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Enjoying The Benefits
The value of onshore wind farm Community Benefit Funds to Wales
Executive summary
Renewable energy is seen by Welsh Government as having an important role
in economic development. However, there are many other benefits the
industry is bringing to local communities up and down Wales which are
perhaps not so acknowledged or understood. Many renewable energy
operators participate in the success of local communities both in terms of their
time and through voluntary contributions to local ‘good causes’ through a
variety of different schemes. However, the number and form of such schemes
which operate in Wales is unknown.

Community benefit funds and schemes (hereafter known as CBFs) typically
take the form of an annual payment by the developer of a sum linked to the
capacity of the wind farm. They are usually intended for use on local projects
of a socially beneficial nature, such as environmental preservation or social
regeneration. Aside from simply making grants available for local use,
community benefit funds present an opportunity for local communities to play a
greater part in meeting their own needs in a way that delivers long-term and
sustainable benefits.

In particular, this report explores the local dimensions of CBFs on the onshore
wind power sector - however, offshore wind power also provides a high level of
community support, and our recommendations would also apply to offshore
wind power projects to a large extent. It aims to demonstrate the responsible
way in which onshore wind farm owners operate, and how the sustainability of
the energy they produce goes hand-in-hand with the sustainability of the
communities which they serve.

Our research focuses on the local dimensions of wind energy development,
and more specifically it seeks to examine the provision of wider community
benefits which support long-term sustainability at the local, as well as global,
scale. The range of potential benefits includes economic dividends through
local share ownership, community benefit funds, contributions to the social,
economic or environmental infrastructure for the area, or reduced energy bills
for local residents.
Since the first commercial wind farms were commissioned in Wales, the issue
of ‘community benefits’ has been treated on an ad hoc basis. There has been
little systematic investigation of their number and scope, and of the uses to
which these benefits are put. At the same time there has been rapid evolution
in the scale and form of community benefits provided by wind farm
developments. In response, the Welsh Government is seeking to steer and
improve the process of negotiating and delivering community benefits.

Many Welsh wind projects are already delivering community benefits which fall
within the definition of sustainable development, but there are gaps in our
knowledge surrounding their number, scale and scope.

As wind farms increase in number and size, CBFs are becoming more
common. Further research into current funds may therefore be valuable given
the increasing use of this model. This study only considers currently
operational onshore wind farms, and not those that relate to projects which are
currently in the planning system, have planning approval, or that are currently
being constructed.

The study found that there are a wide range of CBFs operating in Wales which
contribute extremely positively to local communities. In particular, the data
demonstrates that:

• Some four out of every five wind farms operating in Wales already
  contribute to their local communities in a structured way;

• Many different entities benefit from wind farm contributions;

• CBFs in Wales are mainly administered through localised trusts (or similar
  bodies), or community councils;

• The most common form of wind farm operator payment is fixed amounts,
  followed by an amount calculated per megawatt (MW) installed; and

• From 55% of respondents across Wales, the amounts paid to CBFs or
  similar in 2011 totalled £623,853.30.

There is a compelling case based on transparency, openness and the ability to
learn from best practice, for a register such as the Scottish Government’s
Register of Community Benefits from Renewables, as administered by
Community Energy Scotland. As such, we believe the following
recommendations should be adopted by Welsh Government:
• Welsh Government needs to provide funding to undertake the production of
  a CBF register for ‘live’ or approved wind farms that is easily and publicly
  accessible;
• In addition, Welsh Government should provide funding to facilitate the
  production of a CBF register for newly-submitted proposals;
• CBFs should ensure that they are suitable for industry and communities,
  and that they are managed in a ‘smart’ way, and Welsh Government should
  earmark funding to Community Energy Wales (or a similar body) to support
  communities in developing the best CBF for their particular needs;

• Welsh Government should consider how CBF payments can be most
  effective over a project lifetime, given the increasing phenomenon of
  ownership of projects being transferred to vehicles such as hedge funds,
  private equity funds, etc. It is important to note that detailed information for
  this study was provided from the bulk of RenewableUK Cymru membership,
  while those not involved with the organisation at a membership level
  (particularly financial institutions) were less likely to provide a response.

The study also includes a register of wind farm community benefit funds in
Wales, detailing fund value and administrative arrangements.
Table of Contents
Foreword                                                              5

Introduction                                                          6

Methodology                                                           8

Structure of the Report                                               11

Context                                                               12

Findings                                                              17

Entities employed to administer CBFs                                  21

Contribution methods                                                  25

Register of wind farm CBFs in Wales                                   29

Additional comments                                                   33

Conclusions and Recommendations                                       35

Appendix 1                                                            39




       Report produced by Capital Connections for RenewableUK Cymru
Foreword
                                    2012 has revealed a Wales of three parts;
                                    the south, where approval has been
                                    granted for one of the UK’s biggest wind
                                    farms, and where local companies are
                                    lining up to support the development and
                                    installation; mid Wales, which is beset by
                                    local anxiety about grid and transport, and
                                    where local economies stall as jobs, skills
                                    and young people leak away from market
                                    towns and rural communities; and the
                                    north, where offshore wind farms are
                                    revitalising ports and coastal communities.

This description is a gross oversimplification but it does serve to illustrate
some key differences, and also to point out that Wales’ natural resources have
presented a huge opportunity for some of our communities, which is currently
not being grasped.

Community benefits are important, although we should remember that they
are only one of many reasons why environment, economy and society benefits
from onshore wind. This report is a key part of the overall jigsaw of
information, highlighting the additional financial support given to communities
in and around many of our wind sites in Wales.

The total value paid into Community Benefit Funds (or equivalent) during 2011
is conservatively estimated at more than £620,000, a value which is set to rise
considerably as more wind farms come on-stream, and as the index-linked
nature of many of the funds evolves.

As an industry, as a civil society, and as a country, we need to examine how
we use these funds, and whether there is more that can be done. We have a
once-in-a-lifetime opportunity to revitalise, to stimulate and to strategically
support communities and businesses in parts of Wales which have hitherto
proved hard to reach. I hope that this can prove to be another important point
in an ongoing process which delivers greatest benefit to the parts of Wales
which are in greatest need.

Dr David Clubb
Director, RenewableUK Cymru
The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




Introduction
PURPOSE OF THE REPORT


                                               The renewable energy industry in
                                               Wales plays a vital role in our
                                               economy and potentially our
                                               e n e r g y s e c u r i t y. B u t t h i s
                                               contribution extends beyond the
                                               immediate economic benefits of
                                               the business. It often supports a
                                               wide range of projects and
                                               partnerships to build stronger and
                                              more sustainable communities.

RenewableUK Cymru set out to discover the extent and nature of wind farm
community benefit funds in Wales, upon which further work could potentially
be undertaken to evaluate how such funds could continue to contribute to local
development, and investigate factors that aid or constrain their meaningful
use.

The overarching objective of the study was to determine the proportion of wind
farms in Wales which have community benefit funds, and more specifically:

• To discover the extent and nature of wind farm community benefit funds in
  Wales;

• To compile a register of wind farm community benefit funds in Wales,
  detailing fund value and administrative arrangements; and
• To make a series of policy recommendations regarding their operation at a
  pan-Wales level.

The study was confined to CBFs provided by commercial wind farm
developers of grid-connected onshore wind farms, operational in June 2012,
and administered by communities or third-parties appointed on their behalf. It
outlines typical annual contributions per megawatt of installed capacity, which



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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

enables us to approximate an amount of monetary contributions paid by the
industry to local communities across Wales.

The study also allows us to identify the most common type of fund-managing
body, whether they are Community Councils, Community Trusts, Companies
Limited by Guarantee, third-party, or Local Authority, administration and, in
turn, looks at a selection of case studies which have implications for CBF
administration.

The final part of this report outlines implications for operators of CBFs and
policy-makers – in particular, how the industry can include devolved
government policies in the construction and operation of schemes.




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




Methodology
In view of the limited data on wind farm community benefits, it was our aim to
create a comprehensive register of CBFs in Wales using the following
methodology. Firstly, initial desk research was carried out to determine what
proportion of wind farms in Wales have CBFs and to compile a register of
these funds.

A list of all onshore operational wind farms in Wales (operational at June 2012)
was identified which provided us with the name of the development, number of
turbines, megawatt output, developer and owner:


 Wind Farm                        Turbines   MW      Developer                       Owner

 Alltwalis                        10         23      Catamount/Force 9               Statkraft

 BDCR II                          1          0.5     Bro Dyfi Community renewables

 Blaen Bowi                       3          3.9     Windjen Power Ltd               Windjen Power Ltd

 Braich Ddu Farm                  3          3.9     REG WINDPOWER

 Bryn Titli                       22         9.9     RWE Npower Renewables           Beaufort Wind Limited

 Carno 'A' & 'B'                  56         33.6    RWE Npower Renewables           Beaufort Wind Limited

 Carno Extension (Carno 2)        12         15.6    Amegni                          Amegni

 Castle Pill Farm - repowering    4          3.2     Infinergy

 Cefn Croes (inc Devils Bridge)   39         58.5    RDC                             Falck Renewables

 Cemmaes                          18         15.3    First Windfarm Holdings Ltd     First Wind Farm Holdings

 Dyffryn Brodyn                   11         5.5     New World Power                 RES

 Ferndale                         8          6.4     Infinergy                       Infinergy

 Ffynnon Oer                      16         32      RWE Npower Renewables           RWE Npower Renewables

 G24I                             1          2.3     Ecotricity                      Ecotricity

 Hafoty Ucha 1                    1          0.6     Tegni                           Tegni

 Hafoty Ucha 2 extension          2          1.7     Tegni                           Tegni

 Hafoty Ucha 3 extension          1          0.85    Tegni

 Llandinam P & L                  103        30.9    Scottish Power/Eurus Energy     ScottishPower/Eurus Energy

 Llangwyryfon repowering          11         9.35    First Windfarm Holdings Ltd     First Wind Farm Holdings

 Llyn Alaw                        34         20.4    RWE Npower Renewables           Beaufort Wind Limited

 Maesgwyn                         13         26      Pennant Walters

 Mawla (Moel Maelogen)            3          3.9     Energiekontor                   Co WP Mombkg UK branch

 Moel Maelogen Extension          9          11.7    Ail Wynt Cyf

 Monier Redland Plant             1          0.5     Infinite Energy

 Mynydd Clogau                    17         14.45   Novera                          Infinis

 Mynydd Gorddu                    19         10.2    Amgen                           Beaufort Wind Limited

 Parc Cynog                       5          3.6     Nuon Renewables                 Nuon Renewables

 Pendine (Parc Cynog Extension I) 6          4.8     Nuon Renewables                 Nuon Renewables

                                                                  8
The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

 Rheidol                     8    2.4     E.ON UK Renewables                      Infinis

 Rhyd-y-Groes                24   7.2     EcoGen, Seawest & Tomen joint venture   E.on Renewables

 Solutia UK Ltd              2    5       Wind Direct                             Wind Direct Ltd

 Swansea Docks               1    0.25    EnergyTech                              Swansea Bay Energy Partnership ltd

 Taff Ely                    20   9       Perma Energy                            RWE Npower Renewables

 Tesco Distribution Centre   2    1.6     TNEI

 Tir Mostyn & Foel Goch      25   21.25   Windjen Power Ltd                       HG Capital

 Trysglwyn                   14   5.6     RWE Npower Renewables                   Beaufort Wind Limited

 Wern Ddu (Craig Lelo)       4    9.2     Tegni                                   Triodos Renewables



Contact details were then identified for each of the developers/operators, and
the following basic information was requested:

๏ Name of company
๏ Name of wind farm(s) operated

๏ Post code(s) of wind farm(s) operated
๏ MW capacity of wind farm(s) operated

๏ Approximate age(s) of wind farm development(s) operated

๏ Name and position of respondent


❖ Value of community benefit fund (if any)

❖ How the fund is administered
❖ Rules on use of the fund

❖ An open-ended question prompting further comments on either their own
   CBF arrangements or CBFs in general.


The actual questions asked were:

• Does your company contribute to a Community Benefit Scheme or Fund? (If
   the answer was ‘No’, then there were no further questions)

• To which entity do you contribute to the Community Benefit Scheme or
   Fund (i.e. the name of the Scheme or Fund and who administers it)?
• What is the governance structure of the Community Benefit Scheme or
   Fund you contribute to (e.g. a community trust, a co-operative, or a Local
   Authority-run entity)?

• What amount of contribution do you make to a Community Benefit Scheme
   or Fund (e.g. a payment per MW capacity, or per MW produced, or in
   another way, for example, ‘in kind’ benefits)?
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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

• For what activities are the monies of the Community Benefit Scheme or
  Fund used       (e.g. community projects, sponsoring community events or
  sports teams, etc)?
• Do you have any further comments about your engagement with
  Community Benefit Schemes or Funds (e.g. do you think they work well, or
  do you think there are alternative ways that such funding could better be
  distributed)?

The questions themselves were designed to capture quantitative data that
allowed categorical analysis. The open question at the end was included to
gather richer, qualitative data. Quantitative categorical data was then reported
as percentages for ease of comparison. Qualitative data was subjected to brief
content analysis categorising the substantive points to allow quantitative
presentation of the data, together with the quotation of representative
statements.

ISSUES AND LIMITATIONS
We recognised that the sensitive nature of the data might limit responses,
therefore research subjects were contacted in advance and assured that the
nature of the data was appreciated and would be treated sensitively and
constructively.

The inclusion of case studies afforded greater insights, as did gathering the
views of operators. Issues arising from these case studies and comments
could provide the basis for further investigation in this area.

It is hoped this will also contribute to broader thinking about the way in which
Community Benefit Funds in Wales might be further developed.




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




Structure of the Report
In the remainder of this report we:

• Outline the context for the study;

• Present our findings; and
• Put forward our conclusions and make some recommendations for the
  industry and policy-makers.




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




Context
This report is framed against the background of recent major pieces of Welsh
Government legislation (and proposed legislation), and the undertaking of the
Banding Review for the Renewables Obligation by the Department of Energy
and Climate Change.

Launched in March 2012, the Welsh Government’s Low Carbon Transition
programme has a general aim of ensuring investment delivers jobs, helping
businesses maximise opportunities, and ensuring communities benefit from
energy developments by making Wales ‘best in class’. “[We will] act to ensure
that communities benefit from renewable energy development and strive to be
exemplars,” - Energy Wales: A Low Carbon Transition (March 2012). “Wales,
like the rest of the world, is working hard to make the move to more
sustainable, low carbon energy. It is vital that we do this in a way that is
sensitive to the needs of our communities, creates sustainable, local jobs and
supports Wales’ wider economy,” Environment Minister John Griffiths 1.

In July 2011 the Welsh Government’s Legislative Programme 2011-16
signalled their intention to introduce a Sustainable Development Bill to
strengthen the approach of ‘One Wales: One Planet’ and change this
commitment to a legal duty. First Minister Carwyn Jones said: “Sustainability
is...about defining the long term development path for our nation. It means
healthy, productive people; vibrant, inclusive communities; a diverse and
resilient environment and an advanced and innovative economy.”2

In addition, the Climate Change Strategy for Wales, introduced in October
2010, acknowledged the importance of economic development in tackling
climate change: “We want to ensure that Wales is in the best possible position
to not only create new jobs and supply chain opportunities, but to take




1 http://wales.gov.uk/newsroom/firstminister/2012/120314energyvision/?lang=en


2 http://wales.gov.uk/topics/sustainabledevelopment/sdbill/?lang=en

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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

advantage of the potential to export energy, expertise, goods and services to
other nations seeking to make the transition to a low carbon economy.”3

The end of July 2012 saw the publication of the Banding Review for the
Renewables Obligation by DECC 4, which sets the Government’s main
mechanism for supporting large-scale renewables for the period 2013-17. The
Renewables Obligation (RO) is part of the UK Government’s commitment to
increasing the deployment of renewable energy to make the UK more energy
secure, help protect consumers from fossil fuel price fluctuations, drive
investment in new jobs and businesses in the renewable energy sector, as
well as to keep the UK on track to meet its carbon reduction objectives for the
coming decades (the UK has committed to generating 15% of our energy from
renewable sources by 2020).

The RO is currently the main financial mechanism by which the Government
incentivises the deployment of large-scale renewable electricity generation.
Support is granted for 20 years, which balances the need to provide investors
with long-term certainty with the need to keep costs to consumers to a
minimum.

The level of support for onshore wind for the Banding Review period will be
reduced to 0.9 Renewable Obligation Certificates (ROCs), guaranteed until
March 2014. However, the Government has undertaken a call for evidence,
begun in September 2012 and reporting in early 2013, which will re-assess
onshore wind industry costs. If findings of the call for evidence identify a
significant change in generation costs, the Government will initiate an
immediate review of onshore wind ROC levels, with any new support
arrangements for onshore wind taking effect from April 2014. As part of the call
for evidence, they will examine how communities can have more of a say over,
and receive greater economic benefit from, hosting onshore wind farms.

The Banding Review has begun to focus the debate in monetary levels of
community benefit funding. Although the value of payments are certainly
significant (renewables consultancy Regeneris cite that some developers are




3 http://wales.gov.uk/topics/environmentcountryside/climatechange/publications/strategy/?

lang=en
4 http://www.decc.gov.uk/en/content/cms/news/wms_ro_lm/wms_ro_lm.aspx

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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

proposing the equivalent of £5m over the lifetime of a 50MW scheme5), there
remains a general lack of clarity on the purpose and most effective use of the
payments.

CBFs are a unique way of developing a range of additional local community
benefits. The Joseph Rowntree Foundation cites a range of reasons for their
positive outcomes, including the sharing of benefits of developments with host
communities, addressing social justice linking local resources with local
economies, and securing the support of local communities 6.

RenewableUK’s community benefits protocol for England proposes a minimum
payment equivalent of £1,000 per MW of installed capacity, index linked to the
RPI (for schemes over 5 MW). Setting this minimum figure was meant to help
ensure that smaller developers were not disadvantaged given the pressures
being placed on the costs of onshore wind and the risk of further reductions to
ROCs and FIT levels. However, developers can offer significantly larger
amounts than the minimum and in reality the value of benefits over recent
years has increased significantly with £5,000 per MW frequently being offered
on schemes by developers and operators keenly interested in the success of
local communities, which in many cases is equivalent to around 6-7% of their
development costs. As a comparison it is worth noting that John Lewis - widely
held as an exemplar of Community Benefit - contribute approximately 0.25%
of their turnover to such schemes 7.

Against this background there is potentially a need for more information for
developers, and indeed communities, so that they may look at a range of ways
in which community benefits can be negotiated, administered and distributed,
making all parties better equipped to develop the best possible framework for
new projects across Wales, as well as a realisation by policy-makers, Local
Authorities, and local communities of the financial constraints which
developers are under given the cost of bringing schemes on-stream.

The objective of this report is to improve information on community benefits in
Wales. Although, as mentioned above, communities are becoming more aware

5 http://regeneris.co.uk/latest/blog/entry/money-on-the-wind-the-future-of-wind-farm-

community-benefits
6 http://www.jrf.org.uk/publications/wind-energy-disadvantaged-communities


7 http://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/financials/interim%20reports/

john_lewis_partnership_interim_report_2012.pdf
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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

of CBFs and their potential impact, there is also an important role for current
developments informing best practice of future ones (including the
identification of local factors which may, for good reason, cause differences in
the operation of different CBFs). This greater openness has, for example,
been highlighted as important by the Scottish Government8, leading to the
introduction of a database for payments in Scotland. Of overriding importance,
however, is the need for good quality information on the way in which
community benefits are being used and managed and the impacts they are
achieving for local communities. Developers, communities and other
stakeholders need to learn from this evidence.

It is important to understand the way CBF resources are being used, and to
ask questions about whether their allocation could be undertaken in a more
strategic way. Even if many of them are responding to very specific and very
local needs, they still may be better spent in an overall socio-economic context
according to the communities which they serve (see the chart on the next
page) by, for example, using the funding to leverage monies from other
funding streams (e.g. European Social Fund, Welsh Government, etc). There
may also be question marks regarding the awareness that some funds
themselves have of such opportunities, which may potentially provide greater
and more lasting benefits.




8 http://www.scotland.gov.uk/Topics/Business-Industry/Energy/Energy-sources/19185/

Communities
                                            15
The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru




Findings
The total number of responses to the study was 21 out of a possible 37,
representing a 56% response rate. Of those who did not respond, many are at
the smaller end of the scale in terms of contributions to CBFs, although some
larger wind farms are operated or owned by large financial institutions (for
example, hedge funds or private equity funds) which makes information-
gathering problematic.

It is important to recognise that RenewableUK Cymru is a member-led
organisation, which builds consensus with stakeholders and raises awareness
among the general public. As such the organisation has a standing within the
industry which allows far-reaching access to those operating renewables
projects on a day-to-day basis. Detailed information was provided from the
bulk of this membership, while those not involved with RenewableUK at a
membership level (i.e. financial institutions) were less likely to provide a
response. A full list of the details of respondents can be found in Appendix 1.

Of the ones which did respond, the following table shows the type of
development involved and whether it contributes to a CBF:


   Name of wind           Capacity           Age of wind     Operating CBF
   farm                                         farm           scheme?

   Alltwalis                23MW               2 years              Yes

   Wern Ddu                9.2MW               2 years              Yes

   Hafoty Ucha            3.15 MW              8 years              Yes

   Vestas                  575kW               9 years              Yes

   Nordtank                575kW               4 years              Yes

   Carno II               15.6 MW              3 years              Yes

   Llandinam                30MW               20 years             Yes

   Bryn Titli              9.9MW               18 years             Yes

   Carno                   33.6MW              16 years             Yes


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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru

  Ffynnon Oer               33MW               6 years              Yes

  Llyn Alaw                20.4MW             15 years              Yes

  Maesgwyn                  26MW             18 months              Yes

  Mynydd Gorddu            10.2MW             14 years              Yes

  Trysglwyn                5.6MW              14 years              Yes

  Taff Ely                  9MW               19 years              Yes

  Cefn Croes              58.5 MW              8 years              Yes

  Rhyd-Y-Groes             7.2MW              20 years              No

  Moel Moelogan            11.7MW              4 years              Yes

  Castle Pill              3.2MW               3 years              No

  Ferndale                 6.4MW               2 years              No

  Dyffryn Brodyn           5.5MW              18 years              No



As we can see from the above, table, the vast majority of wind farm
developments (80%) contribute to a CBF:




   How many wind farms operate a Community Benefit Fund or Scheme?


                                                                  No
                                                                  Yes

                                             20%




                             80%




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru

                           “Our system works quite well as technically it is an
                             ‘ownership’ arrangement with profit sharing rather
                              than a ‘benefits’ payment from a developer.
                               However, we are a voluntary committee and it is
                              difficult to run the business.

                         We believe there should be more ownership than
                     there currently is, and that all developers should establish
mechanisms for part local ownership so that communities can become direct
beneficiaries and to enhance their experience of having wind farms nearby.

We also believe that benefits funds should be targeted by communities at local
energy resilience and low carbon / energy efficiency measures, as well as
regeneration activities. Much more work needs doing in building our
awareness for considerable changes to our use of energy and where we get it
from if we are to take the issue of tackling climate change seriously and act in
earnest.”

Michael Phillips, Bro Dyfi Community Renewables




CASE STUDY ONE

Local Electricity Discount Scheme
The Local Electricity Discount Scheme (LEDS)9 is a new RES initiative which seeks to
deliver direct and tangible benefits to people living and working closest to their
proposed wind farms.

LEDS will be offered as an additional benefit to RES’ Community Benefit Funds,
which at its new sites provide £2,000 per megawatt (MW) annual contributions to
local communities. It is proposed that total LEDS payments for a site will be £3,000
per MW per year. If LEDS costs less than £3,000 per MW per year then the difference
will be added to the Community Benefit Fund, meaning an overall community benefit
of £5,000 per MW per year.

Under the proposed LEDS initiative those residential, community and business
properties closest to a proposed RES wind farm will each receive a minimum discount
of £100 per year off their electricity bills, which will be paid directly to their electricity
supplier. This minimum figure represents almost a quarter of the average annual
electricity bill in the UK (£453 in 2011 based on the latest figures released by the
Department of Energy and Climate Change, DECC, 29 March 2012). Payments
would commence once the wind farm is operational.

The precise area, and number of properties, qualifying for a LEDS scheme will vary
from site to site, taking into consideration factors such as the number and capacity of
wind turbines proposed and housing density around the wind farm.

The catchment area for each RES LEDS scheme is calculated by taking a straight
line distance - the Set Distance - from each wind turbine (initially set at three

9 http://www.thisissouthwales.co.uk/Windfarm-plan-brings-benefits/story-16745570-detail/
story.html
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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru

kilometres) and identifying all the postcode geographic boundaries (as defined by
Ordnance Survey) with properties on or within this Set Distance to form the Qualifying
Area. The Set Distance may be increased or decreased to ensure that the properties
within the final Qualifying Area will receive a discount of at least £100 per year.

LEDS at Bryn Llywelyn

RES presented its first LEDS scheme at its proposed site in Bryn Llywelyn in
Carmarthenshire. This follows initial consultation with the local community around the
Bryn Llywelyn site which indicated that almost 80 per cent of respondents supported
the idea of discounted electricity and almost 75 per cent would be interested in
participating in such a scheme. If LEDS is successful at Bryn Llywelyn it is anticipated
that it could be launched at other RES wind farms that are in development later in
2012.

LEDS at Bryn Llywelyn will provide an annual discount to the electricity bills of
properties close to RES’ proposed wind farm, if it becomes operational. The scheme
is open to all residential, commercial and community buildings (including schools,
churches and village halls) within the eligible area that have an electricity meter. An
annual discount of £225 will be applied to each property’s electricity bill, paid directly
to their electricity supplier, once the wind farm is operational. In addition, LEDS are
offering a Community Benefit Fund of almost £100,000 per year, which will support
local groups and initiatives.

RES has written to all qualifying properties directly, offering them the opportunity to
register interest in joining the discount scheme. At Bryn Llywelyn, the discount is
available to properties within three and a half kilometres of each proposed wind
turbine. The discount will be available to all properties within the qualifying area
regardless of people’s opinion on the proposed wind farm. However, the discount will
only be implemented if the wind farm is approved and constructed.

The annual discount will apply once the wind farm is fully operational, which could
take between two and four years from planning consent being granted. It will be paid
for the full lifetime of the turbines, or for as long as people live within the qualifying
area.

There are several ways residents register their interest in LEDS at Bryn Llywelyn, and
by using the Unique Reference Code in a letter each gets sent, they can either
contact via mail, telephone, email, or online. The discount is paid per property only,
and therefore only one person per property needs to register.




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Entities employed to
administer CBFs
Community benefit negotiations often result in annual cash payments to
communities throughout the lifetime of the renewable energy scheme. This
offers the community a significant opportunity to plan for and develop
community initiatives that could have long-term, lasting benefit. It also gives
rise, however, to a number of considerations that need to be addressed:

• Establishing a vision for the fund and involving the entire community in
  decision-making: How will all sectors of the community be given the
  opportunity to decide on the way that community benefit funds are used and
  managed? Some key elements of the fund’s purpose, organisation and
  operation need to be acceptable to the community at large and this should
  be decided by appropriate community consultation.

• The choice of a legal entity – i.e. who actually receives the payment? Is it
  the Community Council, Trust, Forum, company, or a local steering group?
  Should it be a specific legal entity, set up to accept payment and carry the
  responsibility that goes along with owning funds, and if so, what type of
  legal entity should it be ?

• Managing community benefit funds – i.e. what happens to the money when
  it is received? What does this entity do with the money? What are its
  objectives? Should these objectives be exclusively charitable in nature?
  What are the tax implications? Can tax be avoided?




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Overall, some 34 separate entities benefit from the contributions of the
respondents:

       Foundations/Trusts/Forums                    Town/Community Councils
       Local Community Projects (directly)          One-off donations
       Charities                                    Social Enterprises
       Private Companies                            Local Authority

         15




         10




          5



          0
                                         Entities

From the diagram above it can be seen that entities such as foundations and
trusts - along with town and community councils - are the preferred vehicles
for CBFs. The advantage of trusts and foundations is that they can be set up
to be community-led organisations, often managed by a board of trustees or a
steering group, is open in terms of its administration, and can incorporate
observers from local authorities and wind farm operators. They usually provide
some measure of economic, environmental, educational, social or cultural
benefit for people living in the area.

There are two main models for a Legal Entity associated with a Town or
Community Council which are most commonly considered for the
administration of community benefit funds:

• A Company incorporated under the Companies Acts with limited liability,
  where the limitation as to liability is by a Guarantee, and where the
  Members of the Company each undertake to pay on a specified date, or on
  the happening of a specified event (usually the winding up of the Company),
  such an amount up to a fixed sum (usually £1) as may be required to settle
  any outstanding debts of the Company, such Guarantee Companies being
  commonly, although not invariably, used for charitable purposes.
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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

• A Local Community Trust set up by the local community the purpose of
  which is to receive, administer, and distribute funds on behalf of the
  community through trustees appointed by the community.

Confusion can sometimes arise as both models are commonly referred to as
“trusts”, although only the second model is a trust in the true legal sense.
Despite having separate legal status to a Trust, communities adopting the
Company Limited by Guarantee model often name the organisation “[Local]
Community Trust” – hence the common confusion.

Other notable channels of contribution are to the Bro Dyfi Community
Renewables scheme (a community energy co-operative registered under the
Industrial and Provident Societies Acts) through a share interest dividend and
donation respectively (by the operator of the BDCR II development);
contributions made at the discretion of the operator (as in the case of Hafoty
Ucha); and through a professional grant-making charity (i.e. the Taff Ely
development who make contributions via Community Foundation Wales).


                    “Funds shall be applied for the benefit of the residents of
                       the communities. The funds should aim to promote
                         community spirit and bring people together; enhance
                         quality of life and promote people’s well-being; and
                         foster vibrant, sustainable communities. The funds
                         should not be used for political, religious,
                       entertainment or hospitality purposes, or for any
                    purpose adverse to the wind farm operator's interests. We
are keen that the funds are used to secure other grants and funds on a
matched-funding basis, allowing the community to secure maximum benefit
from the wind farm contributions.”

Monika Paplaczyk, Triodos Renewables (Wern Ddu) Ltd



CASE STUDY TWO

Windfall
Windfall (officially called the Mid Wales Community Energy Trust) collects a proportion
of the revenue from energy generation in Mid Wales and redistributes it among local
communities. This money is offered as grants for energy efficiency and renewable
energy projects to communities across Mid Wales. The basic income is supplemented
with income from landfill operators, through the Landfill Communities Fund, to
maximise the financial capacity of the scheme. Windfall is a not-for-profit company set
up specifically to fulfil these aims.


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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

Kick-started with money from RWE npower renewables and ENTRUST, Windfall
secured £104,000 for its first projects in 2005. As a result, the communities of Carno
and Trefeglwys enjoy the benefits of renewable energy systems such as wood energy
and photovoltaic systems. In addition, educational programmes have been part of this
scheme.

Building on this success, Windfall plans to extend its operation to deliver benefits to
other communities across Mid Wales. While the Trust recognises the value of local
Funds with very broad community benefit criteria, it offers itself to current and
potential energy generators as a vehicle to complement these, by delivering low
carbon benefits from renewable energy through community action.




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




Contribution methods
In all, there were four distinct methods of payment, and some 32 ‘channels’ of
payments, which were as follows: percentage of profits (1); per MW installed
(6); fixed payments (24); and in-kind (1):

                        0             10                  20                   30

     % of profits


Per MW installed


  Fixed payments


              In kind




Fixed payments are the most common form of contribution, and the amounts
quoted were as follows:

         Wind Farm           Base level of payment /      Actual level of payment
                                to which entity                    (2011)

 Alltwalis                   £75,000 per annum index             £78,600
                               linked / Alltwalis Wind
                             Farm Community Benefit
                                     Trust Fund

 BDCR II                     5-10% of profits / Ecodyfi        Undisclosed

 Bryn Titli                   £2,500 / Town Council             £3,530.38

                               £2,500 / Community               £3,530.38
                                     Council




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

 Carno 2                     £2,000 per MW installed,            £6,000
                                per annum indexed
                            linked / Carno Community
                                     Trust Fund

                             £2,000 per MW installed,            £6,000
                                per annum indexed
                               linked / Llanbrynmair
                              Local Community Trust
                                        Fund

                             £2,000 per MW installed,           £20,000
                               per annum indexed
                                linked / Mid Wales
                             Community Energy Fund
                                     (Windfall)

 Carno 'A' & 'B'                £12,000 / Carno                £18,156.08
                               Community Council

 Cefn Croes                   £1000 per MW, index               £72,240
                               linked / Cefn Croes
                                 Community Trust

 Ffynnon Oer                  £22,000 / Upper Afan             £25,978.84
                                    Forum

 Hafoty Ucha                  £1k per MW installed /             £4,000
                             contributions made at the
                              discretion of the owner

 Llandinam P & L              £5,000 / Celtpower ltd             £5,000

                               £20,000 / Llandinam              £20,000
                                Community Trust

 Llyn Alaw                     £16,000 / Tref Alaw             £23,059.1
                               Community Council

                              £4,000 / Llannerch y             £5,776.98
                            Medd Community Council

                                £4,000 / Mechell               £5,776.98
                               Community Council

                               £2,000 / Community                £2,000
                                Foundation Wales

 Maesgwyn                    £175,000pa / Neath Port           £175,000
                              Talbot County Borough
                                      Council




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

 Moel Maelogen Extension     £50k per year x 3 years /          £50,000
                             Nant Conwy Rugby Club

                             £50k per year x 2 years /          £50,000
                               Dyffryn Conwy Rural
                                    Enterprise

                               £7.5k per year for life           £7,500
                             (indexed) / Bro Garmon
                                Community Council

                               £7.5k per year for life           £7,500
                              (indexed) / Bro Cernyw
                                Community Council

 Mynydd Gorddu                   £10,000 / Amgen               £14,670.38

 Taff Ely                      £2,500 / Community                £2,500
                                Foundation Wales

 Trysglwyn                     £5,000 / Rhosybol               £7,035.18
                               Community Council

 Wern Ddu (Craig Lelo)          £3,333 / Derwen                  £3,333
                               Community Council

                                      £3,333                     £3,333

                                      £3,333                     £3,333



The total disclosed amounts awarded in 2011 were £623,853.30.



                       “They work well up to a certain limit. Most wind farms are
                          built in rural areas where employment is the problem.
                           We need to attract businesses to rural areas so that
                           we can keep youngsters in the area. If money is
                           given to local people to fit energy saving devices
                           such as heat recovery systems, heat pumps, etc
                         perhaps we could attract a company making such
                      equipment to set up in the area. Throwing large amounts
of cash at communities can have an adverse effect and should be avoided at
all costs. Also all the money will do is replace funding previously provided by
councils and Welsh Government which is letting them off the hook, especially
when the wind industry does not enjoy much support from them!”

Huw Smallwood, Tegni Ltd




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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru



CASE STUDY THREE

Cefn Croes Wind Farm Community Trust Fund
The Cefn Croes Wind Farm Community Trust Fund is a Charitable Trust funded by
Cambrian Wind Energy aimed at small community led organisations. Priority will be
given to projects in the Community Council Areas of Blaenrheidol and Pontarfynach
and then to the wider area of the County of Ceredigion. The fund is managed by a
board of five Trustees representing Cambrian Wind Energy and the Communities of
Blaenrheidol and Pontarfynach.

The purpose of the Trust is to support any type of activity that involves local people,
through small community organisations, that benefits their community. The activities
must provide some measure of economic, environmental, educational, social or
cultural benefit for people living in the area. Cambrian Wind Energy will pay £58,500
plus inflation annually into the Trust Fund while the Cefn Croes wind farm is
operational.

In order to apply for funding, projects have to go through an application procedure.
The relevant documentation is online, which consists of a full copy of the application
guidelines 10; a copy of the application form itself 11; and a copy of the fund’s End Of
Project report, which is used for evaluation purposes12. There is also a detailed
breakdown of the funds allocated so far in order to see the type of schemes
supported13.




10 http://ponterwyd.pumlumon.org.uk/assets/File/

Cefn_Croes_Application_Guidelines_Jan10.pdf
11 http://ponterwyd.pumlumon.org.uk/assets/File/

Cefn_croes_Trust_Fund_Application_Jan10.pdf
12 http://ponterwyd.pumlumon.org.uk/assets/File/CefnCroesendofproject.pdf


13 http://ponterwyd.pumlumon.org.uk/index.php?lang=eng&page=104

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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




Register of wind farm
CBFs in Wales
As part of the Scottish Government Community and Renewable Energy
Scheme (CARES), Community Energy Scotland are administering the Scottish
Government Register of Community Benefits from Renewables. This is a
valuable tool in helping communities through the community benefit process.
By demonstrating the range of ways in which community benefits can be
negotiated, administered and distributed, the Scottish Government hopes that
communities and developers will be well equipped to develop the best
possible framework for new renewable projects across Scotland.

The Register details fund spend, and provides ideas and advice for
communities seeking to ensure their funds are spent wisely. Anyone can
access the database 14 and find out what is happening across Scotland, which
encourages the transparency of schemes, and the sharing of ideas and
experiences. Community Energy Scotland will also be using the information to
study more closely what is happening in the field. The Register is voluntary,
and relies on communities and developers sharing their experiences and
lessons learnt. Providers of community benefit funds are encouraged to fill in
the relevant form 15.

On the following page are screenshots demonstrating the typical level of
information which is available.

A basic starting-point for such information regarding a register of wind farm
community benefit funds in Wales, detailing fund value and administrative
arrangements, has been compiled from the respondents of this study.




14 http://www.communityenergyscotland.org.uk/register


15 http://www.communitybenefitregister.org.uk/form.aspx?formtype=1

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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru




                   “Amegni is a local company set up by farmers who have
                      diversified and live in the local community. We own and
                        operate a 15.6 MW wind farm and our long-term goal
                         is to maintain and keep the benefits from the project
                         locally – hence we believe that local ownership like
                        this is a form of community benefit in its own right
                      (but rarely recognised as so!). As a local company we
                   are continually asked to sponsor and contribute to various
community events, projects and help fund organisations which we continually
do so over and above the formal payments made.



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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

It is unfortunate and unreasonable to only target community benefits at wind
farms as very few other industries make such contributions to the communities
they operate in. As a local company we do however find the local community
very supportive to the wind farm and our company - this is probably in part to
the fact that we are a local company but more so they get to share the benefit
with us.”

Sion Thomas, Amegni



CASE STUDY FOUR

An example from Offshore Wind: The Rhyl Flats Offshore Wind Farm
Community Benefit Package
In association with the Rhyl Flats Offshore Wind Farm, a community fund has been
set up to assist local community projects in wards neighbouring the wind farm. The
annual fund started at a base level of £90,000, it is index linked each year in line with
inflation and will be available throughout the operational life of the wind farm.

To maximise the benefit for local communities, RWE npower renewables has worked
in partnership with the Welsh Government to develop an administration arrangement
for this fund that presents local communities with easier access to wider funding
options through one simple application form.

Depending on where community groups are based, they could be eligible to access
funds from both the Rhyl Flats Offshore Wind Farm Community Benefits Package,
and the North Wales Coast Regeneration Area (RA) Community Cohesion Fund,
funded by the Welsh Government, in some cases using the same application form.
Collectively this gives groups access to a combined fund of £1million per annum to
support both capital and revenue elements of projects. Groups in Rhyl have access to
both the North Hoyle and Rhyl Flats Offshore Wind Farm Community Benefit Funds
which are administered by the same organisation, Denbighshire Coastal Partnership.

• The base level of the annual fund is £90,000 per year throughout the operational
  life of the wind farm, normally expected to be in the region of 25 years.
• The fund is Index linked each year in line with the retail price index.
• £75,000 pa is ring-fenced for the following wards in Conwy: Pensarn, Colwyn,
  Eirias, Gele, Glyn, Kinmel Bay, Llanddulas, Llandrillo yn Rhos, Llysfaen, Mochdre,
  Pentre Mawr, Rhiw & Towyn.
• £15,000 pa is ring-fenced for Rhyl.
• The scheme’s fund capital and / or revenue projects are run by charities,
  community and voluntary groups

Administration of the Rhyl Flats Offshore Wind Farm Community Fund

The Conwy part of the fund is administered alongside the existing North Wales Coast
Regeneration Area (RA) Community Cohesion Fund, funded by the Welsh
Government. These arrangements will exist for the life of the Community Cohesion
Fund. Their aim is to agree an appropriate administration structure to take over after
the end of the RA Community Cohesion Fund for the remaining operational life of the
wind farm.

The Rhyl part of the fund is administered by the Denbighshire Coastal Partnership –
the current administrators of the existing Community Fund in association with North
Hoyle Offshore Wind Farm. Decisions on how the funding is allocated are made by
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the Rhyl Community Partnership, a fully constituted group made up of local
volunteers, representing the town council, voluntary sector, local business community,
residents associations and police.




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Additional comments
Additional comments collected during the study are as follows:

                      “We currently deliver over £1.4 million per annum of community
                        benefit across our UK portfolio of construction and
                          operational Projects.

                              Our community benefit is administered by a variety of
                              trusts, community interest companies, social regeneration
                             enterprises and local authorities. Our best practice model
                          from our community benefit portfolio is where communities
                        have created an area-specific community interest company
                 and directly administer the funds themselves. This has led to
substantial regeneration projects being conceived and achieved for the good of the
Region and not just specific communities. Developer input at the beginning and
regular engagement is essential to ensure the funding criteria are in accordance with
both parties’ requirements.

A third party body to provide secretariat and assistance with general administration
and reporting is also essential to ensure not only that criteria are being adhered to,
but also to assist with the realisation of larger projects that may be available via
match funding the Community Benefit with other applicable funding streams, etc.

An empowered group of communities surrounding onshore wind sites in receipt of
Community Benefit may require an initial one or two year period to address the
‘normal’ community concerns e.g. village hall maintenance etc, but our experience
has shown that given proper support the same communities will, in a very short time,
begin to conceive and implement strategic economic and environmental Projects for
their wider area.”

Daniel Ferrier, Celtpower Ltd (Scottish Power Renewables & Eurus Energy)


                       “Aspects of our community benefit funds which work well:
                          To date relatively modest levels of funding which can make a
                            really significant positive impact on the immediate local
                             area;
                             Engagement of local representatives in decision making –
                             empowering local people have more control over their
                            own destiny;
                          Funding arrangements are bespoke tailored to individual
                        communities;
                Innovative partnership with Welsh Government – wind farm
community funding administered alongside WG regeneration area funding, 2 funds –
1 simple application form, funds can match each other, wind farm funding can fund
revenue projects excluded from WG funding.

Alternative options for the future:
We are constantly striving to improve our delivery of community benefits and as such
are already engaging in many of these initiatives;
Considering structures we have used in other areas of the UK more recently;
Increased and earlier consultation with local communities and key stakeholders;

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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

Careful consideration of public perception of new delivery mechanisms / focuses;
New approach more aligned to the increased levels of funding available;
Focus on securing match funding;
Consideration of benefits for wider regional areas;
Closer alignment with local, regional and national strategy;
Increased focus on economic development including jobs and skills;
Possible collaboration amongst developers;
This is still local communities’ biggest opportunity to influence wind energy
developments – care not to exclude them from this process;
Remember that small local grants can still make a big difference and where
appropriate should be considered as part of an overall package;
Better industry collaboration in demonstrating the benefits already delivered by wind
energy.”

Katy Woodington, RWE npower renewables




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Conclusions and
Recommendations
Renewable energy projects are already bringing a range of community
benefits in addition to generating clean and sustainable energy. These include
increased job opportunities and improvements to the built and natural
environment. In addition, there are a wide range of Community Benefit Funds
operating in Wales which contribute extremely positively to local communities
across the country. Established local funds should be seen as a way of saying
‘thank you’ to the communities which host wind farms and other renewable
energy schemes.

We can conclude from the data we have gathered that:

• Approximately four out of every five wind farms operating in Wales
  contribute to their local communities in a structured way;
• Many different entities benefit from wind farm contributions (a total of 34
  were identified through 20 responses);
• CBFs in Wales are mainly administered through localised trusts (or similar
  bodies), or Community Councils;

• The most common form of wind farm operator payment is through fixed
  amounts, followed by a calculated per MW installed; and

• Total disclosed amounts awarded to CBFs or similar in 2011 were
  £623,853.30.

In light of current political agendas, the time may have arrived where onshore
wind farm developers might want to ensure that specific benefits from their
programmes are delivered to communities in a more high-profile and
transparent way, in order to more effectively demonstrate the positive
outcomes which they produce.




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The document ‘Delivering community benefits from wind energy development:
A Toolkit’ 16 outlines a number of different factors which should be taken into
account when designing a community benefit scheme:

• Why should community benefits be considered?

• What are the costs, risks and rewards of wind energy and how do
   community benefits fit into this picture?

• What is the relationship between community benefits and the planning
   process?
• What are the different ways community benefits can be offered?

• Who should benefit and how should this be controlled and managed?
• What agreements can and should be put in place to secure these benefits?

The advice stresses the importance of concentrating on the benefits which will
be delivered ‘in the round’. It may be advantageous for operators involved with
CBFs to revisit the strategic direction of their schemes in order to ensure they
are aligned with wider prevailing economic policy. For example, the LEDS
case study outlined previously (Case Study One; page 19) would potentially
appeal to residents in the area of its operation, but may not necessarily appeal
to Welsh Government policy with regards to promoting energy efficiency. If,
however, the scheme had been developed in conjunction with, for example,
the Welsh Government, then it could have been coupled with the Arbed
scheme17 to coordinate investment into the energy performance of Welsh
homes.

CBFs should ensure that they are suitable for industry and communities, and
that they are managed in a ‘smart’ way. One such way is to explore the
possibility of ‘leveraging in’ funding from different streams (e.g. ESF, Welsh
Government, JobCentre Plus). The Rhyl Flats Offshore Wind Farm Community
Benefit Package (Case Study Four; page 31), for example, incorporates a
Community Cohesion Fund, funded by the Welsh Government, and in some
cases through the same application form. Collectively this gives community
groups access to a combined fund of £1 million per annum to support both
capital and revenue elements of projects, thereby maximising spend enabling


16 http://www.cse.org.uk/downloads/file/Delivering%20community%20benefits%20from

%20wind%20energy%20-%20a%20tookit.pdf
17 http://wales.gov.uk/topics/environmentcountryside/energy/efficiency/arbed/?lang=en

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The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

bigger projects and scalability. There is a role for Welsh Government in
offering advice to CBFs in the most effective way their funding can be used,
perhaps through a vehicle such as Community Energy Wales or Mid Wales
Community Energy Fund (Windfall).

There is also a need to ensure that CBFs are attuned to economic imperatives
as well as continuing the local social benefits which they clearly bring. CBFs
could be used for more strategic regional economic development objectives:
for example, voluntary arrangements could support regional economic
development, job creation, and skills enhancement. One suggestion would be
the creation of a 25-year Strategic Search Area (SSA) investment fund for
each SSA, which would have a strategic regional governance model looking at
regionally important economic issues and garnering input from organisations
such as the Regional Economic Fora. Such vehicles could be set up as trust
funds with developers being invited to pay a share of their CBF into it which
could then leverage matched funding (e.g. European funds), or government
top-ups. These SSA funds would ensure a focus on regional economic
development issues, and not just local issues in often relatively sparsely-
populated communities.

The Welsh Government should help developers and communities choose the
right CBF vehicle for their particular circumstances and to make the most
effective use of the monies to be allocated, possibly through the introduction of
‘CBF Advisors’ to enable their link to potential funding which often
accompanies government initiatives.

Welsh Government should also fund an official public-facing registry (similar to
the Scottish model) which would encourage the sharing of best practice, ideas
and experiences. They should fund a further registry which would list wind
farm applications that have been approved but not yet constructed, and the
type of CBF arrangements that were being put in place or proposed. This
would enable local and regional groups to put forward their own proposals to
work with the CBF going forward.

Vehicles used to deliver CBFs should ensure transparency of their operations.
For example, as best practice the trust or Community Council involved should
establish a public-facing website showing the raison d’etre of the scheme,
listing how money has been allocated, and on what basis, as well as contact
details. In addition, a reasonable level of monies from the CBF should be set
                                        37
The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru

aside to ensure that the CBF is promoted at a local level and that local
communities are made aware of its operations. Both of these
recommendations are in the best interests of the industry so that good works
are not just done but also seen to be done.

The debate regarding a community benefits protocol in England has specified
a £1,000 minimum payment per year per megawatt of installed wind power
during the lifetime of the wind farm. In Wales, the above recommendations
should make this debate largely irrelevant. Our vision should be for well-
thought-out and well-run schemes with clear objectives, that draw in various
partners to leverage maximum funding, and that are transparent and
accessible to communities and stakeholders. This should be the way forward
for the industry, working closely alongside communities at a micro level, and
with Welsh Government at a macro level.

One should not underestimate the value of CBFs themselves, or the wind
farms which they represent. Some 8,600 jobs were provided by the onshore
wind industry in 2011, with £548 million added to the UK economy, according
to a joint study published by RenewableUK and the Department for Energy
and Climate Change 18. It found that the real value that wind provides (close to
£700,000 for every MW installed in the UK) is over £100,000 within the Local
Authority area. CBFs are a vital component in showing local communities not
just the environmental benefits of renewable energy but also local economic
benefit. The focus must be on how these communities can extract maximum
benefit and, in particular, the vital part that CBFs play in this dynamic.




18 http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/wind/5585-economic-

benefits-onshore-wind-full-pn.pdf
                                           38
Appendix 1




    39
Name of company:                      Triodos Renewbales (Wern Ddu) Ltd

Name of the windfarm operated:        Wern Ddu wind farm

MW capacity of windfarm operated:     9.2MW

Approximate age of windfarm           2 years
development operated:

Name and position of respondent:      Monika Paplaczyk, Investment
                                      Manager



Name of company:                      Tegni Ltd

Name of the windfarm operated:        Hafoty Ucha (Ll21 0RL)

MW capacity of windfarm operated:     3.15 MW

Approximate age of windfarm           8 years
development operated:

Name and position of respondent:      Huw Smallwood (Owner)



Name of company:                      Bro Dyfi Community Renewables

Name of the windfarms operated:       Vestas & Nordtank (SY20 8AX)

MW capacity of windfarms operated:    575kW

Approximate age of windfarm           9 years and 4 years respectively
developments operated:

Name and position of respondent:      Michael Phillips, management
                                      committee



Name of company:                      Amegni

Name of the windfarm operated:        Carno II (SY17 5JS)

MW capacity of windfarm operated:     15.6 MW

Approximate age of windfarm           3 years
development operated:

Name and position of respondent:      Sion Thomas – Owner / Operator



                                     40
Name of company:                     Celtpower Ltd (Scottish Power
                                     Renewables & Eurus Energy)

Name of the windfarm operated:       Llandinam (National Grid Ref SO
                                     028836)

MW capacity of windfarm operated:    30MW

Approximate age of windfarm          20 years
development operated:

Name and position of respondent:     Daniel Ferrier – Assistant Project
                                     Manager



Name of company:                     RWE npower renewables

Name of the windfarms operated:      Bryn Titli; Carno; Ffynnon Oer; Llyn
                                     Alaw; Mynydd Gorddu; Trysglwyn;
                                     Taff Ely

MW capacity of windfarm operated:    9.9MW; 33.6MW; 33MW; 20.4MW;
                                     10.2MW; 5.6MW; 9MW

Approximate age of windfarm          18 years; 16 years; 6 years; 15
development operated:                years; 14 years; 14 years; 19 years

Name and position of respondent:     Katy Woodington, Senior Community
                                     Investment Officer



Name of company:                     EC&R (joint venture between EC&R
                                     and Eurus Energy)

Name of the windfarm operated:       Rhyd-Y-Groes

MW capacity of windfarm operated:    7.2MW

Approximate age of windfarm          20 years
development operated:

Name and position of respondent:     Jonn Barnes, Senior Originator




                                    41
Name of company:                     Moelogan 2 Ccc

Name of the windfarm operated:       Moel Moelogan (LL28 5UN)

MW capacity of windfarm operated:    11.7MW

Approximate age of windfarm          4 years
development operated:

Name and position of respondent:     Geraint Davies, Owner/operator



Name of company:                     Cambrian Wind Energy Limited

Name of the windfarm operated:       Cefn Croes Windfarm (SY23 3LE)

MW capacity of windfarm operated:    58.5 MW

Approximate age of windfarm          8 years
development operated:

Name and position of respondent:     Roger Jones, Asset Manager



Name of company:                     Infinergy

Name of the windfarm operated:       Castle Pill wind farm (SA73) +
                                     Ferndale wind farm (CF43)

MW capacity of windfarm operated:    Castle Pill (3.2MW) + Ferndale
                                     (6.4MW)

Approximate age of windfarm          Castle Pill (3 years) + Ferndale (2
development operated:                years)

Name and position of respondent:     Lorraine Dallmeier, Project Director



Name of company:                     RES

Name of the windfarm operated:       Dyffryn Brodyn (SA34 0JE)

MW capacity of windfarm operated:    5.5MW

Approximate age of windfarm          18 years
development operated:

Name and position of respondent:     Samantha Mayes, Community
                                     Relations Co-ordinator



                                    42
Name of company:                     Pennant Walters Maesgwyn Ltd

Name of the windfarm operated:       Maesgwyn (SA10)

MW capacity of windfarm operated:    26MW

Approximate age of windfarm          18 months
development operated:

Name and position of respondent:     Dale Hart, Director



Name of company:                     Statkraft

Name of the windfarm operated:       Alltwalis (SA32 7ED)

MW capacity of windfarm operated:    23MW

Approximate age of windfarm          2-and-a-half years
development operated:

Name and position of respondent:     Rob Fellows (Community Relations
                                     Adviser)




                                    43

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Community benefits in Wales

  • 1. Enjoying The Benefits The value of onshore wind farm Community Benefit Funds to Wales
  • 2. Executive summary Renewable energy is seen by Welsh Government as having an important role in economic development. However, there are many other benefits the industry is bringing to local communities up and down Wales which are perhaps not so acknowledged or understood. Many renewable energy operators participate in the success of local communities both in terms of their time and through voluntary contributions to local ‘good causes’ through a variety of different schemes. However, the number and form of such schemes which operate in Wales is unknown. Community benefit funds and schemes (hereafter known as CBFs) typically take the form of an annual payment by the developer of a sum linked to the capacity of the wind farm. They are usually intended for use on local projects of a socially beneficial nature, such as environmental preservation or social regeneration. Aside from simply making grants available for local use, community benefit funds present an opportunity for local communities to play a greater part in meeting their own needs in a way that delivers long-term and sustainable benefits. In particular, this report explores the local dimensions of CBFs on the onshore wind power sector - however, offshore wind power also provides a high level of community support, and our recommendations would also apply to offshore wind power projects to a large extent. It aims to demonstrate the responsible way in which onshore wind farm owners operate, and how the sustainability of the energy they produce goes hand-in-hand with the sustainability of the communities which they serve. Our research focuses on the local dimensions of wind energy development, and more specifically it seeks to examine the provision of wider community benefits which support long-term sustainability at the local, as well as global, scale. The range of potential benefits includes economic dividends through local share ownership, community benefit funds, contributions to the social, economic or environmental infrastructure for the area, or reduced energy bills for local residents.
  • 3. Since the first commercial wind farms were commissioned in Wales, the issue of ‘community benefits’ has been treated on an ad hoc basis. There has been little systematic investigation of their number and scope, and of the uses to which these benefits are put. At the same time there has been rapid evolution in the scale and form of community benefits provided by wind farm developments. In response, the Welsh Government is seeking to steer and improve the process of negotiating and delivering community benefits. Many Welsh wind projects are already delivering community benefits which fall within the definition of sustainable development, but there are gaps in our knowledge surrounding their number, scale and scope. As wind farms increase in number and size, CBFs are becoming more common. Further research into current funds may therefore be valuable given the increasing use of this model. This study only considers currently operational onshore wind farms, and not those that relate to projects which are currently in the planning system, have planning approval, or that are currently being constructed. The study found that there are a wide range of CBFs operating in Wales which contribute extremely positively to local communities. In particular, the data demonstrates that: • Some four out of every five wind farms operating in Wales already contribute to their local communities in a structured way; • Many different entities benefit from wind farm contributions; • CBFs in Wales are mainly administered through localised trusts (or similar bodies), or community councils; • The most common form of wind farm operator payment is fixed amounts, followed by an amount calculated per megawatt (MW) installed; and • From 55% of respondents across Wales, the amounts paid to CBFs or similar in 2011 totalled £623,853.30. There is a compelling case based on transparency, openness and the ability to learn from best practice, for a register such as the Scottish Government’s Register of Community Benefits from Renewables, as administered by Community Energy Scotland. As such, we believe the following recommendations should be adopted by Welsh Government:
  • 4. • Welsh Government needs to provide funding to undertake the production of a CBF register for ‘live’ or approved wind farms that is easily and publicly accessible; • In addition, Welsh Government should provide funding to facilitate the production of a CBF register for newly-submitted proposals; • CBFs should ensure that they are suitable for industry and communities, and that they are managed in a ‘smart’ way, and Welsh Government should earmark funding to Community Energy Wales (or a similar body) to support communities in developing the best CBF for their particular needs; • Welsh Government should consider how CBF payments can be most effective over a project lifetime, given the increasing phenomenon of ownership of projects being transferred to vehicles such as hedge funds, private equity funds, etc. It is important to note that detailed information for this study was provided from the bulk of RenewableUK Cymru membership, while those not involved with the organisation at a membership level (particularly financial institutions) were less likely to provide a response. The study also includes a register of wind farm community benefit funds in Wales, detailing fund value and administrative arrangements.
  • 5. Table of Contents Foreword 5 Introduction 6 Methodology 8 Structure of the Report 11 Context 12 Findings 17 Entities employed to administer CBFs 21 Contribution methods 25 Register of wind farm CBFs in Wales 29 Additional comments 33 Conclusions and Recommendations 35 Appendix 1 39 Report produced by Capital Connections for RenewableUK Cymru
  • 6. Foreword 2012 has revealed a Wales of three parts; the south, where approval has been granted for one of the UK’s biggest wind farms, and where local companies are lining up to support the development and installation; mid Wales, which is beset by local anxiety about grid and transport, and where local economies stall as jobs, skills and young people leak away from market towns and rural communities; and the north, where offshore wind farms are revitalising ports and coastal communities. This description is a gross oversimplification but it does serve to illustrate some key differences, and also to point out that Wales’ natural resources have presented a huge opportunity for some of our communities, which is currently not being grasped. Community benefits are important, although we should remember that they are only one of many reasons why environment, economy and society benefits from onshore wind. This report is a key part of the overall jigsaw of information, highlighting the additional financial support given to communities in and around many of our wind sites in Wales. The total value paid into Community Benefit Funds (or equivalent) during 2011 is conservatively estimated at more than £620,000, a value which is set to rise considerably as more wind farms come on-stream, and as the index-linked nature of many of the funds evolves. As an industry, as a civil society, and as a country, we need to examine how we use these funds, and whether there is more that can be done. We have a once-in-a-lifetime opportunity to revitalise, to stimulate and to strategically support communities and businesses in parts of Wales which have hitherto proved hard to reach. I hope that this can prove to be another important point in an ongoing process which delivers greatest benefit to the parts of Wales which are in greatest need. Dr David Clubb Director, RenewableUK Cymru
  • 7. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Introduction PURPOSE OF THE REPORT The renewable energy industry in Wales plays a vital role in our economy and potentially our e n e r g y s e c u r i t y. B u t t h i s contribution extends beyond the immediate economic benefits of the business. It often supports a wide range of projects and partnerships to build stronger and more sustainable communities. RenewableUK Cymru set out to discover the extent and nature of wind farm community benefit funds in Wales, upon which further work could potentially be undertaken to evaluate how such funds could continue to contribute to local development, and investigate factors that aid or constrain their meaningful use. The overarching objective of the study was to determine the proportion of wind farms in Wales which have community benefit funds, and more specifically: • To discover the extent and nature of wind farm community benefit funds in Wales; • To compile a register of wind farm community benefit funds in Wales, detailing fund value and administrative arrangements; and • To make a series of policy recommendations regarding their operation at a pan-Wales level. The study was confined to CBFs provided by commercial wind farm developers of grid-connected onshore wind farms, operational in June 2012, and administered by communities or third-parties appointed on their behalf. It outlines typical annual contributions per megawatt of installed capacity, which 6
  • 8. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru enables us to approximate an amount of monetary contributions paid by the industry to local communities across Wales. The study also allows us to identify the most common type of fund-managing body, whether they are Community Councils, Community Trusts, Companies Limited by Guarantee, third-party, or Local Authority, administration and, in turn, looks at a selection of case studies which have implications for CBF administration. The final part of this report outlines implications for operators of CBFs and policy-makers – in particular, how the industry can include devolved government policies in the construction and operation of schemes. 7
  • 9. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Methodology In view of the limited data on wind farm community benefits, it was our aim to create a comprehensive register of CBFs in Wales using the following methodology. Firstly, initial desk research was carried out to determine what proportion of wind farms in Wales have CBFs and to compile a register of these funds. A list of all onshore operational wind farms in Wales (operational at June 2012) was identified which provided us with the name of the development, number of turbines, megawatt output, developer and owner: Wind Farm Turbines MW Developer Owner Alltwalis 10 23 Catamount/Force 9 Statkraft BDCR II 1 0.5 Bro Dyfi Community renewables Blaen Bowi 3 3.9 Windjen Power Ltd Windjen Power Ltd Braich Ddu Farm 3 3.9 REG WINDPOWER Bryn Titli 22 9.9 RWE Npower Renewables Beaufort Wind Limited Carno 'A' & 'B' 56 33.6 RWE Npower Renewables Beaufort Wind Limited Carno Extension (Carno 2) 12 15.6 Amegni Amegni Castle Pill Farm - repowering 4 3.2 Infinergy Cefn Croes (inc Devils Bridge) 39 58.5 RDC Falck Renewables Cemmaes 18 15.3 First Windfarm Holdings Ltd First Wind Farm Holdings Dyffryn Brodyn 11 5.5 New World Power RES Ferndale 8 6.4 Infinergy Infinergy Ffynnon Oer 16 32 RWE Npower Renewables RWE Npower Renewables G24I 1 2.3 Ecotricity Ecotricity Hafoty Ucha 1 1 0.6 Tegni Tegni Hafoty Ucha 2 extension 2 1.7 Tegni Tegni Hafoty Ucha 3 extension 1 0.85 Tegni Llandinam P & L 103 30.9 Scottish Power/Eurus Energy ScottishPower/Eurus Energy Llangwyryfon repowering 11 9.35 First Windfarm Holdings Ltd First Wind Farm Holdings Llyn Alaw 34 20.4 RWE Npower Renewables Beaufort Wind Limited Maesgwyn 13 26 Pennant Walters Mawla (Moel Maelogen) 3 3.9 Energiekontor Co WP Mombkg UK branch Moel Maelogen Extension 9 11.7 Ail Wynt Cyf Monier Redland Plant 1 0.5 Infinite Energy Mynydd Clogau 17 14.45 Novera Infinis Mynydd Gorddu 19 10.2 Amgen Beaufort Wind Limited Parc Cynog 5 3.6 Nuon Renewables Nuon Renewables Pendine (Parc Cynog Extension I) 6 4.8 Nuon Renewables Nuon Renewables 8
  • 10. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Rheidol 8 2.4 E.ON UK Renewables Infinis Rhyd-y-Groes 24 7.2 EcoGen, Seawest & Tomen joint venture E.on Renewables Solutia UK Ltd 2 5 Wind Direct Wind Direct Ltd Swansea Docks 1 0.25 EnergyTech Swansea Bay Energy Partnership ltd Taff Ely 20 9 Perma Energy RWE Npower Renewables Tesco Distribution Centre 2 1.6 TNEI Tir Mostyn & Foel Goch 25 21.25 Windjen Power Ltd HG Capital Trysglwyn 14 5.6 RWE Npower Renewables Beaufort Wind Limited Wern Ddu (Craig Lelo) 4 9.2 Tegni Triodos Renewables Contact details were then identified for each of the developers/operators, and the following basic information was requested: ๏ Name of company ๏ Name of wind farm(s) operated ๏ Post code(s) of wind farm(s) operated ๏ MW capacity of wind farm(s) operated ๏ Approximate age(s) of wind farm development(s) operated ๏ Name and position of respondent ❖ Value of community benefit fund (if any) ❖ How the fund is administered ❖ Rules on use of the fund ❖ An open-ended question prompting further comments on either their own CBF arrangements or CBFs in general. The actual questions asked were: • Does your company contribute to a Community Benefit Scheme or Fund? (If the answer was ‘No’, then there were no further questions) • To which entity do you contribute to the Community Benefit Scheme or Fund (i.e. the name of the Scheme or Fund and who administers it)? • What is the governance structure of the Community Benefit Scheme or Fund you contribute to (e.g. a community trust, a co-operative, or a Local Authority-run entity)? • What amount of contribution do you make to a Community Benefit Scheme or Fund (e.g. a payment per MW capacity, or per MW produced, or in another way, for example, ‘in kind’ benefits)? 9
  • 11. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru • For what activities are the monies of the Community Benefit Scheme or Fund used (e.g. community projects, sponsoring community events or sports teams, etc)? • Do you have any further comments about your engagement with Community Benefit Schemes or Funds (e.g. do you think they work well, or do you think there are alternative ways that such funding could better be distributed)? The questions themselves were designed to capture quantitative data that allowed categorical analysis. The open question at the end was included to gather richer, qualitative data. Quantitative categorical data was then reported as percentages for ease of comparison. Qualitative data was subjected to brief content analysis categorising the substantive points to allow quantitative presentation of the data, together with the quotation of representative statements. ISSUES AND LIMITATIONS We recognised that the sensitive nature of the data might limit responses, therefore research subjects were contacted in advance and assured that the nature of the data was appreciated and would be treated sensitively and constructively. The inclusion of case studies afforded greater insights, as did gathering the views of operators. Issues arising from these case studies and comments could provide the basis for further investigation in this area. It is hoped this will also contribute to broader thinking about the way in which Community Benefit Funds in Wales might be further developed. 10
  • 12. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Structure of the Report In the remainder of this report we: • Outline the context for the study; • Present our findings; and • Put forward our conclusions and make some recommendations for the industry and policy-makers. 11
  • 13. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Context This report is framed against the background of recent major pieces of Welsh Government legislation (and proposed legislation), and the undertaking of the Banding Review for the Renewables Obligation by the Department of Energy and Climate Change. Launched in March 2012, the Welsh Government’s Low Carbon Transition programme has a general aim of ensuring investment delivers jobs, helping businesses maximise opportunities, and ensuring communities benefit from energy developments by making Wales ‘best in class’. “[We will] act to ensure that communities benefit from renewable energy development and strive to be exemplars,” - Energy Wales: A Low Carbon Transition (March 2012). “Wales, like the rest of the world, is working hard to make the move to more sustainable, low carbon energy. It is vital that we do this in a way that is sensitive to the needs of our communities, creates sustainable, local jobs and supports Wales’ wider economy,” Environment Minister John Griffiths 1. In July 2011 the Welsh Government’s Legislative Programme 2011-16 signalled their intention to introduce a Sustainable Development Bill to strengthen the approach of ‘One Wales: One Planet’ and change this commitment to a legal duty. First Minister Carwyn Jones said: “Sustainability is...about defining the long term development path for our nation. It means healthy, productive people; vibrant, inclusive communities; a diverse and resilient environment and an advanced and innovative economy.”2 In addition, the Climate Change Strategy for Wales, introduced in October 2010, acknowledged the importance of economic development in tackling climate change: “We want to ensure that Wales is in the best possible position to not only create new jobs and supply chain opportunities, but to take 1 http://wales.gov.uk/newsroom/firstminister/2012/120314energyvision/?lang=en 2 http://wales.gov.uk/topics/sustainabledevelopment/sdbill/?lang=en 12
  • 14. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru advantage of the potential to export energy, expertise, goods and services to other nations seeking to make the transition to a low carbon economy.”3 The end of July 2012 saw the publication of the Banding Review for the Renewables Obligation by DECC 4, which sets the Government’s main mechanism for supporting large-scale renewables for the period 2013-17. The Renewables Obligation (RO) is part of the UK Government’s commitment to increasing the deployment of renewable energy to make the UK more energy secure, help protect consumers from fossil fuel price fluctuations, drive investment in new jobs and businesses in the renewable energy sector, as well as to keep the UK on track to meet its carbon reduction objectives for the coming decades (the UK has committed to generating 15% of our energy from renewable sources by 2020). The RO is currently the main financial mechanism by which the Government incentivises the deployment of large-scale renewable electricity generation. Support is granted for 20 years, which balances the need to provide investors with long-term certainty with the need to keep costs to consumers to a minimum. The level of support for onshore wind for the Banding Review period will be reduced to 0.9 Renewable Obligation Certificates (ROCs), guaranteed until March 2014. However, the Government has undertaken a call for evidence, begun in September 2012 and reporting in early 2013, which will re-assess onshore wind industry costs. If findings of the call for evidence identify a significant change in generation costs, the Government will initiate an immediate review of onshore wind ROC levels, with any new support arrangements for onshore wind taking effect from April 2014. As part of the call for evidence, they will examine how communities can have more of a say over, and receive greater economic benefit from, hosting onshore wind farms. The Banding Review has begun to focus the debate in monetary levels of community benefit funding. Although the value of payments are certainly significant (renewables consultancy Regeneris cite that some developers are 3 http://wales.gov.uk/topics/environmentcountryside/climatechange/publications/strategy/? lang=en 4 http://www.decc.gov.uk/en/content/cms/news/wms_ro_lm/wms_ro_lm.aspx 13
  • 15. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru proposing the equivalent of £5m over the lifetime of a 50MW scheme5), there remains a general lack of clarity on the purpose and most effective use of the payments. CBFs are a unique way of developing a range of additional local community benefits. The Joseph Rowntree Foundation cites a range of reasons for their positive outcomes, including the sharing of benefits of developments with host communities, addressing social justice linking local resources with local economies, and securing the support of local communities 6. RenewableUK’s community benefits protocol for England proposes a minimum payment equivalent of £1,000 per MW of installed capacity, index linked to the RPI (for schemes over 5 MW). Setting this minimum figure was meant to help ensure that smaller developers were not disadvantaged given the pressures being placed on the costs of onshore wind and the risk of further reductions to ROCs and FIT levels. However, developers can offer significantly larger amounts than the minimum and in reality the value of benefits over recent years has increased significantly with £5,000 per MW frequently being offered on schemes by developers and operators keenly interested in the success of local communities, which in many cases is equivalent to around 6-7% of their development costs. As a comparison it is worth noting that John Lewis - widely held as an exemplar of Community Benefit - contribute approximately 0.25% of their turnover to such schemes 7. Against this background there is potentially a need for more information for developers, and indeed communities, so that they may look at a range of ways in which community benefits can be negotiated, administered and distributed, making all parties better equipped to develop the best possible framework for new projects across Wales, as well as a realisation by policy-makers, Local Authorities, and local communities of the financial constraints which developers are under given the cost of bringing schemes on-stream. The objective of this report is to improve information on community benefits in Wales. Although, as mentioned above, communities are becoming more aware 5 http://regeneris.co.uk/latest/blog/entry/money-on-the-wind-the-future-of-wind-farm- community-benefits 6 http://www.jrf.org.uk/publications/wind-energy-disadvantaged-communities 7 http://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/financials/interim%20reports/ john_lewis_partnership_interim_report_2012.pdf 14
  • 16. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru of CBFs and their potential impact, there is also an important role for current developments informing best practice of future ones (including the identification of local factors which may, for good reason, cause differences in the operation of different CBFs). This greater openness has, for example, been highlighted as important by the Scottish Government8, leading to the introduction of a database for payments in Scotland. Of overriding importance, however, is the need for good quality information on the way in which community benefits are being used and managed and the impacts they are achieving for local communities. Developers, communities and other stakeholders need to learn from this evidence. It is important to understand the way CBF resources are being used, and to ask questions about whether their allocation could be undertaken in a more strategic way. Even if many of them are responding to very specific and very local needs, they still may be better spent in an overall socio-economic context according to the communities which they serve (see the chart on the next page) by, for example, using the funding to leverage monies from other funding streams (e.g. European Social Fund, Welsh Government, etc). There may also be question marks regarding the awareness that some funds themselves have of such opportunities, which may potentially provide greater and more lasting benefits. 8 http://www.scotland.gov.uk/Topics/Business-Industry/Energy/Energy-sources/19185/ Communities 15
  • 17. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru 16
  • 18. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru Findings The total number of responses to the study was 21 out of a possible 37, representing a 56% response rate. Of those who did not respond, many are at the smaller end of the scale in terms of contributions to CBFs, although some larger wind farms are operated or owned by large financial institutions (for example, hedge funds or private equity funds) which makes information- gathering problematic. It is important to recognise that RenewableUK Cymru is a member-led organisation, which builds consensus with stakeholders and raises awareness among the general public. As such the organisation has a standing within the industry which allows far-reaching access to those operating renewables projects on a day-to-day basis. Detailed information was provided from the bulk of this membership, while those not involved with RenewableUK at a membership level (i.e. financial institutions) were less likely to provide a response. A full list of the details of respondents can be found in Appendix 1. Of the ones which did respond, the following table shows the type of development involved and whether it contributes to a CBF: Name of wind Capacity Age of wind Operating CBF farm farm scheme? Alltwalis 23MW 2 years Yes Wern Ddu 9.2MW 2 years Yes Hafoty Ucha 3.15 MW 8 years Yes Vestas 575kW 9 years Yes Nordtank 575kW 4 years Yes Carno II 15.6 MW 3 years Yes Llandinam 30MW 20 years Yes Bryn Titli 9.9MW 18 years Yes Carno 33.6MW 16 years Yes 17
  • 19. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru Ffynnon Oer 33MW 6 years Yes Llyn Alaw 20.4MW 15 years Yes Maesgwyn 26MW 18 months Yes Mynydd Gorddu 10.2MW 14 years Yes Trysglwyn 5.6MW 14 years Yes Taff Ely 9MW 19 years Yes Cefn Croes 58.5 MW 8 years Yes Rhyd-Y-Groes 7.2MW 20 years No Moel Moelogan 11.7MW 4 years Yes Castle Pill 3.2MW 3 years No Ferndale 6.4MW 2 years No Dyffryn Brodyn 5.5MW 18 years No As we can see from the above, table, the vast majority of wind farm developments (80%) contribute to a CBF: How many wind farms operate a Community Benefit Fund or Scheme? No Yes 20% 80% 18
  • 20. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru “Our system works quite well as technically it is an ‘ownership’ arrangement with profit sharing rather than a ‘benefits’ payment from a developer. However, we are a voluntary committee and it is difficult to run the business. We believe there should be more ownership than there currently is, and that all developers should establish mechanisms for part local ownership so that communities can become direct beneficiaries and to enhance their experience of having wind farms nearby. We also believe that benefits funds should be targeted by communities at local energy resilience and low carbon / energy efficiency measures, as well as regeneration activities. Much more work needs doing in building our awareness for considerable changes to our use of energy and where we get it from if we are to take the issue of tackling climate change seriously and act in earnest.” Michael Phillips, Bro Dyfi Community Renewables CASE STUDY ONE Local Electricity Discount Scheme The Local Electricity Discount Scheme (LEDS)9 is a new RES initiative which seeks to deliver direct and tangible benefits to people living and working closest to their proposed wind farms. LEDS will be offered as an additional benefit to RES’ Community Benefit Funds, which at its new sites provide £2,000 per megawatt (MW) annual contributions to local communities. It is proposed that total LEDS payments for a site will be £3,000 per MW per year. If LEDS costs less than £3,000 per MW per year then the difference will be added to the Community Benefit Fund, meaning an overall community benefit of £5,000 per MW per year. Under the proposed LEDS initiative those residential, community and business properties closest to a proposed RES wind farm will each receive a minimum discount of £100 per year off their electricity bills, which will be paid directly to their electricity supplier. This minimum figure represents almost a quarter of the average annual electricity bill in the UK (£453 in 2011 based on the latest figures released by the Department of Energy and Climate Change, DECC, 29 March 2012). Payments would commence once the wind farm is operational. The precise area, and number of properties, qualifying for a LEDS scheme will vary from site to site, taking into consideration factors such as the number and capacity of wind turbines proposed and housing density around the wind farm. The catchment area for each RES LEDS scheme is calculated by taking a straight line distance - the Set Distance - from each wind turbine (initially set at three 9 http://www.thisissouthwales.co.uk/Windfarm-plan-brings-benefits/story-16745570-detail/ story.html 19
  • 21. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cmyru kilometres) and identifying all the postcode geographic boundaries (as defined by Ordnance Survey) with properties on or within this Set Distance to form the Qualifying Area. The Set Distance may be increased or decreased to ensure that the properties within the final Qualifying Area will receive a discount of at least £100 per year. LEDS at Bryn Llywelyn RES presented its first LEDS scheme at its proposed site in Bryn Llywelyn in Carmarthenshire. This follows initial consultation with the local community around the Bryn Llywelyn site which indicated that almost 80 per cent of respondents supported the idea of discounted electricity and almost 75 per cent would be interested in participating in such a scheme. If LEDS is successful at Bryn Llywelyn it is anticipated that it could be launched at other RES wind farms that are in development later in 2012. LEDS at Bryn Llywelyn will provide an annual discount to the electricity bills of properties close to RES’ proposed wind farm, if it becomes operational. The scheme is open to all residential, commercial and community buildings (including schools, churches and village halls) within the eligible area that have an electricity meter. An annual discount of £225 will be applied to each property’s electricity bill, paid directly to their electricity supplier, once the wind farm is operational. In addition, LEDS are offering a Community Benefit Fund of almost £100,000 per year, which will support local groups and initiatives. RES has written to all qualifying properties directly, offering them the opportunity to register interest in joining the discount scheme. At Bryn Llywelyn, the discount is available to properties within three and a half kilometres of each proposed wind turbine. The discount will be available to all properties within the qualifying area regardless of people’s opinion on the proposed wind farm. However, the discount will only be implemented if the wind farm is approved and constructed. The annual discount will apply once the wind farm is fully operational, which could take between two and four years from planning consent being granted. It will be paid for the full lifetime of the turbines, or for as long as people live within the qualifying area. There are several ways residents register their interest in LEDS at Bryn Llywelyn, and by using the Unique Reference Code in a letter each gets sent, they can either contact via mail, telephone, email, or online. The discount is paid per property only, and therefore only one person per property needs to register. 20
  • 22. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Entities employed to administer CBFs Community benefit negotiations often result in annual cash payments to communities throughout the lifetime of the renewable energy scheme. This offers the community a significant opportunity to plan for and develop community initiatives that could have long-term, lasting benefit. It also gives rise, however, to a number of considerations that need to be addressed: • Establishing a vision for the fund and involving the entire community in decision-making: How will all sectors of the community be given the opportunity to decide on the way that community benefit funds are used and managed? Some key elements of the fund’s purpose, organisation and operation need to be acceptable to the community at large and this should be decided by appropriate community consultation. • The choice of a legal entity – i.e. who actually receives the payment? Is it the Community Council, Trust, Forum, company, or a local steering group? Should it be a specific legal entity, set up to accept payment and carry the responsibility that goes along with owning funds, and if so, what type of legal entity should it be ? • Managing community benefit funds – i.e. what happens to the money when it is received? What does this entity do with the money? What are its objectives? Should these objectives be exclusively charitable in nature? What are the tax implications? Can tax be avoided? 21
  • 23. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Overall, some 34 separate entities benefit from the contributions of the respondents: Foundations/Trusts/Forums Town/Community Councils Local Community Projects (directly) One-off donations Charities Social Enterprises Private Companies Local Authority 15 10 5 0 Entities From the diagram above it can be seen that entities such as foundations and trusts - along with town and community councils - are the preferred vehicles for CBFs. The advantage of trusts and foundations is that they can be set up to be community-led organisations, often managed by a board of trustees or a steering group, is open in terms of its administration, and can incorporate observers from local authorities and wind farm operators. They usually provide some measure of economic, environmental, educational, social or cultural benefit for people living in the area. There are two main models for a Legal Entity associated with a Town or Community Council which are most commonly considered for the administration of community benefit funds: • A Company incorporated under the Companies Acts with limited liability, where the limitation as to liability is by a Guarantee, and where the Members of the Company each undertake to pay on a specified date, or on the happening of a specified event (usually the winding up of the Company), such an amount up to a fixed sum (usually £1) as may be required to settle any outstanding debts of the Company, such Guarantee Companies being commonly, although not invariably, used for charitable purposes. 22
  • 24. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru • A Local Community Trust set up by the local community the purpose of which is to receive, administer, and distribute funds on behalf of the community through trustees appointed by the community. Confusion can sometimes arise as both models are commonly referred to as “trusts”, although only the second model is a trust in the true legal sense. Despite having separate legal status to a Trust, communities adopting the Company Limited by Guarantee model often name the organisation “[Local] Community Trust” – hence the common confusion. Other notable channels of contribution are to the Bro Dyfi Community Renewables scheme (a community energy co-operative registered under the Industrial and Provident Societies Acts) through a share interest dividend and donation respectively (by the operator of the BDCR II development); contributions made at the discretion of the operator (as in the case of Hafoty Ucha); and through a professional grant-making charity (i.e. the Taff Ely development who make contributions via Community Foundation Wales). “Funds shall be applied for the benefit of the residents of the communities. The funds should aim to promote community spirit and bring people together; enhance quality of life and promote people’s well-being; and foster vibrant, sustainable communities. The funds should not be used for political, religious, entertainment or hospitality purposes, or for any purpose adverse to the wind farm operator's interests. We are keen that the funds are used to secure other grants and funds on a matched-funding basis, allowing the community to secure maximum benefit from the wind farm contributions.” Monika Paplaczyk, Triodos Renewables (Wern Ddu) Ltd CASE STUDY TWO Windfall Windfall (officially called the Mid Wales Community Energy Trust) collects a proportion of the revenue from energy generation in Mid Wales and redistributes it among local communities. This money is offered as grants for energy efficiency and renewable energy projects to communities across Mid Wales. The basic income is supplemented with income from landfill operators, through the Landfill Communities Fund, to maximise the financial capacity of the scheme. Windfall is a not-for-profit company set up specifically to fulfil these aims. 23
  • 25. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Kick-started with money from RWE npower renewables and ENTRUST, Windfall secured £104,000 for its first projects in 2005. As a result, the communities of Carno and Trefeglwys enjoy the benefits of renewable energy systems such as wood energy and photovoltaic systems. In addition, educational programmes have been part of this scheme. Building on this success, Windfall plans to extend its operation to deliver benefits to other communities across Mid Wales. While the Trust recognises the value of local Funds with very broad community benefit criteria, it offers itself to current and potential energy generators as a vehicle to complement these, by delivering low carbon benefits from renewable energy through community action. 24
  • 26. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Contribution methods In all, there were four distinct methods of payment, and some 32 ‘channels’ of payments, which were as follows: percentage of profits (1); per MW installed (6); fixed payments (24); and in-kind (1): 0 10 20 30 % of profits Per MW installed Fixed payments In kind Fixed payments are the most common form of contribution, and the amounts quoted were as follows: Wind Farm Base level of payment / Actual level of payment to which entity (2011) Alltwalis £75,000 per annum index £78,600 linked / Alltwalis Wind Farm Community Benefit Trust Fund BDCR II 5-10% of profits / Ecodyfi Undisclosed Bryn Titli £2,500 / Town Council £3,530.38 £2,500 / Community £3,530.38 Council 25
  • 27. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Carno 2 £2,000 per MW installed, £6,000 per annum indexed linked / Carno Community Trust Fund £2,000 per MW installed, £6,000 per annum indexed linked / Llanbrynmair Local Community Trust Fund £2,000 per MW installed, £20,000 per annum indexed linked / Mid Wales Community Energy Fund (Windfall) Carno 'A' & 'B' £12,000 / Carno £18,156.08 Community Council Cefn Croes £1000 per MW, index £72,240 linked / Cefn Croes Community Trust Ffynnon Oer £22,000 / Upper Afan £25,978.84 Forum Hafoty Ucha £1k per MW installed / £4,000 contributions made at the discretion of the owner Llandinam P & L £5,000 / Celtpower ltd £5,000 £20,000 / Llandinam £20,000 Community Trust Llyn Alaw £16,000 / Tref Alaw £23,059.1 Community Council £4,000 / Llannerch y £5,776.98 Medd Community Council £4,000 / Mechell £5,776.98 Community Council £2,000 / Community £2,000 Foundation Wales Maesgwyn £175,000pa / Neath Port £175,000 Talbot County Borough Council 26
  • 28. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Moel Maelogen Extension £50k per year x 3 years / £50,000 Nant Conwy Rugby Club £50k per year x 2 years / £50,000 Dyffryn Conwy Rural Enterprise £7.5k per year for life £7,500 (indexed) / Bro Garmon Community Council £7.5k per year for life £7,500 (indexed) / Bro Cernyw Community Council Mynydd Gorddu £10,000 / Amgen £14,670.38 Taff Ely £2,500 / Community £2,500 Foundation Wales Trysglwyn £5,000 / Rhosybol £7,035.18 Community Council Wern Ddu (Craig Lelo) £3,333 / Derwen £3,333 Community Council £3,333 £3,333 £3,333 £3,333 The total disclosed amounts awarded in 2011 were £623,853.30. “They work well up to a certain limit. Most wind farms are built in rural areas where employment is the problem. We need to attract businesses to rural areas so that we can keep youngsters in the area. If money is given to local people to fit energy saving devices such as heat recovery systems, heat pumps, etc perhaps we could attract a company making such equipment to set up in the area. Throwing large amounts of cash at communities can have an adverse effect and should be avoided at all costs. Also all the money will do is replace funding previously provided by councils and Welsh Government which is letting them off the hook, especially when the wind industry does not enjoy much support from them!” Huw Smallwood, Tegni Ltd 27
  • 29. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru CASE STUDY THREE Cefn Croes Wind Farm Community Trust Fund The Cefn Croes Wind Farm Community Trust Fund is a Charitable Trust funded by Cambrian Wind Energy aimed at small community led organisations. Priority will be given to projects in the Community Council Areas of Blaenrheidol and Pontarfynach and then to the wider area of the County of Ceredigion. The fund is managed by a board of five Trustees representing Cambrian Wind Energy and the Communities of Blaenrheidol and Pontarfynach. The purpose of the Trust is to support any type of activity that involves local people, through small community organisations, that benefits their community. The activities must provide some measure of economic, environmental, educational, social or cultural benefit for people living in the area. Cambrian Wind Energy will pay £58,500 plus inflation annually into the Trust Fund while the Cefn Croes wind farm is operational. In order to apply for funding, projects have to go through an application procedure. The relevant documentation is online, which consists of a full copy of the application guidelines 10; a copy of the application form itself 11; and a copy of the fund’s End Of Project report, which is used for evaluation purposes12. There is also a detailed breakdown of the funds allocated so far in order to see the type of schemes supported13. 10 http://ponterwyd.pumlumon.org.uk/assets/File/ Cefn_Croes_Application_Guidelines_Jan10.pdf 11 http://ponterwyd.pumlumon.org.uk/assets/File/ Cefn_croes_Trust_Fund_Application_Jan10.pdf 12 http://ponterwyd.pumlumon.org.uk/assets/File/CefnCroesendofproject.pdf 13 http://ponterwyd.pumlumon.org.uk/index.php?lang=eng&page=104 28
  • 30. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Register of wind farm CBFs in Wales As part of the Scottish Government Community and Renewable Energy Scheme (CARES), Community Energy Scotland are administering the Scottish Government Register of Community Benefits from Renewables. This is a valuable tool in helping communities through the community benefit process. By demonstrating the range of ways in which community benefits can be negotiated, administered and distributed, the Scottish Government hopes that communities and developers will be well equipped to develop the best possible framework for new renewable projects across Scotland. The Register details fund spend, and provides ideas and advice for communities seeking to ensure their funds are spent wisely. Anyone can access the database 14 and find out what is happening across Scotland, which encourages the transparency of schemes, and the sharing of ideas and experiences. Community Energy Scotland will also be using the information to study more closely what is happening in the field. The Register is voluntary, and relies on communities and developers sharing their experiences and lessons learnt. Providers of community benefit funds are encouraged to fill in the relevant form 15. On the following page are screenshots demonstrating the typical level of information which is available. A basic starting-point for such information regarding a register of wind farm community benefit funds in Wales, detailing fund value and administrative arrangements, has been compiled from the respondents of this study. 14 http://www.communityenergyscotland.org.uk/register 15 http://www.communitybenefitregister.org.uk/form.aspx?formtype=1 29
  • 31. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru “Amegni is a local company set up by farmers who have diversified and live in the local community. We own and operate a 15.6 MW wind farm and our long-term goal is to maintain and keep the benefits from the project locally – hence we believe that local ownership like this is a form of community benefit in its own right (but rarely recognised as so!). As a local company we are continually asked to sponsor and contribute to various community events, projects and help fund organisations which we continually do so over and above the formal payments made. 30
  • 32. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru It is unfortunate and unreasonable to only target community benefits at wind farms as very few other industries make such contributions to the communities they operate in. As a local company we do however find the local community very supportive to the wind farm and our company - this is probably in part to the fact that we are a local company but more so they get to share the benefit with us.” Sion Thomas, Amegni CASE STUDY FOUR An example from Offshore Wind: The Rhyl Flats Offshore Wind Farm Community Benefit Package In association with the Rhyl Flats Offshore Wind Farm, a community fund has been set up to assist local community projects in wards neighbouring the wind farm. The annual fund started at a base level of £90,000, it is index linked each year in line with inflation and will be available throughout the operational life of the wind farm. To maximise the benefit for local communities, RWE npower renewables has worked in partnership with the Welsh Government to develop an administration arrangement for this fund that presents local communities with easier access to wider funding options through one simple application form. Depending on where community groups are based, they could be eligible to access funds from both the Rhyl Flats Offshore Wind Farm Community Benefits Package, and the North Wales Coast Regeneration Area (RA) Community Cohesion Fund, funded by the Welsh Government, in some cases using the same application form. Collectively this gives groups access to a combined fund of £1million per annum to support both capital and revenue elements of projects. Groups in Rhyl have access to both the North Hoyle and Rhyl Flats Offshore Wind Farm Community Benefit Funds which are administered by the same organisation, Denbighshire Coastal Partnership. • The base level of the annual fund is £90,000 per year throughout the operational life of the wind farm, normally expected to be in the region of 25 years. • The fund is Index linked each year in line with the retail price index. • £75,000 pa is ring-fenced for the following wards in Conwy: Pensarn, Colwyn, Eirias, Gele, Glyn, Kinmel Bay, Llanddulas, Llandrillo yn Rhos, Llysfaen, Mochdre, Pentre Mawr, Rhiw & Towyn. • £15,000 pa is ring-fenced for Rhyl. • The scheme’s fund capital and / or revenue projects are run by charities, community and voluntary groups Administration of the Rhyl Flats Offshore Wind Farm Community Fund The Conwy part of the fund is administered alongside the existing North Wales Coast Regeneration Area (RA) Community Cohesion Fund, funded by the Welsh Government. These arrangements will exist for the life of the Community Cohesion Fund. Their aim is to agree an appropriate administration structure to take over after the end of the RA Community Cohesion Fund for the remaining operational life of the wind farm. The Rhyl part of the fund is administered by the Denbighshire Coastal Partnership – the current administrators of the existing Community Fund in association with North Hoyle Offshore Wind Farm. Decisions on how the funding is allocated are made by 31
  • 33. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru the Rhyl Community Partnership, a fully constituted group made up of local volunteers, representing the town council, voluntary sector, local business community, residents associations and police. 32
  • 34. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Additional comments Additional comments collected during the study are as follows: “We currently deliver over £1.4 million per annum of community benefit across our UK portfolio of construction and operational Projects. Our community benefit is administered by a variety of trusts, community interest companies, social regeneration enterprises and local authorities. Our best practice model from our community benefit portfolio is where communities have created an area-specific community interest company and directly administer the funds themselves. This has led to substantial regeneration projects being conceived and achieved for the good of the Region and not just specific communities. Developer input at the beginning and regular engagement is essential to ensure the funding criteria are in accordance with both parties’ requirements. A third party body to provide secretariat and assistance with general administration and reporting is also essential to ensure not only that criteria are being adhered to, but also to assist with the realisation of larger projects that may be available via match funding the Community Benefit with other applicable funding streams, etc. An empowered group of communities surrounding onshore wind sites in receipt of Community Benefit may require an initial one or two year period to address the ‘normal’ community concerns e.g. village hall maintenance etc, but our experience has shown that given proper support the same communities will, in a very short time, begin to conceive and implement strategic economic and environmental Projects for their wider area.” Daniel Ferrier, Celtpower Ltd (Scottish Power Renewables & Eurus Energy) “Aspects of our community benefit funds which work well: To date relatively modest levels of funding which can make a really significant positive impact on the immediate local area; Engagement of local representatives in decision making – empowering local people have more control over their own destiny; Funding arrangements are bespoke tailored to individual communities; Innovative partnership with Welsh Government – wind farm community funding administered alongside WG regeneration area funding, 2 funds – 1 simple application form, funds can match each other, wind farm funding can fund revenue projects excluded from WG funding. Alternative options for the future: We are constantly striving to improve our delivery of community benefits and as such are already engaging in many of these initiatives; Considering structures we have used in other areas of the UK more recently; Increased and earlier consultation with local communities and key stakeholders; 33
  • 35. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Careful consideration of public perception of new delivery mechanisms / focuses; New approach more aligned to the increased levels of funding available; Focus on securing match funding; Consideration of benefits for wider regional areas; Closer alignment with local, regional and national strategy; Increased focus on economic development including jobs and skills; Possible collaboration amongst developers; This is still local communities’ biggest opportunity to influence wind energy developments – care not to exclude them from this process; Remember that small local grants can still make a big difference and where appropriate should be considered as part of an overall package; Better industry collaboration in demonstrating the benefits already delivered by wind energy.” Katy Woodington, RWE npower renewables 34
  • 36. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru Conclusions and Recommendations Renewable energy projects are already bringing a range of community benefits in addition to generating clean and sustainable energy. These include increased job opportunities and improvements to the built and natural environment. In addition, there are a wide range of Community Benefit Funds operating in Wales which contribute extremely positively to local communities across the country. Established local funds should be seen as a way of saying ‘thank you’ to the communities which host wind farms and other renewable energy schemes. We can conclude from the data we have gathered that: • Approximately four out of every five wind farms operating in Wales contribute to their local communities in a structured way; • Many different entities benefit from wind farm contributions (a total of 34 were identified through 20 responses); • CBFs in Wales are mainly administered through localised trusts (or similar bodies), or Community Councils; • The most common form of wind farm operator payment is through fixed amounts, followed by a calculated per MW installed; and • Total disclosed amounts awarded to CBFs or similar in 2011 were £623,853.30. In light of current political agendas, the time may have arrived where onshore wind farm developers might want to ensure that specific benefits from their programmes are delivered to communities in a more high-profile and transparent way, in order to more effectively demonstrate the positive outcomes which they produce. 35
  • 37. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru The document ‘Delivering community benefits from wind energy development: A Toolkit’ 16 outlines a number of different factors which should be taken into account when designing a community benefit scheme: • Why should community benefits be considered? • What are the costs, risks and rewards of wind energy and how do community benefits fit into this picture? • What is the relationship between community benefits and the planning process? • What are the different ways community benefits can be offered? • Who should benefit and how should this be controlled and managed? • What agreements can and should be put in place to secure these benefits? The advice stresses the importance of concentrating on the benefits which will be delivered ‘in the round’. It may be advantageous for operators involved with CBFs to revisit the strategic direction of their schemes in order to ensure they are aligned with wider prevailing economic policy. For example, the LEDS case study outlined previously (Case Study One; page 19) would potentially appeal to residents in the area of its operation, but may not necessarily appeal to Welsh Government policy with regards to promoting energy efficiency. If, however, the scheme had been developed in conjunction with, for example, the Welsh Government, then it could have been coupled with the Arbed scheme17 to coordinate investment into the energy performance of Welsh homes. CBFs should ensure that they are suitable for industry and communities, and that they are managed in a ‘smart’ way. One such way is to explore the possibility of ‘leveraging in’ funding from different streams (e.g. ESF, Welsh Government, JobCentre Plus). The Rhyl Flats Offshore Wind Farm Community Benefit Package (Case Study Four; page 31), for example, incorporates a Community Cohesion Fund, funded by the Welsh Government, and in some cases through the same application form. Collectively this gives community groups access to a combined fund of £1 million per annum to support both capital and revenue elements of projects, thereby maximising spend enabling 16 http://www.cse.org.uk/downloads/file/Delivering%20community%20benefits%20from %20wind%20energy%20-%20a%20tookit.pdf 17 http://wales.gov.uk/topics/environmentcountryside/energy/efficiency/arbed/?lang=en 36
  • 38. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru bigger projects and scalability. There is a role for Welsh Government in offering advice to CBFs in the most effective way their funding can be used, perhaps through a vehicle such as Community Energy Wales or Mid Wales Community Energy Fund (Windfall). There is also a need to ensure that CBFs are attuned to economic imperatives as well as continuing the local social benefits which they clearly bring. CBFs could be used for more strategic regional economic development objectives: for example, voluntary arrangements could support regional economic development, job creation, and skills enhancement. One suggestion would be the creation of a 25-year Strategic Search Area (SSA) investment fund for each SSA, which would have a strategic regional governance model looking at regionally important economic issues and garnering input from organisations such as the Regional Economic Fora. Such vehicles could be set up as trust funds with developers being invited to pay a share of their CBF into it which could then leverage matched funding (e.g. European funds), or government top-ups. These SSA funds would ensure a focus on regional economic development issues, and not just local issues in often relatively sparsely- populated communities. The Welsh Government should help developers and communities choose the right CBF vehicle for their particular circumstances and to make the most effective use of the monies to be allocated, possibly through the introduction of ‘CBF Advisors’ to enable their link to potential funding which often accompanies government initiatives. Welsh Government should also fund an official public-facing registry (similar to the Scottish model) which would encourage the sharing of best practice, ideas and experiences. They should fund a further registry which would list wind farm applications that have been approved but not yet constructed, and the type of CBF arrangements that were being put in place or proposed. This would enable local and regional groups to put forward their own proposals to work with the CBF going forward. Vehicles used to deliver CBFs should ensure transparency of their operations. For example, as best practice the trust or Community Council involved should establish a public-facing website showing the raison d’etre of the scheme, listing how money has been allocated, and on what basis, as well as contact details. In addition, a reasonable level of monies from the CBF should be set 37
  • 39. The value of onshore wind farm Community Benefit Funds to Wales | RenewableUK Cymru aside to ensure that the CBF is promoted at a local level and that local communities are made aware of its operations. Both of these recommendations are in the best interests of the industry so that good works are not just done but also seen to be done. The debate regarding a community benefits protocol in England has specified a £1,000 minimum payment per year per megawatt of installed wind power during the lifetime of the wind farm. In Wales, the above recommendations should make this debate largely irrelevant. Our vision should be for well- thought-out and well-run schemes with clear objectives, that draw in various partners to leverage maximum funding, and that are transparent and accessible to communities and stakeholders. This should be the way forward for the industry, working closely alongside communities at a micro level, and with Welsh Government at a macro level. One should not underestimate the value of CBFs themselves, or the wind farms which they represent. Some 8,600 jobs were provided by the onshore wind industry in 2011, with £548 million added to the UK economy, according to a joint study published by RenewableUK and the Department for Energy and Climate Change 18. It found that the real value that wind provides (close to £700,000 for every MW installed in the UK) is over £100,000 within the Local Authority area. CBFs are a vital component in showing local communities not just the environmental benefits of renewable energy but also local economic benefit. The focus must be on how these communities can extract maximum benefit and, in particular, the vital part that CBFs play in this dynamic. 18 http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/wind/5585-economic- benefits-onshore-wind-full-pn.pdf 38
  • 41. Name of company: Triodos Renewbales (Wern Ddu) Ltd Name of the windfarm operated: Wern Ddu wind farm MW capacity of windfarm operated: 9.2MW Approximate age of windfarm 2 years development operated: Name and position of respondent: Monika Paplaczyk, Investment Manager Name of company: Tegni Ltd Name of the windfarm operated: Hafoty Ucha (Ll21 0RL) MW capacity of windfarm operated: 3.15 MW Approximate age of windfarm 8 years development operated: Name and position of respondent: Huw Smallwood (Owner) Name of company: Bro Dyfi Community Renewables Name of the windfarms operated: Vestas & Nordtank (SY20 8AX) MW capacity of windfarms operated: 575kW Approximate age of windfarm 9 years and 4 years respectively developments operated: Name and position of respondent: Michael Phillips, management committee Name of company: Amegni Name of the windfarm operated: Carno II (SY17 5JS) MW capacity of windfarm operated: 15.6 MW Approximate age of windfarm 3 years development operated: Name and position of respondent: Sion Thomas – Owner / Operator 40
  • 42. Name of company: Celtpower Ltd (Scottish Power Renewables & Eurus Energy) Name of the windfarm operated: Llandinam (National Grid Ref SO 028836) MW capacity of windfarm operated: 30MW Approximate age of windfarm 20 years development operated: Name and position of respondent: Daniel Ferrier – Assistant Project Manager Name of company: RWE npower renewables Name of the windfarms operated: Bryn Titli; Carno; Ffynnon Oer; Llyn Alaw; Mynydd Gorddu; Trysglwyn; Taff Ely MW capacity of windfarm operated: 9.9MW; 33.6MW; 33MW; 20.4MW; 10.2MW; 5.6MW; 9MW Approximate age of windfarm 18 years; 16 years; 6 years; 15 development operated: years; 14 years; 14 years; 19 years Name and position of respondent: Katy Woodington, Senior Community Investment Officer Name of company: EC&R (joint venture between EC&R and Eurus Energy) Name of the windfarm operated: Rhyd-Y-Groes MW capacity of windfarm operated: 7.2MW Approximate age of windfarm 20 years development operated: Name and position of respondent: Jonn Barnes, Senior Originator 41
  • 43. Name of company: Moelogan 2 Ccc Name of the windfarm operated: Moel Moelogan (LL28 5UN) MW capacity of windfarm operated: 11.7MW Approximate age of windfarm 4 years development operated: Name and position of respondent: Geraint Davies, Owner/operator Name of company: Cambrian Wind Energy Limited Name of the windfarm operated: Cefn Croes Windfarm (SY23 3LE) MW capacity of windfarm operated: 58.5 MW Approximate age of windfarm 8 years development operated: Name and position of respondent: Roger Jones, Asset Manager Name of company: Infinergy Name of the windfarm operated: Castle Pill wind farm (SA73) + Ferndale wind farm (CF43) MW capacity of windfarm operated: Castle Pill (3.2MW) + Ferndale (6.4MW) Approximate age of windfarm Castle Pill (3 years) + Ferndale (2 development operated: years) Name and position of respondent: Lorraine Dallmeier, Project Director Name of company: RES Name of the windfarm operated: Dyffryn Brodyn (SA34 0JE) MW capacity of windfarm operated: 5.5MW Approximate age of windfarm 18 years development operated: Name and position of respondent: Samantha Mayes, Community Relations Co-ordinator 42
  • 44. Name of company: Pennant Walters Maesgwyn Ltd Name of the windfarm operated: Maesgwyn (SA10) MW capacity of windfarm operated: 26MW Approximate age of windfarm 18 months development operated: Name and position of respondent: Dale Hart, Director Name of company: Statkraft Name of the windfarm operated: Alltwalis (SA32 7ED) MW capacity of windfarm operated: 23MW Approximate age of windfarm 2-and-a-half years development operated: Name and position of respondent: Rob Fellows (Community Relations Adviser) 43