The Scottish Government has made public a report containing an initial business case for the establishment of a pre-planning loan fund for community renewables projects. The hope is that an initial loan from the fund will help communities which are considering renewables projects to overcome concerns about how they will finance a scoping exercise and obtain planning permission. Earlier this year, when announcing the feasibility study which produced the report, Environment Secretary Richard Lochhead described the lack of available funding being identified as a "major stumbling block" for landowners, farmers, local business and communities who wish to develop and own renewable energy projects.
Once a project has passed these hurdles, there is far greater scope for private sector financing, in relation to which there is a maturing market of funding options. Together with a community's ability to benefit from feed-in tariffs for the export of excess electricity to the grid, there is scope for communities to earn not insignificant sums from renewables projects, in turn making such projects eminently fundable. The suggestion in the announcement of the proposal is that one 2.5 MW turbine can provide a net return of £4.8 million over a 20 year period.
Estimates given for the scope of community projects to contribute to Scotland's renewables target are of the "potential for nearly 900 MW of electricity being produced from wind turbines at some 340 sites, about 23 MW of hydropower and about 800 MW of biomass heating capacity across 460 installations. On the heat side alone, this equates to a 300 per cent increase on the 155 small and medium scale systems currently operating in Scotland".
If these proposals result in a pre-planning fund, this will indeed be a significant further boost to the communities renewable sector, likely to encourage a whole new raft of projects, predominantly in rural Scotland. With Scotland's commitment to reducing carbon emissions raised again, now to a reduction of 80% by 2050, this is a welcome initiative.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
