Policy - Wind - Wales - General Resources
Introduction
This page should serve as a guide to communities in Wales who seek community ownership of wind turbines and wind farms. It outlines the planning permission process as it relates to Wales’ specific policies on renewable energy development projects, as well as the process of incorporation, financing and fundraising for such projects in Wales. It assumes the desired ownership of one or more wind turbines by a small Welsh community with no or limited energy and finance expertise. The primary purpose of these turbines would be to generate electricity for their owners, and secondarily to sell excess electricity to the grid and receive the financial benefits of the Feed-in tariff scheme (commonly called the Clean Energy Cashback Scheme). Much of the text has been excerpted from official Welsh and UK government documentation, all of which can be found online (see references and appendix). While this document includes all of the most important aspects required for community wind development in Wales, it is not the only source of information you should consult. It is highly recommended that you read all of the included references in full and make an appointment with the your local council planning office before submitting your application. Council specific information can be found here.
Contents
Background
Initial Project Steps
Legal Status
Ownership
Finance
Feed-in Tariff
Grants
Loans
Obtaining Planning Permission
Council Specific Policies
Additional References
Background
The government of Wales, as part of its Climate Change Strategy for Wales, has an emissions reduction target of 3% annually from 2011 and specifically highlights the role that communities have to play in achieving this. This implies a minimum reduction of 40% below 1990 levels by 2020 and includes direct CO2 emissions from the transport, residential, and agricultural sectors as well as from waste and land use change and all business and industrial emissions not subject to the EU Emissions Trading Scheme. One of the main aims of the Welsh government in order to meet these targets is supporting community and decentralised energy production through a number of strategies. These include:
• an initial £15m EU funding programme to support 22 community energy projects across Wales;
• working in partnership with DECC to deliver a two year research programme, supporting 20 communities in England, Wales and Northern Ireland; of which four are from Wales, to deliver community led, low carbon initiatives from which others across the UK can learn;
• further reducing the need for planning permission for installing domestic low carbon energy efficiency equipment;
• working with stakeholders in Wales to encourage the take-up of renewable energy financial incentives from micro- to macro-scale projects;
• championing the potential benefits of feed-in tariffs for community renewable energy projects;
• encouraging the piloting of smart-grid technology in Wales;
• working with the Distribution Network Operators in Wales (Western Power Distribution and Scottish Power/Manweb) to promote uptake in Wales of the £500m Ofgem UK low carbon networks fund;
• supporting small-scale renewables developments through the planning system in Wales;
• providing domestic renewables as part of our Home Energy Efficiency Scheme and other energy efficiency programmes, and offering individual householders the opportunity to ‘buy in’ to programmes in their area to reduce the costs of technologies;
• promoting local energy generation, including as part of public sector schemes and procurements;
• promoting ‘whole house’ integrated energy efficiency and micro-generation investments, including in our zero carbon demonstration developments.
Initial Project Steps
At the inception of a community wind project, many questions must be answered before any money changes hands, holes are dug, or contracts are signed. These include:
What is the proposed capacity of the wind turbine(s)?
How many people or parties are owners?
What legal status do we want to use?
How is this being funded?
How much will it cost?
Is there a good local wind resource that we can legally use?
All of the answers to these questions will depend on the needs and abilities of the community.
Legal Status
Your community group may already exist as a registered charity or other non-profit organisation, in which case you just need to determine the ownership model appropriate for your group. Technically a group of people organized under a common goal or initiative automatically becomes an unincorporated association, which has very few legal restrictions or regulatory obligations. In order to sign contracts or apply for grants, groups will need to move to something more legitimate, such as the following:
Community Interest Company (CIC) – Community interest companies are a type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people. CICs can be limited by shares, or by guarantee, have a statutory “asset lock” to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity. A CIC cannot be formed to support political activities and a company that is a charity cannot also be a CIC without surrendering charitable status. However, a charity may apply to register a CIC as a subsidiary company. More information is available here.
Cooperative – Run by and in the interest of members and pay out dividends to members, often on the basis of participation rather than financial investment. Each member gets one vote regardless of the number of shares owned.
Community Benefit Society (CBS) – Attracts investors interested in bringing dividends to the wider community. Can have an asset lock. Each member gets one vote regardless of the number of shares owned.
Charity - Takes a long time to form, but will typically get access to more money from philanthropic organizations and great tax breaks. They are also more regulated than CICs.
Joint Venture – Consists of two or more independent parties pursuing ownership, possibly your community organisation and a private investor. One particular benefit of this model is that one party may have significantly more expertise and capital while the other may have the available land and a large group of small investors but limited experience, making a partnership ideal.
Ownership
Ownership of one’s own electricity production is one of the main reasons why communities choose to pursue renewable energy, so determining exactly who owns what and how much is very important. As an organisation you can have complete ownership of the project, ownership of certain turbines in the project, or purchase an ownership interest in a joint venture company that owns the project. Within that framework, it must be determined how shares are distributed among the community group members. This depends on the legal status chosen from above, and the relative wealth of different members of your community.
Finance
Wind energy development is expensive and, in order to ensure that the community project remains financially viable, a full assessment of investment, expenses, risks and income for your community group will be necessary. These include but are not limited to:
Required Investment
-funding preliminaries (first group meetings, speakers, web hosting)
-planning permission process and application fees
-professional consultants and advisors
-land
-turbines
-construction
-grid connection and application fees
-decommissioning
Financing
-grants
-loans
-community investment
-investment from other parties
Operating Income
-power purchase agreements (PPA’s) and generation tariffs
-Renewables Obligation Certificates
-other income sources
Operating Expenses
-employees
-regular maintenance
-environmental protection
-insurance
-other operating expenses
-taxes
Financial Risks
-regulatory changes
-wind speed variability
-environmental disasters and storm damage
-inaccurate estimation of appropriate investment
-inadequate or variable investment from the community
-economic crisis
-delays due to project opposition, funding gaps, or application errors
Feed-in Tariffs
The primary support mechanism for small scale renewable energy (under 5MW) is the Feed-in Tariff scheme, also commonly referred to by the Welsh government as the Clean Energy Cashback Scheme. It works by paying your organisation a generation tariff for the electricity you generate and use yourself and an export tariff for any extra electricity you export to the grid. This payment is calculated and paid by your electric utility and reflected in your balance with them. The current generation tariff (valid from August 1st 2012 to October 31st 2012) for wind is displayed in the table below:
| Max System Capacity | p/kWh |
| less than 1.5kW | 35.8 |
| 1.5 - 15kW | 28.0 |
| 15 - 100kW | 25.4 |
| 100 - 500kW | 20.6 |
| 500kW - 1.5MW | 10.4 |
| 1.5MW - 5MW | 4.9 |
Once a system has been installed and registered for the Feed-In Tariff, its rate is fixed for 20 years and then expires. The export tariff for installations after 1st August 2012 currently has a price floor of 4.5p/kWh, however you are entitled to accept or reject this each year and attempt to negotiate a higher rate with your utility. Both the generation and export tariff rates are linked to the Retail Price Index (RPI) and will be readjusted accordingly each year, however both are also subject to pre-planned annual degression of about 5%. The rates for specific technologies are reviewed constantly and adjusted based on the level of deployment. All of the above information, including regular tariff adjustments, is available from www.fitariffs.co.uk.
Grants
There are at least 4,000 independent trusts and foundations in the UK giving about £3 billion each year to charities and community organisations. There are at least two community foundations in Northern Ireland. It is important to note that one cannot typically receive grant funding and Feed-in Tariff support at the same time due to European Commission State Aid rules.
Government Grants
The Ynni’r Fro Programme
The Welsh Government’s Ynni’r Fro Programe is financed by European Structural Funds to offer social enterprises grant aid, loans and free hands-on advice and information to help social enterprises develop their own community scale renewable energy schemes across Wales. Up to £30,000 is available to fund early stage activities such as environmental surveys, planning applications and community engagement activity. A grant of up to £300,000 is available towards capital costs of a renewable energy project. Grants are available to any legally constituted community based social enterprise located in Wales. Wind energy schemes should expect to generate at least 240,000 kWh per annum and raise a minimum gross income of £70,000. All terms, conditions and additional information can be found here.
Windfall (Mid Wales Community Energy Trust or MWCET)
A proportion of the revenue from energy generation in Mid Wales is collected by Windfall and is redistributed among local communities. This money is offered as grants for energy efficiency and renewable energy projects to communities, householders, farmers, schools and businesses across Mid Wales. Communities who use Windfall will benefit from the well-established technical and financial management capability of The Trust in developing and supporting sustainable energy projects throughout Mid Wales. All of the above information and additional details is available here.
Big Lottery Fund - Village SOS
Funded by the National Lottery, it provides grants for sustainable community enterprises, but only for rural towns with a population of 3,000 people or less. Grants are between £10,000 and £50,000 pounds. Grant applications and additional information can be found here.
The Community Generation Fund
The Community Generation Fund is national fund created to provide a catalyst for the widespread development community-owned renewable energy infrastructure. The Fund is designed for communities seeking to develop renewable energy generation infrastructure which will create renewable energy, social engagement and a long term income source to be recycled by the community into relevant social impact initiatives. The Community Generation Fund will provide commercial but creative loan funding for communities at the pre-planning (“development”) stage of their projects, as well as the construction (post-planning) stage:
-
Development Loans:
Contingently repayable loans for design, environmental and other external costs involved in achieving the required planning and other consents/licenses
-
Construction Loans:
Long-term loans for equipment, construction & commissioning costs (post planning consent) either stand-alone or alongside bank finance.
The Fund will consider project sizes from 25kW capacity upwards, subject to assessment of technical viability, financial viability and social impact. The level of project typically is likely to involve total feasibility/pre-planning costs of £20,000-£150,000 maximum (depending on technology and scale) and construction costs of £250,000-£2,000,000 maximum. The Community Generation Fund has been developed by the FSE Group (FSE) and the National Energy Foundation (NEF). NEF is able to assist communities with a range of energy strategies and specifically, support in considering applications for the Fund. Further information on applications and additional details are available here.
E-ON Sustainable Energy Fund
The E-ON Sustainable Energy Fund is committed to investing in communities, with the aim of helping them become energy fit and delivering positive social impact to individuals and organisations. They focus community investment and employee volunteering activity on two key areas: education and supporting vulnerable consumers. They also support charitable organisations nominated by colleagues through their employee fund and payroll giving initiatives. All of the above information and additional details are available here.
EDF Energy Green Fund
The EDF Energy Green Fund has awarded over £4.6m to 260 community projects across the UK since 2001. Customers on their Green Tariff pay a small premium on their electricity bills. They match their contributions and use this to help support renewable energy projects across England, Scotland and Wales. Additional details are available here.
RWE npower
RWE npower renewables offers a range of community benefit packages at their operating onshore and offshore wind farms. These usually benefit those communities living closest to the site. Community benefit packages have been used to fund a wide variety of activities including community building refurbishments, environmental education programmes, energy efficiency schemes and supporting local groups and organisations. For more information on community benefit packages, visit this website.
Loans
Most commercial banks will not lend to non-profit organisations with limited cash flow, however there are some lenders who specialise in working with community groups, such as:
Charity Bank lends to community organisations throughout the UK, including renewable energy projects.
Triodos Bank has provided loans to 210 renewable energy projects.
The Community Development Finance Association provides an online service to help connect charities, community organisations and social enterprises with financing.
Obtaining Planning Permission
The Welsh government and local council authorities provide relatively little planning information specific to wind energy development, so it is essentially mandatory that you contact your local planning authority prior to creating and submitting your application to ensure you have met all of the necessary requirements and included the correct forms and fees. This section will provide some of the nationally applicable regulations as well as wind energy policies and guidelines from individual councils.
In Wales planning permission for onshore wind energy installations under 50MW is given by local council planning authorities. Offshore projects are decided by the national government at any size. Planning permission is required for all sizes of wind turbines; they are excluded from micro-generation permitted development rights. Therefore you will be required to submit a planning application to your local council authority. Links to local council websites are provided in the glossary. You will also need to consult the Environment Agency Wales before submitting a planning application to your local council.
The Welsh Government Planning Policy Guide for wind energy development lists key factors (below) to assess and ways to minimize the impacts when planning your wind turbine(s). These are basic guidelines and all are likely to require some type of specialist to ensure they are done according to best practices and are scientifically based decisions.
Landscape
Wind turbines can have a visual impact on the townscape and landscape character and especially have cumulative impacts with other wind developments or tall structures. To minimize the visual impact position the turbine sympathetically to surrounding built forms and choose paint and finishes for the turbine components that respect the surroundings. Use screenings such as plantings minimize unsympathetic views and in general ensure careful siting of the turbine.
Ecology
The construction and general presence of wind turbines, especially the rotating blades, foundation and buried cabling, can have an impact on local ecology and wildlife. The turbine should be sited away from sensitive habitats and species. Be aware of legislation protecting certain species and designated protected areas.
Birds
While bird collisions with turbines are generally less frequent then most people believe, it is good practice to site the turbine away from areas with high flight activity such as known migration routes and nesting areas.
Shadow Flicker
Shadow flicker is the phenomenon of sunlight being interrupted by the blades rotating, and especially occurs when the sun is lower on the horizon. This can be irritating to people indoors as it creates a strobing effect. Site the turbine such that the blade shadows will not fall on any houses for a significant time.
Hydrology
Wind turbine construction and development should not have a negative impact on ponds, rivers, streams, wetlands or other water structures. Be sure to site the turbine an adequate distance from these.
Noise
Smaller turbines not only make more noise because they rotate faster, but also are likely to be closer to homes than large turbines. Therefore noise needs to be seriously assessed prior to development. Noise from construction must also be minimised.
Historic Environment
Turbines developments should not have a negative impact, visual or otherwise, on the character of historic buildings, sites and conservation areas. When viewed from such a location the turbine should have a backdrop of land rather than open sky.
Building Design
Wind turbines affixed to building structures need to be properly secured using the appropriate hardware to a strong structural element. Avoid fixing to chimneys or into soft materials, including colm, rendered infill panels, soft brick or stone or anywhere showing signs of pre-existing structural problem such as cracked or de-laminating stone walls. Wind turbines vibrate and this could make noise inside the structure as well as weaken the structure over time.
Other Types of Approval You May Need
Listed Building consent if the building is listed.
Conservation Area consent of the development is in a conservation area
Trees: Many trees are protected by tree preservation orders. You may need the council’s consent to prune or fell them.
Building Regulations: New building work will often need to comply with Building Regulations.
Wildlife Some buildings may hold roosts of bats or provide a refuge for other protected species and are given special protection.
Environment Agency Licenses: Please check with your local planning authority whether any of these apply to your site or your proposal.
Please see the Council Specific Policies page for more information on each council.
Additional References
Climate Change Strategy for Wales
http://wales.gov.uk/docs/desh/publications/101006ccstratfinalen.pdf
Welsh Energy Policy 2010
http://www.mng.org.uk/gh/resources/100315energystatementen.pdf
Scenetwork Glossary, http://scenetwork.co.uk/glossary
Community Benefit Societies http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1077475850&typ...
Joint Ventures, Community Energy Scotland http://www.communityenergyscotland.org.uk/joint_ventures
Energy Saving Trust, Find Funding, Wales http://www.energysavingtrust.org.uk/wales/Take-action/Community-projects...
Welsh Energy Policy 2010
http://www.mng.org.uk/gh/resources/100315energystatementen.pdf
Generating Your Own Energy, Welsh Government http://wales.gov.uk/topics/planning/policy/guidanceandleaflets/generater...
Environment Agency Wales
http://publications.environment-agency.gov.uk/PDF/GEHO1211BVWW-E-E.pdf
