Community benefits are, without question, emerging as the policy of choice at the Department of Energy and Climate Change (Decc). Promoted predominantly by onshore wind and waste developers for a number of years, in recent months we have suddenly witnessed the government roll out benefit guidelines for companies operating in onshore wind (calling for a five-fold increase), nuclear and unconventional oil and gas. There is no reason to believe that other technology providers will not be asked to fall into line.
The political case for promoting community benefit is, on the face of it, compelling. With the UK’s energy infrastructure ageing, communities around the UK are increasingly coming into contact with energy companies looking to build new, or overhaul existing, generation capacity in their area. It seems logical, therefore, that people should benefit from hosting developments in their local area. Furthermore, a standardised, formalised approach should help to ensure that the level of benefit is consistent across each community.
However, the track record of community benefits in the UK has been far from perfect. As onshore wind developers already know having piloted the concept for a number of years, it can be challenging to ensure that those who are affected most by projects are those who actually receive the associated benefits. And too often the benefits themselves have been characterised by some as a cynical bribe by developers who use them to buy local support for their projects – due in part to companies failing to engage meaningfully on the issue.
So while community benefits as a policy may be popular in the corridors of power in Westminster, are they the solution the public wants? To investigate this further, PPS undertook a comprehensive study with Atomik Research into the acceptability of energy developments in the UK, including a representative sample of 2,000 respondents from across the country. The results were illuminating.
Despite the increasingly polarised nature of the energy debate in the UK, 85 per cent of respondents agreed that every community in the UK should play its part in using domestic energy resources to help the country meet its energy needs. This suggests that messaging from both industry and government around the UK’s energy trilemma and the need for security of supply has achieved some resonance with the public.
However, as with any form of development, the magnanimity of respondents varied dramatically when asked to consider the acceptability of different energy developments if built in their back yard. Renewable technologies fared particularly well on this question, with over 80 per cent of respondents deeming solar farms acceptable for their area, closely followed by onshore wind and energy from waste.
In contrast, nuclear and open cast coal mining were both adjudged to be personae non grata, with acceptability hovering around the 40 per cent mark. This may make for difficult reading for Ed Davey and his colleagues at Decc, who have dedicated significant time and political capital to finalising a strike price for new nuclear and securing Far Eastern investment into the sector.
Having established the baseline level of public satisfaction with a range of energy technologies, we also looked at how effective community benefits were in bolstering local support. The headline finding from this research is that there is a large chunk of people – nearly 40 per cent – who genuinely believe that community benefits can make a positive contribution, provided the package is targeted to meet the community’s needs.
In contrast, 24 per cent of people took the hawkish view that community benefits are glorified bribes, while 21 per cent of people viewed them as a positive mechanism for sharing economic rewards.
So if these people represent swing voters in local communities around the UK, what can and should energy companies be doing to win their support? That answer becomes increasingly clear when you ask people what type of benefit they actually want.
Unsurprisingly at a time of rising energy costs, 65 per cent of respondents said the prospect of a subsidised energy bill would make them more likely to support an energy development in their area. While UK energy companies have largely shied away from this option to date, in the past 12 months we have begun to see a small number of companies such as ASC Renewables and RWE (disclaimer: both clients of ours) pioneering this approach to good effect.
Another direct and monetary-based community benefit that drew significant support was that of a community share or stake in an energy project. Again, this has been trialled sporadically by onshore wind developers in the past, and has been given a new lease of life in recent months by the onshore oil and gas sector, which has promised a 1 per cent share of revenues to communities near producing oil or gas wells that have been hydraulically fractured.
In contrast, education-based community benefits received a comparatively tepid response from respondents, with 37 per cent of respondents backing local educational initiatives and just 20 per cent supporting bursaries for students. Both options are only relevant or attractive to certain demographic groups within communities and the comparative slump in support compared with the more direct benefits mentioned above is no great surprise.
So what are the implications of all this for energy operators in the UK? The good news is that community benefits remain a useful way of increasing public acceptability on the ground, despite criticism from some quarters that they are a blunt policy instrument.
However, as our research has shown, support is more likely to swing in operators’ favour if they address the need to offer direct benefits with clear monetary value to individual households rather than more collective alternatives that benefit only certain parts of the community. It is for that reason that the phrase “community benefit” appears to be a bit of a misnomer – what we are actually seeing is an age where “household benefit” is the key to unlocking local support.
So much for being all in this together.
Karl Smyth is an account director at PPS Group