Community owned projects - the future of onshore generation in Scotland?

Mark Stewart

Mark Stewart

Corporate Finance Partner

27 April 2017

    The 2017 Community and Renewable Energy Scheme (CARES) conference took place last week, and addressed how community energy could become a bigger player in Scotland's energy future.  The CARES scheme aims to provide loans towards the high risk, pre-planning consent stages of renewable energy projects which have significant community engagement and benefit.

    Paul Wheelhouse, the Scottish Government Minister for Business, Innovation and Energy, announced that Scotland has already met its 2020 target for the production of 500MW of community and locally owned renewable capacity.  The Scottish Government has therefore set a new target for community and locally owned renewable energy of 1GW by 2020 and 2 GW by 2030.

    Developing a renewable energy project can be a daunting task for a community, but there is strong support from the Scottish Government and advisors such as Johnston Carmichael.  We are proud to be on the CARES corporate finance advisory framework and we are  actively advising on community projects.  Our team has advised on:

    • 14 community energy projects, including the largest community owned project in the UK
    • 60MW of community energy (full community ownership)
    • £7m annual community benefit payment

    There are essentially 3 community development models:

    1. Full community ownership whereby a local community itself develops and is fully responsible for all aspects of the project and retains all of the income
    2. Shared ownership where a local community works in partnership with a commercial developer to deliver a project and the community itself receives a community benefit payment from the project
    3. Joint venture whereby the project will be part owned by the community group and the developer and profits are shared

    Community involvement in renewable energy projects not only brings financial benefits to the local community, it allows a community to take control of its local area and develop a project in a way which complements the existing uses of the land.  Community projects also play an important part in reducing the effects of climate change, help to  provide security of energy supply, and contribute to a clean energy future for generations to come.