Please send me SCA's fortnightly briefing:

< Back to '17th October 2018' briefing

October 17, 2018

Hidden wealth

Although the window of opportunity has more or less closed for communities to develop their own renewable energy projects (thereby acquiring a long term and substantial income stream), there can be no doubt that the expansion of privately owned renewable energy projects has produced a massive compensatory windfall for neighbouring communities. Last year alone, an estimated £16m was distributed through a variety of community benefit funds. While no doubt a boon for these communities, there is a legitimate concern about equity across the country and whether these windfall payments are ever taken into account by other funders.


Sandra Dick, The Herald

REMOTE communities across Scotland are sharing a multi-million-pound cash bonanza generated by the wind and rain that batters them. Over the past decade, nearly £50 million has been paid to communities from the proceeds of wind farms that have been built nearby.

The money has been spent on a diverse range of schemes, from the renovation of village halls and bowling clubs, to taking school pupils on day trips, providing musical tuition and giving everyone in the community new Christmas lights.

In other cases, canny investors who have pumped savings into buying shares in community energy schemes are reaping up to eight per cent return on their investment – far more than they might hope for in any high street savings account.

Such is the clamour to invest in renewable schemes, the latest share offer that calls for community investors to purchase the first of £1.89m worth of shares in six hydroelectric projects across the Highlands raised one-third of the money required within days. Indeed, demand for a share of the windfall means the offer is likely to be over-subscribed.

But the real money-spinners are the lucrative community agreements made in the early stages of wind-farm planning, which has led to millions being distributed for the good of the surrounding area.

Last year alone an estimated £15.7m was distributed to community wind-farm trusts despite rising household energy bills and the £105 on average that every UK household pays to subsidise wind farms.

Funds from energy giant SSE alone – which aims to have a renewables network valued at £10 billion within five years – delivered almost £5.2m in support for community projects across the UK last year.

Almost all was distributed in Scotland, in many cases landing with tiny communities that are now finding themselves with so much spare cash it’s increasingly difficult to know how to spend it.

Meanwhile, Scottish Power Renewables, which currently has 40 wind farms across the UK, gave over £3.5m to more than 30 community benefit funds.

In total, the two firms have handed out £48m to communities over the past decade.

This has allowed the northerly communities of Bettyhill, Armadale, Strathnavar, Melvich and Altnahara, which sit close to the 33-turbine Strathy North Wind Farm in Sutherland, to be handed £230,000 in the past year alone, which is about £225 for each of the 904 locals.

During a 12-month spending spree, £75,000 went on a new bowling green, £25,000 for new clay pigeon traps for Armadale Gun Club, and a hefty £7,500 to bathe the handful of houses and businesses in the hamlet of Melvich – population 300 – in Christmas lights.

Throughout the course of its lifespan, the local wind farm will plough £4.5m into an area known mostly for its wild and unspoiled scenery.

In Fort Augustus, the 32-turbine Bhlaraidh wind farm will deliver a £7m windfall to the community of just 3,288 people. Cash last year went on social housing and an apprentice programme, with enough left over to spend £7,500 for new windows, doors and carpets for Fort Augustus Golf Club and £6,384 for Glen Urquhart Shinty Club for a vehicle to help keep the pitch in trim.

It is a picture that is replicated wherever a wind farm or hydro development has sprung up.

In the east Sutherland communities of Golspie, Brora, Helmsdale and Rogart, the Gordonbush turbines are generating a £5.2m pot of cash for a 4,680-strong community.

Recent spending included £12,600 to send Golspie High School pupils on a trip to Manchester City FC, and £4,300 for a senior pupils’ common room.

In Huntly, the local fire station received £5,000 from Vattenfall Clashindarroch Community Fund to buy a bouncy castle, while Huntly and District Pipe Band scooped £9,500 to pay for a mentor to work with the pipe major and leading drummer.

The windfall is being shared right across the country where cash is flowing to communities.

Achany in Sutherland, with a population of just 2,500, is set to receive £2.5m over 25 years, of which £6,500 has recently gone towards marketing the area to tourists.

Elsewhere, offshore wind farms are helping to fund a £3,000 Viking farmstead at Largs Station in Ayrshire.

In the far north of Orkney, 500 residents of Sanday will benefit to the tune of £600,000, with £5,000 already paying for music lessons for the local high school’s 51 pupils.

In one case, a Western Isle community has scooped a £3m payment for a wind farm that was never even been built.

French company Engie abandoned its £200m plans for a 39-turbine wind farm on the Eishken estate on Lewis in 2015 amid uncertainty over the laying of a subsea cable to the mainland.

A legal contract meant it was still required to make payments to the Muaitheabhal Community Wind Farm Trust, resulting in a deal to pay £2.92m to grateful islanders.

Since then, Muaitheabhal Community Wind Farm Trust has helped a local group become community landowners, by providing funding to help them take over the 1,200 acres of Keose Glebe estate.

But while canny investors and big spending communities are enjoying the financial benefits, critics question the long-term benefits.

Graham Lang, of campaign group Scotland Against Spin, said: “It’s pretty short-sighted. There is a carrot dangled in front of communities. The first thing that a wind-farm developer does is say ‘Look guys, we will get this wind farm that we need and you will get something out of it too’.

“It’s thousands of pounds and people prick up their ears and think it’s fine. But the people that are benefiting are very seldom – or never – the people that are worst affected.

“If you have a house on the edge of the area where a wind farm is, you will have 25 years of looking at this thing. Your house will be devalued, your health might be affected, you can’t sleep at night for the noise and you don’t receive any compensation for that.

“It’s an uneven playing field. We realise that good things are done with the funds – there’s no doubt about that – but there’s a large section of the population who are the worst affected who don’t benefit at all.”

The windfalls also come at a price through higher customer bills.

Earlier this week, Ofgem warned that vulnerable customers are still getting a bad deal from energy providers, with more than half of households on a poor value deal leaving them “most likely paying over the odds for their energy”.

This year alone UK energy providers have made a combined total of 41 price increases for gas and electricity.

At the same time, the £105 per year paid by each UK household to subsidise wind and solar farms and energy-efficiency measures could be set to soar.

The UK Government’s Committee on Climate Change is to examine Britain’s response to dire global warming warnings from the Intergovernmental Panel on Climate Change, which could result in additional investment for wind, solar, hydro and other renewable projects.

Rachel McEwen, SSE’s director of sustainability, said: “Community benefit is a central feature of SSE’s renewable energy portfolio, with £23m provided in Community Funding since 2008.

“The funding stream from SSE’s wind farms – and others – provides an important boost to communities. Because it is private money, the funds can be more flexible than the funding streams communities often rely on through the public sector. The other key feature is that the decisions to allocate funds are made by the local communities themselves.

“However, we are very conscious that communities need support in this role and SSE employs a specialist team of grant managers for evaluate funding bids, administer the funds and, often, to undertake social value assessments too.”

A ScottishPower Renewables spokesman said: “Our onshore wind farms provide employment opportunities and a wide range of benefits for local communities and the wider economy in Scotland.

“For example, of eight onshore wind farms we recently built, more than £1.6bn of investment will directly benefit the economy, providing £59m of community benefit funding over their lifetime. We have good relationships with the community groups we work with, and will continue to seek to enhance local economic opportunities.”

But MSP Maurice Golden, the shadow cabinet secretary for the environment, climate change and land reform, said there is a need for the money flowing into communities from renewable energy developments to be spent wisely.

He said: “Community benefit was devised as a means of helping small, rural communities mitigate the after- effects of large-scale renewable energy developments. After all, it is only right that communities affected by wind farms receive due compensation.

“For the most part, community benefit has been positive for rural areas, but funding must be spent wisely and with a long-term strategic vision.

“Poverty and inequality is a serious issue for rural Scotland and many small towns and villages suffer from digital and infrastructure shortfalls and it is here where community benefit can have the most impact.”

A Scottish Government spokesman said: “The Scottish Government’s work in this area supports our wider ambition to grow communities and tackle inequality in often rural and isolated communities. Our Good Practice Principles are voluntary guidelines that we encourage communities and developers to use.”