HM Insights

Power to the people – the rise and rise of Community Energy Projects in Scotland

Community renewable energy projects have developed into a sector in their own right in the past few years, despite them having to overcome the same barriers and uncertainty as the wider renewable energy sector.

Community Energy Renewables Wind Solar Community Project Solicitor Lawyer Scotland

There are particular challenges for community projects as generally these do not benefit from economies of scale (although there are examples of large community energy projects), there are challenges in accessing finance, and community projects also invariably rely (to some extent) on volunteers.

However, when a community has a particular energy need, that often drives the project forward and some of the most innovative projects we have been involved in are in the community renewables sector.

What makes community projects different?

The legal issues for a community project are often the same as other projects. For example, generally they require to negotiate the necessary rights from one or more landowner and they require the same statutory consents as any other project (although the fact that a project is wholly or partially owned by a community may assist in the planning process).

The motivation for a community undertaking a renewables project can vary. Some of the projects we are involved in are not about making use subsidies or profit, but about solving a particular energy need and assisting in alleviating fuel poverty. In some cases they are simply about ensuring that some of our remotest communities have a secure energy supply at all.

In addition to this, an ancillary benefit is the confidence, skills, knowledge building and resilience which comes through having undertaken such a project. These motives mean the community will often find ways to make such projects happen against the odds and often there is a real determination to ensure that projects happen.

Storage and technological developments

Whilst the last few years have been difficult for the sector, advances in technology have created greater opportunities for community projects. One such technological advance is the potential for energy storage which could be a game changer for community projects.

Grid constraints have meant that many projects have not been possible for our remotest communities. Energy storage, however, has opened doors for community groups and would enable energy generated locally to be used locally, which in some cases is the very essence of a community project.

Funding – looking at alternatives

Due to the nature of community renewable energy projects, obtaining finance can be challenging and we are increasingly seeing community groups looking to raise funds through innovative alternative funding structures.

Groups have been finding new and innovative ways of raising funds where the more traditional routes haven't been fruitful. We have been involved in a number of projects over the last few years which have proceeded by way of "community share offers", where the community group has set up as a Community Benefit Society (a specific legal entity which is regulated by the Financial Conduct Authority) and these structures enable members of the community to purchase shares and have a real stake in the project. Unlike traditional companies, there are specific statutory mechanisms in Community Benefit Society which ensure the assets must be used for the benefit of the community (although at the same time they provide a very small return for the investments).

Innovation – a common thread

As stated above some of the most interesting, innovative but at the same time challenging projects are in our remotest communities but they are the projects that are often the most satisfying.

In addition to technological and funding innovations, we have seen legal innovation as well with some communities we have assisted using the Community Right to Buy under the Land Reform Act in order to purchase land or an asset for a renewables projects.

In addition to working on projects where alternative funding structures were used - including advising on Applecross Community Hydro Scheme and the Arrochar Community Hydro Scheme in Argyll, both of which involved community share offers - we are currently advising a community group on a project on Fair Isle which will provide a secure supply of electricity to the islands for the first time. The project involves three wind turbines and two solar PV arrays being erected and then a high voltage cable being run up and down the island creating a micro-grid which enables consumers on the island to obtain electricity.

Part of this project involves the electricity supply arrangement to the various householders and commercial entities on the island. The project is still being developed with various agreements with the landowners, householders. Construction is about to commence with the project due to be commissioned in 2018.

It is perhaps in this type of project, where the project's aim is to fulfil the necessity of having a secure supply of electricity, where we have seen the greatest innovation, resilience and inspiration of all.

Get in touch

If you would like to speak to Harper Macleod about any community energy project, we would be delighted to help.