Infra.Law
Government pushes for a mandatory community benefit system and updates guidance for onshore wind
By Kevin Gibbs and Claire Fallows
Infra.Law
Government pushes for a mandatory community benefit system and updates guidance for onshore wind
By Kevin Gibbs and Claire Fallows
In our Expert Insights we explored the key infrastructure reforms in the Planning and Infrastructure Bill (PIB), particularly those relating to electricity generation and transmission. With the aim of reducing opposition to energy transmission proposals, the PIB provides for locals to benefit financially by means of a Bill Discount Scheme for those living closest to new electricity transmission infrastructure.
Our Expert Insight also explored the Government’s updated Community Benefit guidance applicable to transmission projects. That guidance is in force already and will supplement the Bill Discount Scheme once the PIB reaches royal assent. There have now been two further Government announcements for community benefits associated with energy generation (rather than transmission) projects:
- On 4 July 2025 DESNZ updated guidance on voluntary community benefit schemes for onshore wind projects in England, first released in 2013.
- On 21 May 2025 DESNZ published a working paper to consult on the introduction of mandatory community benefits for and “shared ownership” of low carbon energy infrastructure.
Onshore Wind Community Benefit Guidance (“the Guidance”)
The Guidance notes that benefit packages designed by industry to reward communities for hosting onshore wind (and other renewable) projects are relatively well established. The packages can be highly flexible, facilitating financial payments to the community, or in-kind benefits such as shared ownership or direct investment in local infrastructure. As with all community benefit arrangements, they are immaterial to planning decisions and cannot be considered when deciding whether to grant planning consent. They cannot therefore be considered, for instance, as mitigation of impacts on communities in any way shape or form. To help meet net zero targets, the Government is committed to radically increasing onshore wind capacity by 2030. To help achieve this step change, it wants to make sure that those communities hosting onshore wind projects receive a real and material benefit. This is what the Guidance is intended to achieve.
Onshore Wind Community Benefit Guidance (“the Guidance”)
Hence for larger scale projects of 5 MW or greater, which are eligible for support under the Contracts for Difference scheme, developers are expected, under the updated Guidance, to deliver community benefits of at least £5,000 per MW of installed capacity per year (index linked) for the operational lifetime of the project. Community owned wind projects are exempt, as are private wire schemes behind the meter for onsite consumption. The Guidance recommends early-stage engagement to establish the foundations of a productive long-term relationship between the developer and the host community. Engagement on community benefits is encouraged alongside engagement on the proposals for the development of the onshore wind project itself. Changes in the size for instance, can affect the community benefit expectation. The Guidance contains a step-by-step guide for setting up a community benefit fund, local bill discount scheme and shared ownership scheme. Critical to any fund arrangement is the formation of a community legal entity and well drafted legal agreement that sets out the obligations of each party.
Onshore Wind Community Benefit Guidance (“the Guidance”)
The Guidance notes that benefit packages designed by industry to reward communities for hosting onshore wind (and other renewable) projects are relatively well established. The packages can be highly flexible, facilitating financial payments to the community, or in-kind benefits such as shared ownership or direct investment in local infrastructure. As with all community benefit arrangements, they are immaterial to planning decisions and cannot be considered when deciding whether to grant planning consent. They cannot therefore be considered, for instance, as mitigation of impacts on communities in any way shape or form. To help meet net zero targets, the Government is committed to radically increasing onshore wind capacity by 2030. To help achieve this step change, it wants to make sure that those communities hosting onshore wind projects receive a real and material benefit. This is what the Guidance is intended to achieve.
Hence for larger scale projects of 5 MW or greater, which are eligible for support under the Contracts for Difference scheme, developers are expected, under the updated Guidance, to deliver community benefits of at least £5,000 per MW of installed capacity per year (index linked) for the operational lifetime of the project. Community owned wind projects are exempt, as are private wire schemes behind the meter for onsite consumption. The Guidance recommends early-stage engagement to establish the foundations of a productive long-term relationship between the developer and the host community. Engagement on community benefits is encouraged alongside engagement on the proposals for the development of the onshore wind project itself. Changes in the size for instance, can affect the community benefit expectation. The Guidance contains a step-by-step guide for setting up a community benefit fund, local bill discount scheme and shared ownership scheme. Critical to any fund arrangement is the formation of a community legal entity and well drafted legal agreement that sets out the obligations of each party.
The Mandatory Proposals
Which low carbon technologies will be affected?
The proposals for both mandatory community benefits and shared ownership of assets cover a wide range of low-carbon energy technologies including onshore and offshore wind, solar, marine (tidal and hydro), nuclear, power CCUS, hydrogen to power (ie fuel cells) and battery/long duration storage. The government recognises, however, that some technologies already fulfil a crucial role in our power mix, while others are still developing or not yet commercially deployed. Therefore, in determining the scope of any potential measures on community benefits, a balance will need to be struck between the adverse impact of hosting energy infrastructure with the additional regulatory burden which benefit scheme proposals could impose on developing technologies.
Community benefits
As noted above, it is recognised that voluntary community benefit agreements in the renewables industry are common. Government and industry led guidance underpinning such agreements makes it very clear that the offer of benefits should not be a material consideration in the determination of applications for planning consents whether under the Town and County Planning Act or the Planning Act for Nationally Significant Infrastructure Projects. Guidance will continue to support a voluntary approach ahead of any new mandatory schemes taking effect and experiences and lessons learned will inform the detail of those schemes. Under a mandatory scheme, developers of low carbon infrastructure would be required by legislation to contribute to a community benefits fund, either in cash or in kind. The funds would be targeted to local priorities and managed collaboratively by communities. The paper recommends a 5 MW generation capacity minimum threshold for the system to be applicable. The scheme would address the current inconsistent use of community benefits for different projects and in different geographies across the UK. It is considered that it would also boost local acceptance and foster stronger community/developer relationships. The Government is considering the level of benefit and is proposing a fund contribution either based on installed generating capacity (£/MW), or on actual generation output (£/MWh). There are a wide number of technical issues that the Government is considering. For instance, repowering or retrofitting projects may well be caught by the scheme. Since the obligations in respect of community benefits are to be placed on the relevant licence-holder (a licence for generation of electricity under the Electricity Act 1989), when a project undergoes a change in ownership, it is proposed that any existing community benefits obligations would therefore be transferred to the new party. There are also recommendations and case studies as to how a fund may be administered, such as the appointment of a Fund Administrator along the lines of Ireland’s mandatory community benefits scheme.
Shared Ownership
The working paper also addresses “shared ownership” i.e. the offer to a community group of the opportunity to invest in a commercially owned renewable energy project, and where the community’s share of the development is then considered community owned. A ‘community group’ is either a body or group which represents the interests of members of the community. The working paper acknowledges introducing mandatory shared ownership could result in increased complexity and costs, which could impact the financial viability of projects and lead to potential delays in the roll-out of some sites. The Infrastructure Act 2015 already includes provisions enabling regulations to be made requiring that shared ownership must be offered. Sections 38 and 39 of that Act provide for a Community Electricity Right, which, if the relevant powers were exercised through regulations made by the Secretary of State, would create a requirement for developers in Great Britain to offer communities the chance to invest in new commercial renewable electricity generation schemes being developed in their area. There are a number of factors which need to be addressed to make shared ownership accessible for communities, including access to the required capital to invest in a project, and access to support throughout the shared ownership process, including with the necessary legal and financial arrangements. The working paper notes that in Denmark legislation requires a 20% share of new wind projects to be offered to local residents. This includes those living within 4.5km of the nearest turbine or within the relevant municipality. The offer is typically made to residents well before construction begins, ensuring that the community has a financial stake in the project from the outset. However, the model has received criticism regarding the financial returns on investments, with some residents feeling that the returns are not as high as expected, and broader concerns have been raised about the transparency of the process and whether the distribution of benefits and decision-making lacks clarity. If exercised, the Community Electricity Right would apply to new renewable electricity generation projects in Great Britain with an expected installed capacity of 5MW or more. The 2015 Act defines a renewable generation project as a facility using a renewable source of energy to generate electricity, such as onshore wind, offshore wind or solar. The definition of “renewable source” comes from Section 32 of the Electricity Act 1989: sources of energy other than fossil fuel or nuclear fuel. As with the community benefits scheme, the offer of shared ownership is not intended to become part of the planning process or influence decision making on applications for planning consents, so communities will still be able to have their say on local developments.
Comment: The Guidance has been produced in close collaboration with the onshore wind industry and we would not therefore expect resistance from the industry. We also consider that the Guidance will aid support for the raft of onshore wind proposals likely to emerge following the Government’s latest Onshore Wind Taskforce Strategy published on 4 July 2025. We would also expect the proposals for a mandatory scheme to be broadly welcomed by developers as providing some consistency in approach. However, the legal structures and administration burden, as well as dialogue with community groups will need careful thought in order to capture the intended benefits across a possibly diverse community. Our team at Charles Russell Speechlys advises on the deployment of low carbon generation schemes including on appropriate legal structures and agreements for community benefit and shared ownership schemes. The community benefits and shared ownership for low carbon energy consultation working paper and the community benefits guidance for onshore wind can be found on the government websites:
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