Fuels with benefits: paying communities to host new energy infrastructure
Would you happily accept living next to new windfarms, nuclear plants or frack pads for shale gas if companies and the government paid your community? The UK government hopes so. We look at how new community benefits schemes will work as the UK increases the amount of energy it generates at home.
Community payments for hosting generation technologies aren’t new: wind companies have been offering neighbourhoods compensation packages on a voluntary basis for a number of years now.
Renewables trade body, Renewable UK, has had a protocol in place since 2011 that means wind companies agree to provide a minimum of £1,000 per megawatt (MW) of installed capacity. They can also offer equivalent benefits like village halls, community-owned renewable energy projects or school equipment. In the Welsh town of Cefn Croes, for example, Cambrian Wind Energy has given £58,000 a year to a trust run by local representatives since 2005, which gives grants to community projects.
New announcements
But a more formal community payment scheme could be around the corner. In June, DECC said it would quintuple the recommended benefits windfarm developers pay to communities to £5,000 per MW – which the department said could equate to £400 off each households annual electricity bill.
DECC also announced a benefits package for communities near new shale gas drilling sites. Companies have proposed to offer local people £100,000 per well at the exploratory stage, as well as one per cent of revenues if the site becomes commercial. Again, if the new schemes are successful, the payments are being projected at millions per production site.
Outside voluntary community payments, however, there have been steps to offer government funding for communities. Already, local authorities keep all of the business rates – taxes charged on non-domestic properties – from onshore renewables that have come online after April this year.
And the government announced yesterday that communities near new nuclear power stations “could be in line” to receive £1,000 per MW to host new nuclear generation over 40 years in payments from the government. That could translate to £128 million going to the local area around the new twin reactor at Hinkley Point in Somerset, the release says.
In the first 10 years of a nuclear station’s life, local authorities could receive increased business rates revenues from the new power stations. For 30 years after that, the Department for Energy and Climate Change (DECC) will pay directly to communities near new nuclear plant.
Energy minister, Michael Fallon, says the package is “proportionate to the scale and lifespan of new nuclear power stations”.
The differences in the potential payments to communities have not gone unnoticed. Renewable energy companies have complained that they are now expected to pay more per megawatt than nuclear power, for example.
Then there’s also the prospect that local communities will have less of a say in how payments from shale gas companies are spent, according to blog politics.co.uk, which raises the possibility that the companies may pay straight to local authorities rather than appointed trustees from the community.
How are the payments administered?
But could payments become more uniform as community benefits schemes become more common?
Head of planning at law firm Norton Rose Fulbright, Nigel Hewitson, points out that community payments sit outside the UK’s planning system, so it is unclear at present how an increase in community benefits payments across different domestically-generated fuels will be administered . He says:
“By the government’s own admission, community benefits packages are bribes to communities. It’s a long-established principle that you can’t buy or sell planning permission and local authorities can’t take benefits packages into account formally when deciding to allow applications”.
At present, there is no system in place other than to appoint local trustees to decide what the community should receive. Hewitson says the government’s neighbourhood planning overhaul, which is expected to give communities more of a say over whether new generation – especially wind turbines – is built, may provide some answers. He adds:
“There may be legislation to iron out some of the inequalities – such as the difference between the recommended wind payment and that for the other energy sources”.
Are payments the best approach?
Some experts seem rather unconvinced by the government’s belief that community payments will persuade people to accept new power plants. Geoff Wood, an energy researcher at the University of Dundee says:
“The government’s promotion of these payments herald a new approach that suggests you can pay to get what you want. But people don’t seem to be motivated in that way – and you could argue that it removes some of the public’s involvement in the planning process.”
Hewitson agrees:
“The current government seems to genuinely believe that people object to planning applications because they don’t see what’s in it for them. But that’s not been my experience. Mostly, people just want to keep their corner of the world the way it is”.
Wood says:
“My experience suggests that when people feel more involved in the planning process, they are more likely to start looking for available options rather than just opposing developments per se”.
So if communities are less money-motivated than the government might suspect, what would persuade them to host new frack pads or windfarms? Denmark is often cited as utopia for domestically-generated renewable electricity.
In Denmark, windfarms are largely sensitively-sited, and local objections are rare – but that’s because local people have shares in generation capacity, Wood says, giving them an “ownership stake” in the generation capacity. As well as getting monetary benefit from the installations, local people also feel like they have a stake – and a say – in local energy. Contrast that to the UK, he says:
“Looking at the areas of large-scale renewable deployment – subsidies, the complexity of the system, investment risk, policy risk, planning and supply chains – the thread running through it is the sheer lack of proper public participation”.
Both Wood and Hewitson point to smaller-scale generation schemes, such as plans to install reverse Archimedes Screws along the Thames in Teddington, which offer local people a stake in the project as well as cheap electricity as an attractive alternative for communities. Wood points out, however, that such schemes can find it hard to enter a market controlled by large energy companies.
It could be argued that more could be done to encourage small-scale generation on these lines, but the UK will still need a big increase in low-carbon energy if it is to meet its legally binding emissions targets. And that will probably mean many more large installations, which don’t seem to be as popular – even in Denmark.
The government’s plans aim to allow communities to decide how their new income will be spent – and many would agree that generators should not have free access to people’s back gardens. But the real test will be how many communities sign along the dotted line. Do the current proposals seem like a good deal to you?