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Community / Agreement reached on £2.2m-a-year Viking Energy community benefit fund

AN AGREEMENT has now been reached on the community benefit fund which is set to receive around £2.2 million a year from the Viking Energy wind farm.

The payments will first begin when electricity starts flowing through the interconnector cable to the Scottish mainland.

The money is set to go towards community projects and schemes.

However, Shetland Community Benefit Fund Ltd will receive an extra £400,000 a year during construction to develop its business plans as well as operate an advanced grant scheme for the isles’ community councils.

The long-awaited signing of the community benefit fund’s head of terms was announced today (Wednesday) – the day after a Scottish firm was confirmed as the contractor for the wind farm’s construction.

There is a feeling from some critics of the Viking Energy wind farm, though, that the community payments would not compensate for the impact on Shetland’s environment.

Chairman of anti-Viking campaign group Sustainable Shetland, Frank Hay, said: “No money in the world can compensate the residents of Aith, Weisdale and Nesting as one of Britain’s largest wind farms is speared into their environment, in reality far too near to peoples’ homes.

“As the tourism sector will undoubtedly suffer a huge blow due to the windfarm, that sector may well deserve to make a very large claim on the fund.

“This project has unfortunately turned out to be almost exclusively about money rather than any genuine attempt to save the planet.”

The advance grant scheme, open to projects proposed by a community council, is not far off the horizon as the Viking Energy construction programme is set to begin next month.

The advance grant scheme will operate three tiers of grants – tier one will provide grants between £50 and £500, tier two between £500 and £5,000, and tier three will provide grants over £5,000.

Applications for tier one will be kept as “simple as possible”, with more detail and information needed for larger projects.

The advanced funding will be divided on a share basis – a community council with at least one Viking turbine within its boundary will receive five shares and community councils with no turbines will receive one share.

Four community councils qualify for five shares: Nesting and Lunnasting; Tingwall, Whiteness and Weisdale; Delting; and Sandsting and Aithsting.

The signing of the heads of terms is not legally binding, but it commits Viking Energy Wind Farm (VEWF) and Shetland Community Benefit Fund (SCBF) to agreeing two legally binding minutes of agreement.

Discussions have already started on the first minute of agreement covering the advanced grant scheme.  It is hoped this will be signed in September.

A second minute of agreement covering the main community benefit scheme, for about £2.2 million a year index-linked, will be signed prior to the wind farm generating electricity via the interconnector cable.

It is expected to pay out £5,000 per installed megawatt (MW) capacity, with the Viking wind farm totalling around 443MW.

This main fund will begin its life once the Viking wind farm starts operating. Ten per cent of the annual income will be available to community councils using a similar share basis to the advanced grant scheme.

The majority of the funding will be available to help sustain and develop Shetland’s communities through grants, loans or investments.

SCBF will develop its aims and objectives, with strategic targets, into a full business plan, with consultation on this expected throughout Shetland.

Each of the 18 community councils in Shetland can nominate someone as a director of SCBF.

The fund “takes no view on any development but exists to negotiate and administer the community benefit funds from commercial renewable energy projects that do go-ahead”.

With the Viking Energy wind farm expected to have a 25-year lifespan, there could be around £70 million released in community benefit money in total.

The Viking development is expected to cost £580 million and it will be the UK’s largest onshore wind farm.

SCBF chair Chris Bunyan said the agreement with Viking Energy Wind Farm (VEWF) “opened up tremendous opportunities to help sustain and develop local communities”.

”It has always been the intention of both SCBF and VEWF that the whole of Shetland should have access to these funds – with the four community council areas within the wind farm boundary getting a bigger share of available funds,” he said.

“The funds will be available for potential projects from Fair Isle to Unst, and from Foula to Skerries.”

Bunyan said it is hoped that developers of other commercial renewable energy projects, whether onshore, offshore or tidal, take a similar view about sharing community benefits throughout the islands.

At this stage the proposed Energy Isles wind farm in Yell, for example, would likely pay out community benefit money to the North Isles only.

“SCBF has a tremendous amount of work ahead of it,” Bunyan added.

“While we have done some preparatory work we could only go so far until we knew whether or not the Viking development was going to happen.

“We will be explaining our plans as widely as possible to the public but we ask for some patience as SCBF has to ensure it moves forward carefully and diligently.

“Finally I would like to thank the directors of SCBF for their work over the past decade and also recognise the effort of VEWF and SSE Renewables staff to help SCBF achieve its aims through this agreement.”

Viking Energy Wind Farm said it was pleased to reach the agreement.

Other direct financial pay-outs from the wind farm project due to start soon include land rent to landowners, such as Shetland Islands Council, and compensation payments to around 200 crofters whose areas of common grazings will form part of the wind farm site.

Shetland Charitable Trust will earn an income from its previous £10 million investment once the wind farm is in operation, but it is not known what this return will be.

Managing director of wind farm developer SSE Renewables Jim Smith said: “We are delighted to reach this stage and we congratulate Shetland Community Benefit Fund on the results of a decade of hard work by its chairman and committee.

“Not least, they have shown patience and perseverance through the years when it was not clear that the wind farm would go ahead.

“Community benefit schemes associated with other SSE renewables projects have had a major positive impact on their local communities with nearly £38 million being made available to over 3,400 projects since 2008.

“We are confident that the funds Shetland can look forward to for nearly three decades to come will do much to enhance quality of life in the islands.”