Two leading renewable energy developers have thrown their support behind a call for communities hosting Scotland’s next generation of onshore wind farms to retain a greater share of the wealth created by the projects.
Robin Winstanley, Sustainability and Community Director, OnPath Energy. Image Credit: OnPath Energy
OnPath Energy and Muirhall Energy have backed a report by independent consultancy BiGGAR Economics which suggests that allowing councils to retain business rates from new wind farms could effectively triple the financial benefits available locally when combined with existing community benefit funding.
The research estimates that an additional 7.8 GW of onshore wind capacity would be needed to meet the Scottish Government’s 20 GW ambition, beyond projects already operating or under construction. This could generate approximately £78 million annually in business rates, based on an estimated contribution of £10,000 per MW each year.
Currently, non-domestic rates collected by Scottish councils form part of the national funding system, meaning the revenues generated by wind farms do not automatically remain in the areas hosting them.
The proposal, outlined in a study authored by Simon Cleary, energy transition director at BiGGAR Economics, would see councils retain the rates generated by future developments, creating a direct financial benefit for local authorities hosting renewable energy infrastructure.
It would apply only to new developments, ensuring no council would lose income it currently receives from existing projects.
The research also suggests that the annual business rates generated by a typical 5 MW wind turbine could be equivalent to the cost of employing a full-time teacher, illustrating the additional spending power that could be available to host authorities.
Robin Winstanley, sustainability and marketing director at OnPath Energy, said: “Scotland needs renewable energy projects which delivers clearly and fairly for the communities which host them.
“Community benefit funds already play an important role, but more of the wider economic value created by new developments should stay in the local area to support local services such as schools and roads. As this paper outlines, older projects could be ring-fenced and new ones could have their rates sent locally, making it a win-win policy for national and local government.
“Allowing councils to retain the business rates generated by future onshore wind projects would create a much clearer link between hosting renewable infrastructure and the long-term benefits it can bring, improving local confidence, community support and the growth rural Scotland needs.”
Muirhall Energy’s Managing Director, Sarah McIntosh, added:
“Onshore wind delivers significant economic benefits for Scotland, yet its business rates contribution is often overlooked. As the sector supports Scotland’s energy security and decarbonization goals, there is an opportunity to further build on this contribution by ensuring communities hosting developments see a more direct and lasting return through business rates retention, alongside existing community benefit funding.
“Enabling local authorities to retain business rates from new wind farms would help councils to invest more in local services, infrastructure and priorities, recognizing the vital role communities and regions play in Scotland’s energy transition.”
BiGGAR Economics argues that the traditional rationale for pooling and redistributing business rates does not apply as strongly to onshore wind as it does to many other businesses.
Wind farms require significant capital investment but typically support relatively few permanent jobs once operational. They are also generally located in rural areas because of natural resources and available land, rather than proximity to population centers.
The research estimates that £1 million in business rates is associated with around 920 operational jobs across the wider Scottish economy, compared with approximately 10 jobs in onshore wind.
It argues that this distinction strengthens the case for allowing host authorities to retain revenues generated by new wind farms, recognizing the contribution their communities make to Scotland’s wider energy ambitions.
Simon Cleary said: “These communities are playing an important role in helping Scotland meet its national energy ambitions, so it is right that they should see more of the economic value created by those projects.
“This is not about compensation for development, but about making sure Scotland is capturing and distributing the economic benefits of the energy transition in the most effective way.”
Under the proposal, councils would decide how retained revenues were spent, rather than developers or central government prescribing how the money should be used.
The additional funding would complement existing community benefit arrangements, rather than replace them, providing another way for areas hosting renewable infrastructure to share in the economic value generated.
OnPath Energy and Muirhall Energy are calling for the Scottish Government to consider the proposal as part of future policy and budget decisions on non-domestic rates and renewable energy development.