Energy / Council encouraged to lobby for much improved community benefit from renewable energy projects
PIONEERING proposals for what Shetland should seek in community benefit from energy developments will go in front of councillors next week.
One proposal is for five per cent of gross net revenue from future onshore wind developments to go back to the community, which would mark a considerable shift from existing schemes.
If this was hypothetically applied to the 103-turbine Viking wind farm – which went live last year – then it is thought that over £7 million would come Shetland’s way in the form of community benefit, more than three times the current level.
The recommendations also include a guaranteed minimum payment of £7,300 per installed megawatt (MW) a year.
This minimum payment is greater than the £5,000 per MW industry benchmark which the Viking community fund receives from developer SSE Renewables.
The recommendations are included in a report compiled by consultancy Aquatera in partnership with VOAR and Community Energy Scotland which will be presented to elected members at a meeting of the full council on Monday.
The report says there is “real potential for Shetland Islands Council to shape the future of community benefits in Scotland and the UK through bold policies and leadership and sharing these widely, to create new benchmarks for what best practice can look like”.
There is also a recommended 2.5 per share of gross revenue for floating offshore wind, which comes with a guaranteed minimum payment of £5,000 per MW a year.
It is recommended that this 2.5 per cent share also applies to other future energy developments such as hydrogen and carbon capture and storage.
Councillors will be advised to approve incorporating these principles into Shetland’s energy strategy for negotiations with developers.
The study aimed to “consider whether community benefit models from energy developments are currently achieving policy aims and delivering a fair share for Shetland, or whether a new and locally specific approach is required”.
There are some existing community benefit schemes in Shetland from renewables, with the £2.2 million-a-year Viking fund the largest.
But the proposed principle of having community returns linked to revenue would represent a major change in direction.
Coincidentally the five per cent idea has already been floated by the Scottish Liberal Democrats.
Lib Dems call for enhanced community benefit payments from onshore wind farms
The Aquatera report said the recommended minimum figure of £7,300 per MW for onshore wind meanwhile is what the industry standard benchmark of £5,000/MW would be worth now had it been index-linked to when it was first established in 2010.
With many energy projects in the pipeline, there are plenty of unknowns around future community benefit for Shetland.
There are Statkraft’s three planned wind farms in Yell and the outskirts of Lerwick, as well as two large offshore developments proposed to the east of Shetland.
For Statkraft’s projects the idea of community ownership has been floated, with some community councils for instance expressing an interest in taking on a stake in the Mossy Hill wind farm near Lerwick.
Yell Community Council has also expressed an interest in a similar scheme for the two wind farms planned for the island.
But there are also new energy proposals in Shetland outside of wind, such as hydrogen production at Scatsta plus Sullom Voe Terminal.
Meanwhile the report also advocates exploring opportunities for greater community ownership of energy projects.
There is also a recommendation that the SIC could consider a presumption against further large onshore wind developments in Shetland “unless these demonstrate a significant degree of community ownership”.
The report says that Shetland is in the “early stages of a wind, hydrogen, and energy infrastructure development boom”.
It adds that the total generation capacity of onshore and offshore wind projects in operation or the planning system in Shetland is close to 3.5GW – seventy times Shetland’s current peak electricity demand.
If the aspirations of hydrogen production are realised – including a desire from Sullom Voe Terminal operator EnQuest to produce one million tonnes a year – then nearly three times that capacity will be required.
The report also highlights North Yell Development Council’s 4.5MW Garth wind farm as a “leading example” of a community-owned renewable development.
In a good year the wind farm can generate a “comparable level of return” for the North Yell community fund as Viking pays out in benefits each year – despite it being around 1/100th the size.
The report also highlights that while Shetland has high transmission charges for generating electricity, this can be counteracted by the much higher than average productivity of wind turbines located here.
As such it is said that Shetland has the lowest community benefit as a proportion of revenue of all UK grid zones.
In the report’s conclusion, it suggests that the “quality of Shetland’s wind resource and development sites means that SIC can afford to take a robust line, with a low risk of turning developers away”.
At Monday’s meeting of the full council elected members will be advised to approve the recommendations on community benefit proposed in the report.
The full Aquatera/VOAR report can be found here.
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