COMMUNITY OWNERSHIP OF ALTERNATIVE ENERGY RESOURCES

Transcription

1 QUARTERLY MAGAZINE OF THE THE VOICE OF THE MEMBERSHIP NO. 287, 2012 ISSUE 3 COMMUNITY OWNERSHIP OF ALTERNATIVE ENERGY RESOURCES Issn:

2 Regional Survey Regions No 287 Autumn 2012 RENEWABLE ENERGY, ASSET-BASED MANAGEMENT AND COMMUNITIES: THE ROLES OF OWNERSHIP AND MANAGEMENT IN DETERMINING OUTPUTS AND OUTCOMES Geoff Whittam and Mike Danson, The University of the West of Scotland; and George Callaghan, The Open University in Scotland, UK the community from renewable energy schemes. Introduction This paper draws on two important trends: addressing climate change and community o w n e r s h i p of assets. At international and UK levels, the concern over carbon outputs and sustainability is well known and this concern is also evident in Scotland where the devolved government has made the renewables sector an economic priority. Scotland is of interest not just because of its focus on renewable energy but also because it has seen signifi cant developments in community land ownership and associated ownership and management of land-based assets (Slee et al., 2008; Callaghan et al., 2011). This paper explores how different forms of community ownership and involvement impact upon the type of renewables projects chosen, the management of these projects and the level of fi nancial resource fl owing into Renewables in Scotland Scotland has a leading share of the natural resource base for renewables within both European and global contexts, with potential renewable electricity generating capacity estimated at 60 GW (Scottish Renewables 2011). Additionally, Scotland has a target for generating 80 per cent of electricity (circa 8GW) from renewables by While there is general support across society for renewable energy, for many schemes there are also controversies, particularly around large scale wind farms and associated transmission infrastructure. Smaller projects tend to attract less opposition, suggesting that there is an interaction between the ownership and the scale of renewable schemes. Whilst positive externalities occur for society as a whole through the reductions in CO 2 emissions, negative externalities exist for the communities where production takes place. Such negative externalities include the impact on landscape, on place-based identities and on ideas of what constitutes nature and wild land. So while there is a general acceptance from the mainstream scientif ic community that global warming needs to be controlled and that carbon emissions (CO 2 ) are a major cause of global warming, often these renewable energy schemes are built in Community Energy Scotland, an organisation which helps communities develop their renewables projects. areas of natural beauty. In an attempt to address the issue of negative externalities, the UK Government produced a toolkit where different types of community benefits were identifi ed (Centre for Sustainable Energy, 2007) as a way of compensation for negative externalities of production. However, this scheme omitted the option of renewable energy projects being owned by the community and where all the direct financial benefits accrue to the community. Clearly this has implications for improving sustainable economic development within rural and peripheral regions (Hanley and Nevin, 1999). The scale of potential benefits to local communities is signifi cant: according to Nicholas Gubbins, Community Energy Scotland, when assessing the community benefits of onshore wind projects a rough rule of thumb [is of ] 100k net annual profit per 1MW installed capacity (Gubbins, 2011). With 4GW of onshore wind installed capacity, there is approximately 400,000,000 net annual profi t being generated in Scotland this year. Community Benefit is estimated by Gubbins to be between 700 and 2,000 per MW, depending on ownership and agreements, suggesting that communities should be receiving between 2.8m and 8m pa from this profit or a share ranging from 0.7% to 2% pa (Gubbins, 2011). Evidence The research questions addressed in this paper are: Whitelee wind farm, a large commercial wind farm to the south of Glasgow, UK. 1. How do different forms of community ownership impact upon which renewables projects are chosen and how they are managed? 10

3 Regional Survey Table 1: Ownership model and project structure (wind turbines) Community- Shared Cooperative Commercial owned ownership Project scale Small Small Small to Large medium Project driver Community Commercial Commercial Commercial Planning permission Project fi nance Few problems Few problems More diffi culty Diffi cult Substantial Few diffi culties Few diffi culties None diffi culties Community- Shared owned ownership Table 2: Revenue fl ow, distribution and externalities Revenue to local community Internalisation of externalities Local social and economic development 2. What revenue fl ows from these renewables projects, how are these distributed and what is the impact on externalities? We used a case study qualitative approach and this primary data was supplemented with desk research and the growing body of secondary data and analysis on community assets (Slee et al., 2008). For reasons of simplification, we concentrated mainly on wind turbines and split ownership into four main types: a. Community ownership: land and renewable energy projects owned by the community b. Shared ownership: where the equity is split between a commercial operator and community trust c. Co-operative ownership: partial community share in commercial operation, d. Commercial ownership: no direct community involvement. Table 1 summarises the fi ve main characteristics of the four ownership models. It describes how in terms of projects scale, the energy generation All Proportionate Modest Minimal High Medium Marginal Minimal High Medium to high Modest CO2 reduction Low Low Low to medium Minimal High moves on a spectrum from lower end of community-owned to the higher output associated with commercial projects. It also shows that, apart from communityowned schemes the main drivers are commercial companies. Perhaps this information might be useful for policymakers, as those working within economic development bodies could champion the potential of renewable energy projects to generate new funds in small communities. There is also a spectrum from low to high associated with planning permission problems: the greater the amount of community involvement, the fewer objections raised to planning offi cers. The reverse is true with raising project finance, with commercial companies using their size and strength to access equity while smaller communities struggle with fi nance. Table 2 summarises the issues relating to revenue and externalities. Again there is a scale of the proportion of revenue fl owing to the local community with community-owned being high and commercial low. There is a direct relationship between this and the internalisation of externalities, as the North Harris Trust workparty, a community who have bought their own land and who wish to develop renewables. costs associated with the installation and visual impact of a renewable energy scheme are met by the fact that all the money goes back to the local community. This internalisation of externalities then declines as ownership moves towards a fully commercial project. The positive externalities associated with improving local social and economic activity also runs from high at the community-owned end and low at the commercial end. The reverse is true of the positive externalities linked to reduced CO2 emissions. Here the economies of scale associated with the large projects clearly deliver great societal benefits. Another important policy question is how many smaller schemes would need to combine to create similar CO2 reductions - and the technical costs associated with changing the electricity generating grid. Conclusions This paper has explored different ownership models of renewable energy schemes (concentrating on wind generation) and focused on how the revenue they produce is distributed. Closely linked to this is the economic concept of externalities and we have shown how smaller schemes internalise many of the costs associated with negative externalities. Such schemes also have positive externalities which might well improve economic and social activity in communities which 11

4 Regional Survey Regions No 287 Autumn 2012 have suffered from depopulation and deskilling for generations (although this requires further research). However, in terms of generating positive externalities associated with CO2 reduction the potential is much less. If the aim of Government and policymakers is to develop local economies across Scotland, then the Geoff Whittam is a Reader in Entrepreneurship at the University of Paisley, Scotland. He has written widely on regional, industrial and small fi rm issues. His other current research interests include community buyouts in the Highlands and Islands of Scotland and issues surrounding social entrepreneurship. geoffrey.whittam@uws.ac.uk Mike Danson is Professor of Scottish and Regional Economics at the University of the West of Scotland, Co-director of the Scottish Centre for Island Studies community and shared ownership models offer the greatest potential. Clearly, for such small schemes to have a meaningful impact on overall energy generation, changes would also be required to the electricity generating grid. This would mean significant investment; but perhaps offers even more signifi cant long-term returns. and Treasurer and Scottish Convenor of the Academy of Social Sciences. He has published extensively and has been on the organising committees of over 90 national and international conferences. michael.danson@uws.ac.uk Dr George Callaghan is a Senior Lecturer in Economics at the Open University in Scotland. He is working on research into the economic development opportunities associated with community land ownership, particularly linked to community renewable energy projects. george.callaghan@open.ac.uk References: Callaghan, G., Danson, M. and Whittam, G. (2011) Community ownership and sustainable economic development, Scottish Affairs, 74, pp Centre for Sustainable Energy (2007) Delivering community benefi ts from wind energy development. Gubbins, N. (2011) Renewable energy who benefi ts? UWS-Oxfam Poverty Whose Economy? Seminar Series, Whose Environment? Seminar, Inverness, 25th March. Hanley, N. and Nevin, C. (1999) Appraising renewable energy developments in remote communities: the case of the North Assynt Estate, Scotland, Energy Policy, 27, pp Scottish Renewables (2011) scottishrenewables.com/ Accessed 4th April Slee, B., Blackstock, K., Brown, K., Dilley, R., Cook, P., Grieve, J. and Moxey, A. (2008) Monitoring and Evaluating the Effects of Land Reform on Rural Scotland: a Scoping Study and Impact Assessment, uk/publications/2008/06/ /10. Accessed 24/02/2010. WIND ENERGY: MIGHT COMMUNITY BENEFIT PROVISIONS GROW COMMUNITY OWNERSHIP OF RENEWABLE ENERGY RESOURCES? 1 Richard Cowell, Gillian Bristow and Max Munday, Cardiff University, UK Introduction Our research resulted from two separate pieces of work. The fi rst for the Welsh Government in 2007 examined the evolution of community benefi t schemes surrounding onshore wind projects in Wales. The second was for the Joseph Rowntree Foundation and examined how community benefi t schemes linked to wind energy might lever longer-term socio-economic outcomes for affected communities. In both cases an important context was the rapid growth of wind generation capacity in more peripheral parts of the UK. Below, we consider the evolving pattern of community benefi t provisions from wind energy schemes in Wales. Wind farm development often occurs in rural or coastal areas suffering from economic, social and environmental disadvantage. A key issue addressed is whether benefi ts can be used to better serve the long-term needs of the communities living with wind farms. It is worth refl ecting briefl y on the background to community benefits from major wind farm developments. Wind generation can create impacts viewed as significant and adverse in areas valued for their openness. Wind farms have become larger in terms of more numerous and larger turbines increasing potential effects on preexisting landscapes and the way that people relate to them. There are also risks to biodiversity, and impacts arise not just from turbine development, but from the construction of grid connections and access roads. The distribution of effects from wind farms may fall unevenly. The clustering of turbines at windier sites can concentrate harms on those living closest to such facilities, and beyond the income streams to landowners, conventional economic benefi ts (such as jobs) to communities living with schemes can be modest (Munday et al., 2011). Furthermore, it is clear that the geography of wind farm development has concentrated the burdens on particular areas of the country. Many of the rural and coastal areas receiving large-scale wind energy are relatively disadvantaged, suffering from higher than average levels of deprivation, and geographic isolation, with ageing populations, youth outmigration, and a reliance on low paid seasonal employment. The above provides only partial context on why community benefits from wind farm developments exist. Clearly, developers who may be pursuing socially beneficial energy projects recognize these developments can compromise environmental qualities that communities might otherwise have kept. 12

5 Association News Regions No 287 Autumn 2012 Regions THE VOICE OF THE MEMBERSHIP Global warming is a classic case of a global problem which requires local solutions. The papers in the Regional Survey of this issue, attempt to explore the possibilities of such solutions. Our Guest Editors (Geoff Whittam and George Callaghan) draw together five summary papers that were delivered at the RSA Research Network, Acquiring Community Assets, the Role of Social Capital and Establishment of Alternative Energy Resources, hosted at the Gigha Hotel on the community-owned isle of Gigha off the coast of Argyll in Scotland, in March The context for the workshop and indeed the Research Network can be found in the growing emphasis being placed on the development of alternative energy systems by policy-makers as global warming continues to move to the top of political agendas. What is increasingly apparent is that whilst the majority of people support alternative energy systems, the introduction of such schemes is not without opposition. It would appear that this opposition is somewhat diminished when the community has a stake in the alternative energy resource. The common theme amongst the papers is to highlight differing approaches to community involvement with alternative energy schemes. There are contributions from researchers and practitioners from around Europe and North America. Our In Depth article by Arda Akbulut, RSA Ambassador in Turkey, looks at the background to regional development in Turkey and the establishment of RDA s. This issue also contains articles that provoke debate on controversial subjects, including the regional benefits (and costs) associated with mega-transport projects such as the high-speed trains investment announced in the UK; and the potential economic impacts of gambling casinos and their possible negative social consequences. Regional Studies Association, PO Box 2058, Seaford, East Sussex BN25 4QU, UK Tel: (0) , Fax: (0) info@regionalstudies.org, Registered Charity No: Registered Company, Limited By Guarantee In England No: Typesetting and Printing by Sussex Living Ltd 128 High Street, Hurstpierpoint, West Sussex BN6 9PX. Tel: studio@sussexliving.com