Community group

Developing a Successful Community Energy Project

Locogen has been delivering community energy projects for more than a decade. In that time we have worked on hundreds projects and delivered some award-winning work.

We work closely with Local Energy Scotland and specifically the CARES programme in Scotland and with the Community Energy Fund in England and the Welsh Government Energy Service.

Having worked on so many community energy projects, we know the difficulties they face and what is required to work through grid constraints, the planning process and countless other hurdles to bring them to fruition.

As an engineering consultancy, we support our clients to design, develop, build, and operate renewable energy projects. We work across the whole life cycle of a project, from feasibility, including grid and planning or consenting works, through implementation, construction management and asset management for operational projects. We may also co invest with our clients in projects, becoming a stakeholder in their success.

Scottish Borders Council Heat Pump

Consenting and options appraisal

Whether a community group comes to us with a firm idea, or just the blank canvas of a site and the ambition to do something, our first action is always a constraints analysis. This constraints analysis forms the backbone of the feasibility study, looking at how technically, environmentally and financially feasible the project could be. Where a community is unsure what it wants to do, this analysis is the first step in the options appraisal process, which is designed to narrow down that list of possibilities, resulting in a shortlist or the most feasible single option for a project at the site. The constraints analysis process uses GIS mapping showing overlaying areas of different designations to identify the best site.

There’s a long list of constraints that can include environmental or ecological designations, such as SSSIs or Ramsar sites. Also archeological or cultural heritage designations like listed buildings, scheduled ancient monuments, military low flying zones, military or commercial radars, agricultural land classification,  nearby roads, railways, commercial and residential properties, and any already consented and/or operational, wind, solar and battery storage projects nearby.

This first pass helps inform what sort of development is possible at the site and what is likely to encounter planning issues.

Planning consent can be a contentious issue for renewable energy developments, and it represents a significant hurdle in achieving project success. However, the above constraints analysis is designed to vastly reduce the size and scale of that hurdle and verify early stage project conception.

Once the suitable technology and scale of development has been identified, we move to assessing financial feasibility.

Solar rooftop

Financial issues and grid connections

We know that developing a renewable energy project often comes with a considerable price tag, and recent history has shown that one of the largest financial hurdles of a new development is the price of a grid connection. As such, we always recommend engaging with your Distribution Network Operator (DNO) very early on.

Online generation maps are available for most DNOs, which show the nearest substations to your site and give an estimate of what available spare capacity might exist. But likely cost can only really be estimated by submitting a budget cost estimate request to the DNO.

Communities can, of course, do this themselves but a renewables consultancy, like Locogen, has significant experience in compiling the information required, and can act on behalf of the community to submit an accurate cost estimate request. Locogen  would then typically follow up any budget estimates received from the DNO to discuss potential alternatives that may be available, or to understand what the impacts on that quote would be if we were to increase or decrease the size of the development.

Once we have the estimated costs for grid connection from the DNO, we can use balance of plant costs obtained from our recently completed and ongoing projects, such as typical costs for foundations, energy generating equipment, access roads transformers, etc. to estimate capital required for projects, plus ongoing operational and maintenance costs. We would also use an estimated energy yield, or an estimate of the electricity that your site would generate to estimate income. This is matched against different operational models to not only determine what the financial feasibility and payback time of the project is likely to be, but, also, to determine, what the best course of action would be for the sale of the electricity generated. For example, should generation be sold directly to the grid? Should it be sold to a local off-taker via private wire arrangement or should a power purchase agreement be put in place?

If financial feasibility isn’t reach at this point, it’s often worthwhile revisiting project parameters, for a different scale or type of development. For example, a 10 megawatt solar PV farm might not be financially viable due to the cost of grid connection, but, a five megawatt solar PV farm may have much lower grid connection costs, i.e. not just half of the 10 megawatt cost but significantly lower and, therefore, representing the best development option.

Coigach turbine

Refurbished wind options

Increasingly, refurbished wind turbines present an opportunity to improve the financial viability of many projects.

For a recent community project we compared the cost of installing a brand-new one megawatt turbine versus a refurbished two megawatt turbine. The new turbine represented a fairly poor payback period, and very low rate of return. And, actually, net present value after 20 years was still negative.

We then modelled a larger 2MW turbine, a refurbished model, and at the end of that 20 year period the NPV was significantly improved. This was despite a higher CAPEX cost and higher grid connection fees. The generation was just much better and hence the 2MW refurbished turbine represented the better development option.

Refining the project design

Hopefully, at this stage, we have identified a technically and financially feasible project, avoiding  any significant constraints, and representing a great return on investment and a really positive opportunity for the community.

At this point, we pass the project on to our specialist wind, solar or storage teams, and to our consenting team who deal specifically with planning works.

The technical teams identify the most suitable turbines or PV panels to be used and then optimise the site layout. Once the site layout has been agreed, the team then uses much more detailed resource analysis such as wind speeds from nearby operational wind farm sites or solar irradiance levels from satellites to produce an accurate energy yield assessment to more accurately predict generation and hence financial returns.

These revised figures are then fed back into the financial model to better predict future financial performance. A finalized site layout and turbine or panel selection can then also be used to go back to the DNO, to obtain a firm quote for grid connection.

At this time, our consenting team would begin tackling the planning hurdles, undertaking screening, and scoping exercises, with the local planning authority, to determine the scale of the planning application required: Does it need a full Environmental Impact Assessment (EIA)? Or just an environmental survey?

The consenting team also identifies any further issues, such as planning, policy perspective, or elements of the project that would directly contradict local plans or any published renewable energy planning guidance. Once that screening and scoping response has been received, planning work can begin in earnest. Locogen has an in-house team of former planning officers, ecologists, cultural heritage, and archeological specialists, dedicated to predicting and circumnavigating any potential planning issues before they represent a significant threat to the project. Once planning consent and a grid offer has been secured, we can hand over a neatly wrapped project, ready for construction. Locogen also assists with securing funding and providing construction management, while our asset management team steps in to optimize and run operational projects.

Working with Developers: Community Benefits and Renewable Energy Projects

An alternative model to a community developing its own renewables project is where a developer owns the project and the local area benefits through a community benefits scheme.

We can first look at how renewables do benefit the communities local to the developments, such as wind and solar projects.

The Scottish Government has published guidance on Community Benefits from Onshore Renewable Energy Developments, here.

One of the best practices widely adopted by developers is that onshore wind developments should pay out £5,000 per installed MW per annum, with other technologies encouraged to aspire to that level of funding. It should be noted, however, that these payments are voluntary and that some projects with marginal returns may offer significantly less.

These financial benefits can be transformative for what are often small, rural communities around the developments. But there are other benefits too. The developments can bring much needed job opportunities to rural areas while strengthening local infrastructure and boosting the local economy through supply chains. Larger sites may also provide educational and leisure opportunities, such as those offered at Whitelee Wind Farm.

The importance of consultation

A second factor to consider is how developers interact with and even define ‘local’ communities to be included in any benefits package. As a starting point, the developer may work with the local community council to establish an ‘area of benefit’. This may focus on proximity to the site, visibility and areas impacted by construction.

Consultation is an important foundation of this identification process and the Scottish Government’s Community Benefits paper offers some useful guidance here. It advises early consultation, even pre-consent, to allow communities to build their resources and identify appropriate areas for benefit. Developers are also encouraged to offer a clear, consistent and transparent approach in order to build early trust and strengthen relationships.

Working with community groups

It is understood that many community groups are staffed by volunteers who often do not have sufficient  time or expertise to easily navigate strategic decision making and planning during this consultation process. The developer can certainly provide some help and resources but they are less likely to have an intimate knowledge of the local area, issues and priorities.

Foundation Scotland is one organization that can help communities set up and administer their funds. They work with 350+ community groups and manage funds worth approximately £7.5 million.

The future of community benefits

There has been some discussion around what the future of community benefits might look like. One possibility is to expand the ownership of renewable energy projects so as to include communities and give them a stake in the success of projects in their area. This is a model currently being implemented by Ripple Energy.

There are also concerns that the hyperlocal distribution of funds from renewable energy projects can cause quite pronounced differences in funding levels between communities. This may result in more urgent community projects being unfunded, due to not being in the area of benefit.

One way of dealing with this uneven distribution of funds across communities is to aggregate benefits across wider areas and smooth out the differences between communities. Clearly, though, there is a balance to be struck between levelling out benefits and ‘compensating’ those communities nearest developments for any impacts they experience from the renewable energy project.

In conclusion

Clearly, delivery of a community energy project is a major undertaking requiring a number of specialist skills. The situation is made even more complex by the nature of community groups, largely staffed by volunteers. At Locogen, we’re acutely aware of these challenges and our end-to-end services have been designed to remove as much of that burden as possible for the community and to deliver successful, even award-winning, projects.


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