Shetland Community Benefit Fund is a unique initiative which see all the local communities coming together to benefit from commercial renewable energy developments in the islands.
The islands’ 18 community councils formed SCBF to negotiate and administer community benefit funding from developers.
The background to SCBF
Shetland Community Benefit Fund Ltd is an independent co-operative setup in 2011 following an initiative by the Association of Shetland Community Councils in the very early days of renewable energy in the islands when the Viking Energy development was first proposed.
SCBF and its directors take no view on the rights or wrongs of any wind farm development. SCBF exists to negotiate the best possible agreement for Shetland from commercial developments that do go ahead in the islands.
SCBF is an independent non-charitable co-operative registered and regulated by the Financial Conduct Authority. It was agreed from the very start that community benefits should be available on a Shetland-wide basis – so all local communities have a chance of accessing the funds.
Each of Shetland’s 18 community councils can nominate a director for the SCBF board and they need not be a community councillor. Once elected to the board the director has a separate legal responsibility to the co-operative – like any company director or charity trustee.
A co-op not a charity
From the start it was agreed that SCBF would not be set-up as a charity and therefore be free of any legal constraints that charities can get caught up in. SCBF will have considerable freedom in using its funds. It can invest in or make loans or grants to community or charitable bodies as well as businesses and individuals – although there are restrictions for businesses and individuals.
Viking’s roller-coaster ride
Because it was the first proposed development, the work of SCBF has largely concerned the Viking Energy Wind Farm (VEWF).
Anyone in Shetland over the past decade knows the Viking project has experienced something of a roller-coaster ride. The work and activity levels of SCBF and its directors has largely mirrored that of Viking Energy.
When its prospects of going-ahead seemed more likely then SCBF activity increased because we had to be prepared in case the wind farm was built. However when the prospects were less likely, as was the case for some time, then SCBF activity was largely restricted to an annual meeting and a ‘watching brief’ on what was, or wasn’t happening.
However, work continued somewhat spasmodically on preparing a draft agreement for community benefit if the Viking development did ever happen. SCBF held numerous negotiations with the company and its main shareholder – SSE Renewables.
As the commitment and confidence of SSE to build the Viking windfarm increased SCBF, Viking energy and SSE Renewable finally signed Heads of Terms in July 2020 to form the basis of community benefit funding through the Viking Community Fund.
This committed Viking Energy and SCBF to two legally-binding agreements – one for funding of £400,000 a year while the development is being built and secondly for the main core funding of £2,214,500 a year (index-linked) for the planned 25 years of the development and starting when it becomes operational and sends power through the new interconnector cable to the Scottish mainland.
The first legal agreement was signed in May 2020 and will see SCBF receive £400,000 a year during wind farm construction from the Viking community Fund, starting in September 2020. The developers believe construction will finish in 2024 – but the agreement allows funding to continue if there are delays.
This money will be used by SCBF to operate an Advance Grant Scheme to support projects supported by one of Shetland’s community councils. In the first year the four community councils that have a turbine in their area – Tingwall Whiteness and Weisdale, Sandsting and Aithsting, Delting, and Nesting and Lunnasting – will have £50,000 to support projects. The other 14 community councils will have £10,000.
SCBF will also use the funding to operate the scheme, run its administration and to develop a full Business Plan which is needed before the second legal agreement, for the main core funding of £2,214,500 a year, can be signed.
SCBF intends to consult widely when developing its Business Plan and deciding on priorities in the islands for funding. It is the intention of SCBF not simply to replace or take over what should be Shetland Islands Council’s responsibility or that of other local or central government agencies.
SCBF will be looking to see how the community benefit can be used to supplement and enhance existing funding schemes, from whatever source, and to help tackle local needs and priorities in imaginative and creative ways.
In May 2020 SCBF signed its second agreement with the local company that runs the Burradale wind farm – Shetland Aerogenerators. This will be managed and accounted for separately from the Viking funds. The agreement is for £10,000 a year for 10 years, index linked to CPI.
There are three other proposed wind farms in the islands from two developers – Manchester-based Peel Energy and Energy Isles, started by a consortium of local people and companies but now taken over by Norwegian state-owned company Statkraft.
SCBF hopes that these developers and the local communities will agree to the same general principles – that all communities in Shetland should benefit in some way from the developments, although recognising that each agreement will be different. SCBF is in contact with both companies.