Maximising the local economic benefits of onshore wind

On 6th March Shona Glenn spoke at the Planning the Energy Transition Seminar. In this blog, she outlines what the new planning emphasis on maximising local benefits means for onshore wind projects.

Early in my career, I remember being corrected for claiming the community benefits from a wind farm had been “maximised”.

This claim, I was told, could not be substantiated. To make it implied knowledge we did not have. Moreover, it exposed us to the risk of being proved wrong. There would always be someone, somewhere who could find something that could have been done differently to produce a slightly better result.

For 15 years I eradicated the word “maximised” from my professional vocabulary.

So, when NPF4 was published, complete with its requirement for renewable projects to “maximise net economic impacts” I was surprised.

So were several of our clients. Some wanted to know how this requirement could be evidenced, others saw an opportunity to increase community benefits.

What they were all doing was thinking about it.

And that’s the point. Whether or not objective proof can be found, making people think about maximising benefits will encourage them to try. More importantly, it will encourage them to innovate. To come up with more creative ways of doing things that stretch current limitations and push the boundaries of existing best practices.

The focus on maximising benefits also exposes the need for collaboration. Developers can do a lot to enhance the economic impacts, but maximising them requires support. The need for collaboration forms the backbone of the Onshore Wind Sector Deal for Scotland which was also published by the Scottish Government in 2023.

A policy that encourages innovation and collaboration? Surely that’s a good thing?

Maybe. But it doesn’t explain how to achieve it.

The Benefits

A good starting point is understanding what the benefits of renewables project are. Our work suggests the breadth of this is often underestimated.

One reason for this is that ‘community’ benefits (activity undertaken explicitly to benefit host communities) and ‘economic’ benefits (consequential impacts arising from the construction and operational phases of development) are often considered separately.

Our recent work suggests this may not help efforts to maximise impacts.

Both types of activity can (and ideally should) be mutually reinforcing. Drawing artificial boxes around the two risks overlooking the interplay between them. This is not conducive to maximising impacts.

The following typology may be more helpful:

  • impacts directly delivered by developers;
  • impacts enabled by developers but delivered by others; and
  • wider contributions to capital stocks that underpin future benefits.

Direct Benefits

The main driver of local economic impact from renewables projects is the construction and operation of the projects themselves. The impact of this can be maximised by ensuring as much activity as possible is retained within locally.

Our experience suggests most developers try to make sure this happens.

From accommodation for visiting staff to maintaining the site, developers generally like to keep things local when they can. This is not altruism, it’s good business sense. Sourcing goods, services and people close to where they are needed is cheaper than moving them across the country.

This is not altruism, it’s good business sense.

Direct impacts also include benefits provided directly for the community. One increasingly common approach are local electricity discounts. Elsewhere developers have directly funded local nature wardens and community development workers or even gym membership for residents.

The range of direct benefits provided is continually increasing, a testament to the innovative nature of the sector. These benefits are often not widely known about. Increasing their visibility will encourage imitation and help drive continued improvement.

Enabling Contributions

If asked to identify the benefits of renewable projects, most people would point first to community benefit funds. Locally controlled pots of money provided by developers and used to support local projects.

But community benefit funds are not impacts. They can enable impacts to be generated but they are not impacts in their own right. The implication? The value of the fund is not everything.

Our recent research shows how a fund is set up is important too.  Good alignment between funding criteria and local needs, robust evaluation and governance arrangements and support for community capacity to deliver all make a difference.

Fortunately, there is a lot of good practice to learn from. Seeking to emulate (and improve upon) this is a good route toward maximising impact.

There is a lot of good practice to learn from

However, perhaps the most important way renewable energy projects enable local economic impact is through the supply chain. Contracts (and sub-contracts) let to local businesses, supplies bought from local firms and the knock-on effect of staff spending their wages in the local economy all drive local economic impact.

As with other enabling contributions, these impacts are not controlled directly by wind farm developers. Here again adherence to good practice can help. Supporting local firms to build capacity and clauses requiring main contractors to do likewise can help maximise local impacts.

Building Capital Stocks

Of course, the magnitude of supply chain impacts depends on the capacity of the local economy to deliver. Building this capacity takes time.

A lot is being done in this space. From supplier engagement events to partnerships with training providers and engagement programmes with local schools.

This kind of work builds knowledge, skills, networks and relationships. The human and social capital needed to grow the supply chain and build the workforce needed to deliver greater impacts in the future.

Many wind farm projects also support the formation of physical capital. Contributions to local transport infrastructure are commonplace. Delivering affordable housing is more novel, but potentially transformative.

The hallmark of all of this is collaboration. Developing and maintaining effective collaborative partnerships is key to maximising these kinds of benefits.

The Verdict

The new requirement to maximise the net-economic impact of renewables projects will not be welcomed by everyone. Evidencing it will be tough. But if it forces us all to think harder about how to enhance community benefits and come up with increasingly creative ways of doing so. If it provides a stimulus for collaboration and an incentive for transparency, it’s a good thing in my book.

I will be speaking at the “Planning the Energy Transition Seminar” on the 6th March 2024. My presentation is linked below:

Further Information

You can find out more about our recent work on renewables here: https://biggareconomics.co.uk/category/renewables

If you would like to talk to us about how you can maximise the benefits of your projects, please get in touch at info@biggareconomics.co.uk

Posted 06.03.24

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