Calum MacDonald, the former MP for the Western Isles, and the developer and manager of Britain’s largest community-owned wind farm at Beinn Ghrideag, in Sandwick, has called on the UK Government to introduce a new scheme to promote the growth of community energy projects.
Mr MacDonald made his call after a meeting today with the Secretary of State for Scotland, David Mundell MP, in London.
Mr MacDonald, who operates the Beinn Ghrideag scheme for Point and Sandwick Trust, is pressing for a new category of community-owned wind farms to be included in the Government’s Contracts for Difference (CfD) subsidy scheme which is currently restricted to only large-scale offshore wind farms.
Mr MacDonald argues that this would correct a ‘market failure’ in the commercial financing of community wind farms and allow them to be developed on a much larger scale. Lenders are wary of community projects as they are unfamiliar with their financial structure and support in the form of a CfD support would provide some reassurance to the market and encourage more lenders.
In recent weeks Mr MacDonald has also had meetings with the Secretary of State for Business, Energy and Innovation, Greg Clarke MP, and with the Minister for Energy, Jesse Norman MP, as part of his campaign.
Mr MacDonald said: “The local economic benefit of community-owned energy schemes is 16 times greater than that of a conventional corporate wind farm. That means that a single community turbine in your area delivers the same economic impact as 16 conventional turbines. Having 10 community turbines brings as much benefit as 160 corporate turbines.
“In the Western Isles, for example, we now have six community projects which return a collective profit of £2million a year, every penny of which goes back into the local community benefitting everything from the local hospice to youth training to new woodlands to local arts and culture.
“If those projects had been developed by conventional means, the return to the community would have been nearer £100,000 a year rather than £2million.
“That is why community-owned energy is very much in line with the Government’s aim of promoting local enterprise in disadvantaged regions and spreading the benefits of economic growth more fairly and more widely. I am calling on the Government to build now on these local successes to develop a national strategy to promote community energy.
“The past few years have demonstrated that community-owned wind farms are just as efficient, low-cost and competitive as normal corporate wind farms. The only thing now holding back the rapid growth of the community sector in the UK is the shortage of banks willing to lend on the same normal, commercial terms as they lend to the corporate sector.
“The problem we face is basically the novelty of the community energy sector. Most banks are not used to dealing with the sector, especially when it comes to the kind of ‘non-recourse’ project finance used to build medium to large size wind farms.
“Time will eventually solve this problem but in the meantime there is a real market failure which the Government can solve very easily and at no cost to the electricity consumer by including community energy in the Government’s existing CfD scheme for offshore wind farms. This would give the banking sector the confidence to lend and would immediately result in a more liquid and competitive finance market.
“I am calling for a targeted and short-term intervention which would be enough to create a level playing field between the community and the conventional corporate sectors. It would not cost the consumer or the Government anything – in fact it would help the electricity consumer by creating a more competitive market and reducing the cost of project finance for the community sector. It would boost local enterprise and ‘community-owned capitalism’ in some of the most disadvantaged regions in the country.
“I was very pleased to have the opportunity to put the community case to the Secretary of State today. Mr Mundell asked a number of questions and I have no doubt that he has a genuine interest in the community energy sector in Scotland and how to take it forward into the no-subsidy future that we are all aiming for.”