'New game, old rules': How Scottish communities should benefit from net zero project rush

The community benefit funding system is only set to grow in the push for Net Zero, experts have said.

It is a scheme that has delivered refurbished pubs, improved village halls and supported leisure facilities for communities.

But now there is pressure on governments to go further with community benefit funding systems as fast-paced net zero developments bring wider landscape-scale changes to the communities living among them.

Electricity bills do not reflect the relatively cheap cost of energy produced by windfarms like Whitelees, near Eaglesham (Picture: Andrew Milligan) | PA

The push to meet respective government targets means onshore wind capacity in Scotland alone will have to double in the next five years, according to industry leaders.

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The existing and future build-out of energy projects also means major upgrades to the grid network to become “superhighways” to transport the energy from Scotland to England as part of SSEN Transmission’s “Pathways to 30” project.

But what is the benefit to the communities living in amongst these developments?

It has been widely recognised that residents across rural parts of Scotland, including the Highlands and Islands, are paying higher bills despite renewable energy developments on their doorstep.

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Professor Matthew Hannon | Professor Matthew Hannon

Professor Matthew Hannon, director of the Strathclyde Institute for Sustainable Communities (SISC), said: “At the moment, we are playing a new game with old rules. Typically, back in the day, power stations would be near to where our populations lived - Battersea Power Station, for example.

“But now we have most of the generation capacity in the far north and the communities living there are, per unit of power, paying proportionally more than those who don’t live near that power.

“These communities are hosting these facilities and they are seeing their landscape change at pace, but they are not getting cheaper bills.”

The UK government is deciding on whether to implement zonal pricing - where electricity is priced differently in various geographic regions in relation to renewable developments - which would mean Scotland could see some of the cheapest bills in Europe. Ministers said a decision is to be made “in due course”. Industry experts, however, have said the change to the national rate could put renewable energy developments in the pipeline at risk over price uncertainty.

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While jobs are likely to increase in rural areas targeted by energy or electricity developments, with SSEN saying there will be 37,000 positions produced in the work to its 2030 goal, Prof Hannon said a lot of projects, including offshore wind farms, are owned by foreign firms and often contracted out to foreign firms. The industry is also not as labour intensive as previous ones such as coal mining.

But the professor said as a country, “we could be doing more to increase the employment intensity of these net zero projects”.

He said where benefits are being felt from renewable energy projects is with community benefit funds (CBFs), which he described as a sector that “will only grow and grow”. At the moment, CBFs are a voluntary financial package offered by developers of renewable energy projects, such as wind farms, to local communities impacted. The Scottish Government is looking into making them mandatory.

There have been multiple projects across Scotland that have benefited from such funding, including New Luce in Dumfries and Galloway, which has seen its local pub, the Kenmuir Arms, refurbished and funding towards staffing the post office.

Prof Hannon said while the input from developers was widespread, with government figures showing more than £30 million was offered in community benefits to Scottish communities in 2024, Scottish Government guidance of giving £5,000 per MW of installed capacity is from 2014 and needs to update with inflation.

Where improvements could also be made are with ensuring there is “capacity and capabilities” in communities “to effectively govern these monies coming in”, he said.

“For some communities, these can be a huge sum of money that have to be managed by volunteers who haven’t had training and are juggling other priorities,” Prof Hannon said. “To expect them to manage this money is a big ask.

“So it’s important to bolster that capacity and capability to ensure these funds are spent effectively and wisely.”

Prof Hannon said a proportion could be spent on “hyper local” initiatives, but also have some money to go towards broader systemic issues in the region, such as developing new skills for new industry that renewables projects might bring.

He said: “Imagine all the CBFs in Caithness and Sutherland were put into a regional pot. The size and geographical remit of that pot means they can then tackle bigger thornier issues - education, skills and tourism. It might be about establishing new industries and facilitating innovation. I think that’s where it’s going. But it’s taking a while to get there.”

Experts in policy have regularly pointed to net zero developments laying the ground in rural areas for additional electricity intensive demand such as data centres, heavy industry and developments backing up new artificial intelligence infrastructure.

Shared ownership

Another driver in improving community benefit is the drive for shared ownership - where local communities and commercial developers co-own a renewable energy project - Prof Hannon said.

“This is something being explored, but it’s, generally speaking, very rare across the UK and Scotland,” he said. “I think it is an exciting model as it’s about giving the community the means to establish revenue generating assets that create a long-term positive legacy for that community.

“And these assets are either wholly or partially in the hands of the community. That way you’re not beholden to a developer saying ‘we will give you so much for so long.’

“You take that cash and you invest in something that is yours and you have control over the direction of that and the revenue.”

According to a recent report by Regen, an independent centre of energy expertise with a mission to accelerate the transition to a zero carbon energy system, shared ownership “should be recognised as a national priority”.

The Scottish Government said it is reviewing its Good Practice Principles in relation to community benefit and recently consulted the public.

A spokesperson said: “The evidence gathered will inform a refresh of our guidance so that community benefit arrangements deliver sustainable, meaningful impacts and help support our just and fair transition to net zero.”

The UK government set out plans for households in the UK living up to 500m from new or significantly upgraded electricity transmission infrastructure to get up to £2,500 off their electricity bills over ten years, with cash boosts for new facilities when they host offshore wind and solar projects.

A UK government spokesperson said: “We need new infrastructure to protect family and national finances with energy security, through clean homegrown power we control. We are already overhauling the energy system, building the grid we need and connecting new power projects to reach our 2030 target.”