Clean Power by 2030

Throughout our inquiry, we had a clear consensus that the communities in Scotland that shoulder the greatest impact of the energy transition by hosting renewable energy infrastructure must also share in its benefits. As one of our expert witnesses put it, highland communities see that

“the turbines are generating lots of revenue for somebody but not for them.”

That presents an acute problem of fairness. The communities across Scotland that host industrial-scale renewable infrastructure in their backyards are the very same communities that pay among the highest prices for energy. Although fuel poverty rates across the UK cannot be directly compared, it is also clear that those same communities are enduring among the highest levels of fuel poverty. Indeed, many will be among the 34% of Scottish households that are classified as fuel poor while looking on at the massive wind turbines generating renewable electricity nearby—that cannot be just.

As our report highlights, that disconnect is a key driver of the sense of unfairness felt by communities across rural Scotland. It is for that reason that our report welcomes the UK Government’s commitment to introduce a mandatory community benefit scheme for new-generation infrastructure. The scheme, which is expected to be introduced by the end of 2027 at the earliest, could be key to ensuring that Scotland’s rural communities are adequately compensated for the disadvantages that come with enabling the whole of the UK to meet the Government’s clean power mission. However, that raises the thorny issue of what fair compensation looks like.

As the report highlights, the Scottish Government were widely regarded as leaders in this area. In 2015, they introduced voluntary community benefits guidance for onshore renewable developers, which recommended community benefits of £5,000 per megawatt, with inflationary increases. They have recently proposed increasing that to £6,000. However, the UK Government have, in their policy paper on how their mandatory scheme will work, proposed a benchmark contribution of only £5,000 per megawatt. Our report finds that that sum is insufficient and does not reflect fair compensation for rural Scotland. A £5,000 contribution may have been an appropriate amount in 2015, when the Scottish Government adopted it, but it is now worth around 40% less in real terms.

Our report makes it clear that the UK Government must be bolder. The Committee recommends that a figure in the region of £10,000 to £12,000 per megawatt would be more appropriate. The report also calls on the Government to consider carefully the Highland council’s view that £12,500, the upper end of that scale, is a fair figure. That proposal reflects the Highland council’s first-hand experience of supporting communities that bear the brunt of clean energy development.

The Committee’s report also highlights that, no matter what figure the Government adopt, it is equally important that a mechanism is included to maintain that value over time—otherwise, Scotland’s communities will eventually find themselves short-changed as the real-terms value of the figure is eroded. Financial payments will be an essential part of a fair deal for Scotland, but they are not the whole story.

Our report makes it clear that meaningful community benefit extends beyond financial payments, and that housing availability, access to skills training and the creation of long-term local jobs are just as important. If delivered successfully, the influx of vast amounts of renewable energy could provide an opportunity to leave a transformative legacy of housing, skills and quality employment. That would be especially valuable for communities in remote rural Scotland, which have seen little private or public sector investment.

The Committee calls on the Government to seize this opportunity and ensure that their mandatory community benefit scheme is significant enough to reflect the needs and priorities of Scotland’s rural communities. Our report recommends one specific way in which the Government could achieve that: their scheme should include a requirement on energy companies building projects in rural areas to construct legacy worker accommodation to a standard suitable for permanent community housing, rather than temporary modular buildings. That would go some way towards addressing the acute housing shortage in the highlands, which requires an extra 24,000 homes to meet the demand of the next decade, according to Highland council.

With that, I will conclude my statement. The Scottish Affairs Committee looks forward to the Government’s response, which I hope will reflect serious consideration of our recommendations on delivering a fair deal for rural communities across Scotland.