A Strategy for a Community Renewable Energy Fund

“If we cherish the flapping of sails on a boat & shimmer of sunlight on the sea, there is no reason why we cannot cherish the flapping of blades on a wind rotor & the reflection of sunlight on a solar collector. Our minds have shut out these responses & denied them to our spirit because the conventional sounds & imagery of technology are the ear-splitting clatter of an assembly line & the eye-searing flames of a foundry.” Towards an ecological society Murray Bookchin Feb 1975  

Introduction

This report came out of the Engaging Scottish Local Authorities Programme; Re-Energizing Communities Seminar held at Buckhaven Community Centre in March 2010.

It became clear that while some communities in Fife were striving ahead with developing sustainability plans through public funding, other groups were being left in their wake. This document aims to put forward a strategy that will redress the balance and offer a more equitable future for all communities in the region.

The back story

North Howe Transition Toun and Newburgh Community Development Trust over the last couple of years have developed active community groups whose interest lie in the creation of secure and sustainable energy generation.

With the help of the Climate Challenge Fund (CCF), both organisations have been able to push forward these plans. In the case of Newburgh, they are well down the road with plans for developing a community owned wind farm.

North Howe also plan for wind as a major part of their future energy needs, as well as other renewable strategies. It is through the dedicated and hard work often voluntary of certain individuals in these communities that these ideas have been taken forward and are now moving towards realization.

Where is the problem?

The skills required to achieve these results are not readily present in every community. This has led to a schism in the ability for communities to access funding for example through the CCF. This throws up issues of social inequality that will be maintained if not exasperated over time.

In the UK we have seen with the last economic boom, the disparity between rich and poor has deepened, without structural address this trend is set to continue.

Location

Following on from peoples’ skill set resource, there is also the environmental resource. Finding appropriate sites for large wind turbines in the south of Fife with its urban density will be harder than in the mostly rural north.

While I do not want to make the case solely on large wind developments, this is what has brought my attention to this issue and could be considered the hot political topic of the moment as communities strive for and against wind developments.

Technically it is easier to establish large wind developments in rural areas; they also tend to have hills with better wind resource that makes more sense to site them there. Indeed a recent Fife Council wind development map highlights the areas most suited for this type of development.

Creating the divide

Currently, however, communities that lie a few miles away may receive no direct benefit from such developments, and at the same time may not be able to make the financial argument for their own development due to their local wind resource.

So how do we bridge this divide in the making?

This paper describes a possible solution to this dilemma, putting forward a strategy that may have lasting benefits for many communities in Fife. A Global view As we recover from the recent melt down of the global economy and banking system, the political talk of sustainability in society has all but dried up in favour economic stimulus for growth in much the same mold as we have seen over the last twenty or more years.

This flies in the face of delivering a low carbon future that was much vaunted by the recent Copenhagen Summit. If we look at this approach on a global scale, we as a civilization cannot expect that we can continually grow our economy and the demands that it makes on finite resources in the current way for ever. Our affluent western lifestyle is sought after by most of the rest of the world especially the developing world. It is our responsibility to act wisely and demonstrate to others the importance of sustainability in our society.

While many argue that any action we take will have no effect due to the growing importance of China and India, my response is they still look to us for their aspirations and as such we still set the cultural tone.

The role of Local Authorities

The limit of resources will impact on us globally, nationally & regionally, if we focus down on our region, Fife, and if we accept that the main activity for local governing structures is to deliver employment, shelter & security to its constituents. Then we can say that local government is charged with ensuring prosperity for those in Fife. If we follow the current free market approach to resource and renewables development we will end up with a deeply divided community both in spirit and in economy.

Current development policy

At present Fife Council allows along with government guidelines, all wind development to be proposed a case by case basis. This has for the most part has encouraged the large development companies with international financial backing to seek planning permission for developments in the best wind spots in Fife. This free market approach has created immense back lash energy in the local communities against wind farm developments.

Perhaps, damaging future beneficial schemes as the ‘anti wind’ lobby gains momentum and develops local support that may be unable to change its mind when a better offer is on the table.

Community developments

Assuming community developments start to appear in the next couple of years, bubbles of affluence will develop, as revenues start to trickle in to community coffers from income generated from the developments. At first this may be seen as a boon by local people, with all sort of communal improvements made possible.

However, they are also likely to attract negative feelings from other areas and in extreme cases may be targeted by crime, thereby undermining the very security and prosperity that was the initial goal. The renewable developments that were created to provide affluence for locals could easily be lost as the social cost outweighs the financial benefits.

The social heritage

Fife has a long history of Social democracy and the local authority as the largest employer in the region has extensive influence over the development of the region. It therefore makes sense that it engages with the issues of creating strategies for the sustainable development of the region both economically and socially. The development of renewable energy is important now and will become increasingly an important driver for the economy and employment in the near future. Therefore, I would encourage Fife Council to take a more active role in the development of Community Renewables. Employment in the ‘green jobs’ field is set to rise considerably over the next ten years.

Fife Council has already taken action by developing the Energy Park in Levenmouth, but it can still do more by encouraging the workforce to skill up to meet these new demanding markets and encouraging SME set ups within the Fife area.

A community approach to wind development In the last few years there have been a number of planning applications by industrial wind ‘Developers’ in Fife. Most have failed at the first planning hurdle due to public outcry. What many people have spoken out against is the idea of large wind farms, but when you talk through with individuals it is often that they don’t want to have such projects imposed on them, especially if there is no gain for them.

It is this kernel that I wish to plant and foster, that if local people have a say and control over a project, then they are more likely to back it. Once the best wind sites are developed, those that are left will not provide that same return for their investment. Is it not right that local communities should get first bite of this renewable cherry? This will be a once in a generation opportunity, as most projects expected lifespan is at least twenty years.

Investment Approaches

There are a number of ways in which capital can be raised for projects; one way is to issue shares, a route that has been used successfully by many community ventures around the UK over the last decade. Limited to a certain value by individuals, it does however maintain the financial divide, providing a good income for those already with personal wealth.

Wind bonds

In the past during war time the governments of the day have often encouraged the populace to fund the war effort by the purchase of war bonds. This is an extension of this idea. Wind bonds would allow individuals to invest in community wind farms as a way of generating the funding capital to develop projects.

In return the individual investor will receive a return on their original investment in line with current inflation. As the development of projects reaches maturity, in that it has paid off the capital loans to creates the development.

The project moves into a new phase where almost all the income is available for use to the communities and investors. Improvements to the local communities are carried out and investors receive an annuity. This is a fairly straight forward well trodden investment path. Win Wind leverage Those projects that will be online in the coming years ‘payback’ the public money they received to help get the development up and running.

This fund can then be used by other communities for a similar purpose. What you would then have is public money being spent several times creating not only efficiency and great value but also acting as a repetitive enabler for community projects. I have not described any time period when this payback would commence or the rate at which it would be paid, as this requires research into getting the right balance.

Mature projects

At some point, there will be greater income from the power sold to the grid than the capital debt on the project and the planned community enhancements. At this point the possibility for community groups to have large amounts of money sitting in bank accounts may become a reality.

At present that is the ambition of these communities with their eye on the pot of gold, but perhaps without thinking beyond the initial excitement from getting ‘money for nothing’. What’s wrong with that? Nothing much if all communities were so financially endowed.

However those marginal communities may remain in relative poverty and in poor housing, leading to social unease, bad news for all those striving for a stable and secure future.

So what can be done about this?

I suggest a reinvestment through a central fund that collects all the excess income streams from Community Renewable project in the region. Those funds could provide investment streams in a number of different ways:

Employment & training in the ‘green sector’

A study carried out by Massachusetts Political Economy Research Institute. States that $100Billion invested in ‘green sector’ over two years would create 2Million jobs, the same money directed to household spending would create 1.7Million jobs and in the oil industry just over 0.5Million jobs –PERI 2008

Energy efficiency improvements to housing stock

As a nation we have attempted to improve our housing over the last thirty years with little effect. Even when energy prices were at an all time low in 2002 we chose not to spend to energy improvements. Instead our levels if indebtedness grew to all time levels to feed our consumer growth.

Seed funds for new Community Renewable projects

National government funding schemes tend to last only a few years, change their priorities and are often over subscribed. This scheme would provide a steady long term investment fund that could be adjusted to meet local needs.

These three possible fund mechanisms’ will all lead to greater inward investment. As can be seen the longer money generated stays in the local economy the better all of those in the area are, leading to a true improvement in prosperity.

targeting the fund

It could be that socially deprived areas are given special status and receive assistance to make the changes to bring about communities that operate in a more sustainable fashion. This could be using all three of the investment streams to make radical changes to those areas. Where as other communities may only be need one or two of the options. As the CCF has demonstrated, communities can if given the opportunity be self organizing and create change with light administrative control. Therefore a degree of flexibility needs to be incorporated into any scheme.

Benefits to Communities

There will need to be some intrinsic benefit to communities for them to want to be part of this scheme. This is where local council can provide a measure of support, these are some ideas that I have derived:

• A streamlined planning procedure to speed up pre-installation time
• Providing officers trained in delivering identified areas of the project
• It could take the form of reduced purchase & service cost gained through Centralized Purchasing
• Assistance with construction organisation & costs of access road
• Increasing speed of grid tie with National Grid through a strategic approach for the whole region

Benefits for Fife Council

These may be quite diverse, some likely outcomes are:
• Employment in green sector • Improved social cohesion & ‘happiness’
• Coordinated approach to meeting Carbon reduction targets
• Long term income fund for improvements and development to housing and economy

Closing

This paper began with a quote from thirty five years ago, in many ways we have not changed our attitudes to the use of renewable energy in our everyday lives. Our society uses resources more intensively and our way of life less sustainable than ever. At some point we need to address these big issues and change our direction. The question is do we let outside forces govern and make those decisions for us, perhaps not in our best interest, or do we take control over our own destiny and start the process of building our future heritage now.

This report came out of the Engaging Scottish Local Authorities Programme; Re-Energizing Communities Seminar held at Buckhaven Community Centre in March 2010.