Written by Grace Millman, energy analyst, and Fraser Stewart, just transitions lead
Unlocking local and community benefit: four key questions for the offshore wind sector
With the UK aiming to build and operate 50 GW of offshore wind by 2030, questions about who benefits from offshore developments, and how, have never been more pertinent. While onshore wind and associated local and community benefit models are well-established, offshore wind presents unique challenges in this space: what constitutes “the local community” attached to an offshore wind development can be tricky to unpack, while the scale of investment required raises questions as to the viability of traditional community and local ownership models.
In this blog, we outline 4 key questions that need to be addressed to unlock benefit for local areas and communities, to support a truly just transition as we undertake the offshore revolution.
Identifying the community
Key question: How is the community identified and defined to ensure that maximum benefit is realised from offshore wind developments?
For onshore renewable projects, the community around that development is easily identified, and it is usually clear who should benefit from the development. In the case of offshore wind, however, the geographical region relating to the project is less well-defined, and as such, it is unclear who should get to reap those primary benefits. In some examples, the allocation of community benefit has focused on communities around the onshore cable route which, while not unreasonable, could pose fairness problems as multiple developments look to connect at similar onshore locations. Other developments have identified a wider community through extensive local stakeholder engagement.
Given the scale of potential benefits from offshore wind, both socially and economically, it is critical to set a standard of best practice to identify the area and people that should benefit from offshore developments, in as fair and inclusive a way as possible.
Mandating local and community benefit funding
Key question: What should a mandate or accepted standard for community benefit funding from offshore renewables look like?
Community benefit funds, whereby communities can reap financial benefits from nearby renewable developments, are a common feature of energy projects today. Yet as it stands, community benefit funds are still voluntary arrangements offered by developers to communities located near developments, and are not formally mandated in the planning process. For onshore wind, the accepted standard recommendation for community benefit funding is £5,000 per MW. However, this is only an recommendation and a comparable standard has yet to materialise for the offshore sector. Without any legal requirements for offshore developers to allocate any of their projects, or their profits, to communities, there is a real risk that communities lose out on significant amounts of benefit from the exciting developments off their coasts.
Calls for specific community benefit rules have thus been made by both Community Energy England and Community Energy Scotland. These could be mandated by central government, built into local authority planning rules or become a requirement as part of The Crown Estate’s leasing criteria or the UK government’s Contracts for Difference (CfD) auctions.
Engagement and governance
Key question: How can we ensure that communities can engage meaningfully and fairly in offshore developments?
Wrapped up in community benefit is the question of engagement. Engaging local communities in project design has become standard practice in the renewables industry, although how meaningful this engagement is can vary substantially. Meaningful engagement from the outset can be a way to build a mutually supportive relationship between developers and local communities and is paramount to making sure that any benefit from those developments is matching community-specific needs in the long term.
Given the scale of offshore wind generation and the money likely to be made, questions also arise around who should get to decide on its allocation. Community benefit funds governed by local actors and stakeholders can help direct funds to local need, yet often these disproportionately involve people and organisations who are already engaged within energy and wider stakeholder processes, putting marginalised voices and those most in-need communities at risk of subsequent exclusion. For a just transition, consideration needs to be given to this issue.
Ownership and investment
Key question: How can we enable local areas, communities, and citizens to have an ownership stake in offshore renewables?
Beyond benefit funds, is there potential to unlock an “offshore community energy” model and put power fully into the hands of local people themselves? Community-owned energy – whereby communities raise money to install wind, solar or hydro and reap the profits thereof – is tried-and-tested for onshore renewables. Under the community ownership model, communities benefit substantially more than under community benefit funds alone. Yet this has previously only really been mobilised in small-scale developments. Given the sheer scale of offshore wind and the investment required, it would prove difficult for a traditional community energy group to raise the capital to purchase even a small percentage of an offshore wind farm.
There are some emerging ways to overcome this challenge, however. In regions where community energy activity is high, there may be scope for multiple community energy groups to work together across a wider geographic area to raise money to purchase a stake in an offshore development. Likewise, local enterprise partnerships or local authorities themselves may be better placed to raise the kind of capital needed. There is also the scope for implementing a cooperative model, such as that offered by Energy4All and Ripple, whereby individuals can purchase shares in an offshore wind development, potentially with the incentive of getting a discount on the energy they use. This model typically is not geographically constrained (although it can be geographically prioritised) but may present an opportunity for citizens to have a more meaningful stake in this wider offshore revolution.
These are what we believe are the key questions developers, local authorities, and devolved and central governments need to ask themselves to ensure that offshore developments not only benefit local areas by meeting our net zero targets and future energy needs, but does so in a way that brings everyone along for an inclusive and prosperous just transition.
If you would like to know more about Regen’s work in offshore wind and the just transition, please email Fraser and Grace.