑phase: We propose partners provide proportionate early‑stage engagement and support, and record how assistance was offered and agreed.
• Reviews and change events: Annual reviews and five‑year evaluations would consider whether any changes to the Area of Benefits and governance arrangements are required.

We’d like to know:

• Do the proposed Principles provide a clear and workable foundation for refreshed governance and distribution guidance?
• Are the Indicators a helpful and proportionate approach, and which structure is most usable (principle‑led, lifecycle‑based, hybrid)?
• Are the updated and new Tools helpful, and are there any additions or changes would improve the final set?
• Are governance structure options and minimum expectations appropriate?
• Is the strengthened local‑first distribution approach clear and practical, including for co‑located developments?