Benefit

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Shared Community Ownership

of Renewable Energy systems

All about shared community ownership under the Community Energy Strategy's voluntary protocol

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Social & commercial developers

Community and commercial energy project developers have historically adopted somewhat different approaches to community dividend payments.

This type of local benefit is often amongst the key objectives of community energy enterprises, which are often, therefore, relatively generous with the level of payment.

Commercial developers typically aim to maximise the financial return for their investors and therefore tend to restrict the payments to the minimum level which can be agreed, or complies with any protocol in force.

Community Benefit funds

Community benefit funds (sometimes called 'community dividend') are payments pledged by project developers to a local organisation or trust in recognition of the potential impact on the local community of the project. These are similar to 'developer contributions' under the so-called Section 106 Obligation on building developers; and are usually negotiated during the planning consent process.

The payment may be a single lump sum, but in the case of energy projects is more typically annual payments over the lifetime of the generating station and related to the capacity of the plant or its annual revenue. There is now an established protocol which is widely adopted for onshore wind installations. Arrangements for other technologies are less mature, and some developers still offer no community benefit at all.

Use of funds

The funds are typically deployed to investments and expenditure of general benefit to the surrounding community. In the case of community dividends from energy projects typical examples are:

  • Alleviating fuel poverty in the area;
  • Installation and other energy conservation measures in community buildings, social housing and other building stock; or
  • Small-scale renewable energy installations on similar buildings.

Community benefit is different from shared ownership

These payments are made to a local organisation or trust to be deployed as it sees fit. They do not imply any ownership or other rights over the project.

Community dividends are therefore separate from the shared ownership agenda, except that:

  • Both the commercial and the community partner in the shared ownership project will still be expected to adopt best practice with respect to making community benefit payments appropriate to their share of the project; and
  • The commercial partner might consider that the community partner would be an appropriate body to administer its community benefit fund or both partners might jointly establish a trust to do this.