In line with the UK’s ambition to become a “clean energy superpower” and achieve Clean Power 2030 goals, the Department of Energy Security and Net Zero (DESNZ) has published a working paper on “Community Benefits and Shared Ownership for Low Carbon Energy Infrastructure” to facilitate the deployment of low-carbon infrastructure. The paper considers proposals on how to make this transition equitable and widely accepted, proposing a more consistent and potentially mandatory approach to community benefits and shared ownership. Community benefits
Community benefits refer to the monetary and non-monetary contributions made by energy developers to local communities that host infrastructure projects. These benefits can take various forms, including cash payments to community funds, investment in local amenities, support for education and skills development, and in-kind contributions such as equipment or services. In the UK these benefits are currently voluntary, leading to uneven support across communities.
The working paper proposes the introduction of a mandatory community benefit scheme for low-carbon energy infrastructure. This approach would require developers to contribute a minimum amount, linked to the scale of energy generation, to community funds. These funds would then be managed locally, allowing communities to decide how best to use the resources to support their needs and priorities.
The government’s rationale for this approach is to guarantee that communities hosting energy projects share the economic and social advantages of the energy transition, thereby increasing local acceptance and reducing opposition that may delay or block projects. Importantly, should community benefits be mandated, the government anticipates that developers will work closely with local communities to deliver benefits tailored to their unique needs and situations, rather than a one-size-fits-all method. The scheme is inspired by international models like Ireland’s mandatory community benefit funds.
Shared ownership
The working paper also explores the concept of shared ownership, which enables communities to hold a financial stake in local renewable energy projects. The government’s view is that shared ownership provides communities with the opportunity to earn financial returns while also promoting deeper engagement and a stronger sense of partnership. Although shared ownership models are well established in Scotland and Wales, they are less common in England.
The government is exploring whether to mandate shared ownership opportunities or continue relying on voluntary arrangements. The Infrastructure Act 2015 provides the secretary of state with powers to require “community electricity rights” to buy stakes in renewable electricity generation, but these powers have not yet been exercised. The working paper seeks evidence on the effectiveness of voluntary approaches and the potential benefits and challenges of introducing mandatory shared ownership.
The paper also highlights international examples, notably Denmark’s 2008 Renewable Energy Act, which requires developers to offer 20% ownership to nearby residents, supported by government incentives and community engagement. Similar models exist in countries like Canada, Sweden, Norway, the US, and Germany.
Enforcement mechanisms
The government proposes clear enforcement mechanisms to ensure mandatory community benefits and shared ownership schemes are effective. This would require primary legislation to legally bind developers and licence holders to maintain obligations even if ownership changes. The scheme would have defined standards and robust monitoring, with penalties for non-compliance to guarantee delivery. The administration could involve professional fund managers and local committees for transparency.
Enforcement would begin with dispute resolution, escalating to fines and public reporting if necessary. Fines would reflect breach severity, and developers remain responsible for compliance.
A public register would track fund progress and issues, with fine revenues supporting affected communities or those in energy poverty. The regime is not intended to have criminal penalties and would be reviewed to strengthen enforcement if needed. Proposed breaches include failing to provide funds, missed payments, poor reporting, or not appointing administrators.
Range of energy technologies
The scope of the proposed community benefit and shared ownership policies covers a wide range of low-carbon energy technologies. These include onshore and offshore wind, solar photovoltaic (PV), nuclear power, and other renewable and low-carbon electricity generation technologies.
The government’s intention for this inclusive approach reflects the need to apply consistent community benefit standards across the diverse portfolio of energy projects that will contribute to the UK’s net-zero goals. By covering multiple technologies, the policy aims to create a level playing field and ensure that all communities hosting energy infrastructure receive equitable benefits.
Relationship with planning reforms
The government’s proposals for community benefit funds are separate from the bill discounts scheme for transmission infrastructure proposed under the Planning and Infrastructure Bill. Community benefits are not part of the planning process and will not influence planning consent decisions as they exist independently to ensure communities have a say on local developments. These benefits are also not meant as compensation for negative impacts, therefore any individual compensation will likely be arranged separately between developers and affected parties.
Strengths of the proposals
- Transparency for what good looks like would support clearer communication and set expectations locally on level of contribution.
- It is encouraging that the consultation is not prescriptive on what this should fund, rather that it should be guided by local insights and understanding of key issues. This means that Community Benefit Funds could be tailored to the local context, in response to identified need at the time of delivery and administered by those who undertake them best.
- Increasingly, local authorities are asking developers to demonstrate that communities feel as if they are part of the decision making. Community Benefit Funds allow for communities to feel like they are involved in an open and transparent process, helping to shape how this funding is distributed.
- A Community Benefit Fund can provide a more level, inclusive playing field to access benefits, with no expectation to contribute to maintenance payments, or raise funding for shares, typical of other partial community ownership models.
Areas for further consideration
- The working paper sets out that the calculation of benefit is dependent on either the installed generating capacity (£/MW) or actual generation output (£/MWh). Whilst a standardised approach is beneficial in some respects, the level of support provided should also take account of the local context, dependent on geography, or how acute the need is.
- The Community Benefit Funds should not seek to replicate existing provision by key local stakeholders. Developers should be encouraged to continue to engage and consult with existing social value delivery partners, to maximise impact by providing additional support to address local need.
- Whether developers will be required to report on the impact that this funding has had, which can often be far reaching, less tangible, and difficult to define in numbers. What does good look like when it comes to monitoring, measuring and reporting?