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Can community-owned wind farms help achieve energy freedom?

Analysis: Irish citizens investing in wind farms could lead to significant energy cost advantages for their local community  

Citizen investment in wind farms could increase Ireland's wind energy capacity and help us ensure the security of our energy supply by meeting the target of 80% renewable electricity by 2030. What’s more, there appears to be a real appetite among citizens to invest in local wind farms. In a national survey last year, over two-thirds of respondents said they would consider investing in a local wind farm if given the opportunity. Almost half of respondents said an opportunity to buy shares in a wind farm would increase their willingness to agree to a turbine being located within 1km of their home.

So how can Irish citizens invest in local wind farms? At the moment, setting up a wholly community-owned project is the only real option available, such as the Templederry Community Windfarm in Tipperary, or the projects planned in the Aran Islands and Westmeath.

In Scotland’s Western Isles, projects like these have been found to generate, on average, 34 times more benefit for local communities than commercially operated projects. Even small, wholly community-owned projects can bring about considerable local benefits.

On the Scottish island of Westray, a single turbine operated by the Westray Development Trust produces nearly £300,000 per year for the local community. This money has been used to finance a fuel grant to help tackle fuel poverty in the community, the purchase of iPads and laptops for the local secondary school and even contributed towards the greenkeeper’s salary on the island’s golf course.

But while wholly community-owned wind farms can bring enormous benefits, such projects don’t come cheap, and that’s before you consider the risks associated with managing one. Raising the finance for a wholly community-owned project can easily run into millions, which presents a huge hurdle. Typical wind turbines, which range from about 1.5 to 3 megawatts in size, cost around €1.4 million per megawatt to install.

To alleviate this financial hurdle, Scottish communities are choosing to co-own wind farms alongside private developers, by acquiring either a stake in a project or a number of individual turbines. A model also exists that allows communities to buy a share of the revenues from a project, without owning an actual shareholding, which means they can avoid many of the responsibilities and risks that come with co-owing a wind farm.

Of course, the financial challenges associated with developing wholly community-owned wind farms are not unique to Scotland. In our survey, we found that Irish people would only be willing or able to invest small amounts of capital in wind energy projects, which raises obvious concerns over their ability to raise sufficient finance for community ventures.

As such, co-ownership offers a more viable approach for communities to own a stake in a local wind farm, especially in large-scale projects. But such undertakings can still present operational challenges, especially for communities that lack the experience and expertise needed to manage a wind farm. Turbine failure, fluctuating wind speeds and the costs of repowering or decommissioning turbines at the end of their lifetime are just some of the potential challenges.

The case of the Neilston wind farm in Scotland highlights both the difficulties and the benefits that can arise for communities involved in co-owned projects. In 2013, the local community established a four turbine wind farm through a joint venture with Carbon Free Development Ltd., acquiring a 28% share in the project. Carbon Free took care of development, planning and construction, while it also helped the community to source the finance to buy its share of the project (£950,000 of the overall project capital expenditure of £15.6 million).

The project was initially viewed as a success, but problems emerged when the community faced difficulties repaying its loans due to variable incomes caused by a fall in energy prices and the UK Government cutting subsidies for onshore wind farms. Because of this, the community had to sell its share in the project in 2017 to the Renewables Infrastructure Group. Nevertheless, the community still netted a surplus of around £2 million from the sale, which was set aside for local initiatives such as supports for the elderly, upgrading local infrastructure and greenspaces and creating more facilities for youngsters.

Community ownership or co-ownership won't eliminate our dependence on imported fossil fuels

Acknowledging the challenges that communities face in establishing and managing a wind farm, the Sustainable Energy Authority of Ireland (SEAI) is currently developing a Community Energy Resource Toolkit for onshore wind energy projects. This will support communities who wish to set up small-scale, wholly community-owned wind farms by providing them with practical guidance on technology, business and how to set up and manage a community organisation. A similar type of toolkit will need to be developed if communities are to invest in co-owned projects in the future.

Community ownership or co-ownership won’t eliminate our dependence on imported fossil fuels. But it could possibly be part of the solution to meeting our renewable electricity targets by providing a new source of capital, increasing public support for new wind farm developments and empowering citizens to participate in and benefit from our energy transition.

The Co-Wind project has received funding from Sustainable Energy Authority of Ireland (SEAI) under the SEAI Research, Development & Demonstration Funding Programme 2018, Grant number 18/RDD/281. The views and opinions expressed in this piece are the sole responsibility of the author(s) and do not necessarily reflect the views of the funders

Dr Bernadette Power is a Lecturer at the Department of Economics at the Cork University Business School and Researcher at the Environmental Research Institute (ERI) at UCC. She is an Irish Research Council awardee. Dr Geraldine Ryan is a Senior Lecturer and Vice Dean for Learning & Teaching at the Cork University Business School and the Department of Accounting and Finance at UCCDr John Eakins is a Lecturer at the Department of Economics at the Cork University Business School and Researcher at the Environmental Research Institute (ERI) at UCCDr Ellen O'Connor is a Research Fellow at the Department of Economics at the Cork University Business School and the Environmental Research Institute (ERI) at UCCDr Gordon Sirr is a Postdoctoral Researcher at the Department of Economics at the Cork University Business School and at the Environmental Research Institute (ERI) at UCC.