This letter sets out the Local Government Associations view on Governments working paper on Community Benefits and Shared Ownership for Low Carbon Energy Infrastructure.
Community Benefits
Energy Infrastructure Planning Reform
Department for Energy Security and Net Zero
55 Whitehall
London
SW1A 2HP
Dear Community Benefits team,
Councils want to work as partners with central government on climate action. Councils are well-placed to do this as place-shapers, convenors of communities and partners, delivery agents, commissioners, and owners of assets. Emissions reduction can only be achieved with decarbonisation happening in every place across the country and this will require local leadership.
This letter sets out the Local Government Associations view on Governments working paper on Community Benefits and Shared Ownership for Low Carbon Energy Infrastructure.
The proposal on community benefit funds
The LGA strongly agrees that developers should provide community benefit funds when proposing renewable energy facilities in an area, and in fact any energy facilities in the vicinity of communities.
The LGA supports governments approach to make community benefits mandatory as often communities will not directly benefit from the infrastructure in their area. Community benefits schemes should be flexible and be able to adapt to fit future technological changes as technologies are likely to adapt over time.
We agree with the approach outlined for the provision of community benefits for co-located infrastructure in that community benefits should be provided for each individual facility and not just the site accommodating co-located facilities. If this approach is not taken forward, the risk is that developers will maximise the number of facilities co-located to minimise the community benefits payable.
Thresholds
The LGA accepts that proposing a mandatory community benefits threshold of five megawatts or more for power generating and storage assets is consistent with the Contracts for Difference (CfD) eligibility threshold and therefore the certainty CfD provides a project developer with the confidence required to invest in a community benefits fund. This should not mean that projects with an installed capacity of under five megawatts are exempt from community benefits.
The LGA suggests that the appropriate trade body for the sector, most likely Energy UK, develops a voluntary code of practice for projects under five megawatts in line with the good practice being shown by the community energy sector.
Level of benefit
Of the two options presented in the working paper for Level of benefit, the LGA’s preferred option is option ‘Fund contribution based on installed capacity’ with a value of £5,000 per megawatt of installed capacity per year for the operational lifetime of the project as the minimum.
The benefits of this approach are that it keeps England in line with the Scottish Governments Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments, setting a level playing field, and secondly it recognises the impact on communities regardless of whether the facility is generating energy or not.
A third option of combining options ‘Fund contribution based on installed capacity’ and ‘Fund contribution based on generation output’, would be considered if set at the right levels.
Funding considerations
Contributions to a community benefit fund should begin at the earliest opportunity following the project build. The LGA appreciates that the Commercial Operation Date of a facility is when the facility starts generating an income, but the impact on the community will start some time in advance of that date due to build time disruption and visual impact. One option could be to provide a lump sum payment early and developers should be encouraged to work with its communities on these options outside a statutory requirement.
Use of funds
The LGA agrees that government should not produce prescriptive guidance on what community benefit fund can be used for but instead provide voluntary guidance setting out options and examples of existing projects to stimulate and inform the conversation between communities, fund managers and developers.
Defining communities
The LGA agrees that a case-by-case approach to defining a community is most appropriate given the breadth of infrastructure and diversity of communities that statutory community benefits will be applicable for. We believe the fund administrator should lead the consultation with residents, local authorities, community councils, local businesses, community groups, parish councils and more. For the engagement to be meaningful, that process should include some capacity building with communities with the fund administrator leading these, utilising resources provided by the developer.
When engaging with and defining communities impacted by a development, consideration should be given to both communities mostly affected by the development but also communities marginally affected by the development. Consideration could be given to tier the scale of benefit based on a diminishing level of impact to avoid a few communities receiving all the benefit and neighbouring impacted communities none. Another option could be to enable funding to be cascaded out to neighbouring communities when tier one communities run out of good projects to fund. Careful thought will need to be given to the wording of guidance to ensure levels of benefit reach all the appropriate communities it should.
Shared ownership
The LGA supports the concept of Shared Ownership and appreciates the opportunities it can offer not only in revenue generation but also an opportunity for the community to learn new skills first hand from business management to engineering.
However, the opportunity must be open to all in the community and not just those that have the time and resources to invest. Communities from lower socio-economic backgrounds need to have the opportunity to engage in shared ownership models and government should consider how they can facilitate this opportunity at least cost.
Yours sincerely,
Cllr Adam Hug - Chair
Cllr Richard Wright – Vice Chair
Cllr Victor Chamberlain – Deputy Chair
Cllr Loic Rich – Deputy Chair
Local Infrastructure and Net Zero Board