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Scottish communities hosting a new generation of onshore wind farms should be allowed to keep a greater share of the wealth they generate under proposals that could be worth around £78 million a year to local authorities.
Renewable energy developers OnPath Energy and Muirhall Energy have backed calls for councils to retain the business rates generated by future wind farms in their areas, alongside existing community benefit payments.
The proposal stems from research by independent consultancy BiGGAR Economics, which estimates Scotland requires another 7.8 gigawatts (GW) of onshore wind capacity to meet the Scottish Government’s 20GW ambition, beyond projects already operating or under construction.
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Based on an estimated business rates contribution of £10,000 per megawatt each year, the additional capacity could generate approximately £78m annually.
At present, non-domestic rates collected by councils form part of Scotland’s national funding system, meaning revenue raised from wind farms does not automatically remain with the communities hosting them.
The proposal would instead allow councils to retain the rates generated by new wind developments, establishing a more direct financial link between renewable energy infrastructure and the areas in which it is built.
BiGGAR Economics said the change, combined with existing community benefit payments made by wind farm operators, could effectively triple the financial benefit available locally.
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The proposal would apply only to future developments and would not alter income received by councils from existing projects. Local authorities would also decide how the additional money was spent, rather than developers or central government determining its use.
Robin Winstanley, sustainability and marketing director at OnPath Energy, said Scotland needed renewable projects that delivered “clearly and fairly” for host communities.
“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," he said.
“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.”
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Mr Winstanley said creating a clearer link between renewable infrastructure and long-term local benefits could improve community support and contribute to growth in rural Scotland.
Muirhall Energy managing director Sarah McIntosh said onshore wind already delivered “significant economic benefits” for Scotland but argued its contribution through business rates was often overlooked.
She added: “Enabling local authorities to retain business rates from new wind farms would help councils to invest more in local services, infrastructure and priorities, recognising the vital role communities and regions play in Scotland’s energy transition.”
BiGGAR Economics argues there is a particular case for treating wind farms differently from many other businesses because major capital investments in onshore wind generates relatively few permanent jobs once operational.
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Its research estimates that £1m of business rates is associated with around 920 operational jobs across the wider Scottish economy, compared with approximately 10 jobs in onshore wind.
Wind farms are also commonly developed in rural areas because of the availability of natural resources and land, rather than in proximity to large centres of population. The consultancy said the business rates generated annually by a typical 5MW turbine could be equivalent to the cost of employing a full-time teacher in such areas.
Simon Cleary, energy transition director at BiGGAR Economics, said communities hosting renewable developments played an important part in meeting Scotland’s national energy ambitions and should receive more of their economic value.
“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," he added.
OnPath and Muirhall are calling on the Scottish Government to consider the proposal in future decisions on non-domestic rates and renewable energy policy.