Energy Independence Bill seeks to ensure communities benefit from renewable projects

A duty on the operators to form a “community benefit agreement” with local groups is provided for in the new Energy Independence Bill.

According to the Bill, the precise details on how the scheme would work would be prescribed in further regulations. It would build on existing provisions in the Infrastructure Act 2015 that confer rights on communities to acquire a stake in a renewables project.

However, at a high level, the Bill provides a community benefit agreement to require onshore wind or solar PV operators to “make payments into a community benefit fund in relation to the generating station” and/or “otherwise provide benefits for the community in relation to the generating station”. Regulations could further require operators to form an agreement with community groups over the supply of electricity.

Energy projects expert Ronan Lambe of Pinsent Masons said the community benefit measures, while well-intentioned, could serve to increase electricity costs.

“A mandatory industry-wide community benefit obligation would increase the cost base from which competitive ‘contracts for difference’ bids are derived and therefore create upward pressure on strike prices,” Lambe said.

The community benefit measures form just part of what is a wide-ranging new Bill.

Among other things, the draft legislation would enshrine into statute the UK government’s policy of banning the issue of new oil and gas exploration licences while enabling oil and gas production to continue where it is done from existing North Sea infrastructure, under transitional energy certificates. The Bill further seeks to strengthen the powers and amend the statutory objectives of the North Sea Transition Authority (NSTA).

The Bill also contains provisions extending certain employment rights, such as the minimum wage, protection against unfair dismissal and working-time rights, to offshore renewables and low-carbon workers operating in the renewable energy zone, beyond UK territorial waters. This would bring employment protections for those workers into line with those of offshore oil and gas workers.

Other measures included in the Bill are designed to facilitate the modernisation of electricity network infrastructure in Britain and provide a framework for de-risking investment in the production of electricity using hydrogen.

Further provisions, if enacted, would strengthen the powers of local authorities to enforce minimum energy efficiency standards, and cut energy costs for households – by making the government, rather than domestic energy users, liable for the bulk of costs associated with the Renewables Obligation support scheme.