Community Funds for Wind Power

Date: 21 Mar 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Public officials are looking for ways to reduce opposition to wind farms and the United Kingdom is piloting a “community wind fund” program for all new wind projects.  Under the program, each wind project must pay in £1000 per megawatt (~$1600 per MW), per year, for 25 years into a community fund where the project is located.  The funds would help maintain public support for wind power, but also (conveniently for the conservative government) replace reduced government funding for basic services:

“With all the current talk of libraries, community centres and sports halls being closed because of government cuts , here’s a great way for local communities to replace that funding. Local wind projects will from now on not just bring the benefits of local green electricity, but also the funding of vital social projects that government cuts would otherwise shut down.”

The impact for the community is significant.  Compared to the typical land leases (often $5,000 per turbine for the host landowner), the community fund payments would increase local revenue by over 60 percent, with the additional funds spread to the entire community rather than just the lucky turbine hosts.

The impact on turbine owner net revenue is small but not negligible, reducing the net present value of the project by about 3 percent. 

Using community funds to overcome local opposition may be worth the revenue reduction for the wind project owner, but the U.K. government strategy of using wind parks to offset (some) budget cuts represents a strategy that is unlikely to work well in the United States.

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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.