The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project

A Social Accounting Matrix Approach

Research output: Working paperDiscussion paper

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Abstract

As demand for electricity from renewable energy sources grows, there is increasing interest, and public and financial support, for local communities to become involved in the development of renewable energy projects. In the UK, “Community Benefit” payments are the most common financial link between renewable energy projects and local communities. These are “goodwill” payments from the project developer for the community to spend as it wishes. However, if an ownership stake in the renewable energy project were possible, receipts to the local community would potentially be considerably higher. The local economic impacts of these receipts are difficult to quantify using traditional Input-Output techniques, but can be more appropriately handled within a Social Accounting Matrix (SAM) framework where income flows between agents can be traced in detail. We use a SAM for the Shetland Islands to evaluate the potential local economic and employment impact of a large onshore wind energy project proposed for the Islands. Sensitivity analysis is used to show how the local impact varies with: the level of Community Benefit payments; the portion of intermediate inputs being sourced from within the local economy; and the level of any local community ownership of the project. By a substantial margin, local ownership confers the greatest economic impacts for the local community.
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-75
Number of pages76
Volume08
Publication statusPublished - Oct 2008

Fingerprint

Revenue sharing
Economic impact
Social accounting matrix
Local communities
Renewable energy
Payment
Ownership
Financial support
Developer
Local economy
Renewable energy sources
Income
Intermediate inputs
Sensitivity analysis
Margin
Wind energy
Public support
Economics
Goodwill
Electricity

Keywords

  • renewable energy
  • rural economic impacts
  • revenue sharing
  • community ownership

Cite this

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title = "The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project: A Social Accounting Matrix Approach",
abstract = "As demand for electricity from renewable energy sources grows, there is increasing interest, and public and financial support, for local communities to become involved in the development of renewable energy projects. In the UK, “Community Benefit” payments are the most common financial link between renewable energy projects and local communities. These are “goodwill” payments from the project developer for the community to spend as it wishes. However, if an ownership stake in the renewable energy project were possible, receipts to the local community would potentially be considerably higher. The local economic impacts of these receipts are difficult to quantify using traditional Input-Output techniques, but can be more appropriately handled within a Social Accounting Matrix (SAM) framework where income flows between agents can be traced in detail. We use a SAM for the Shetland Islands to evaluate the potential local economic and employment impact of a large onshore wind energy project proposed for the Islands. Sensitivity analysis is used to show how the local impact varies with: the level of Community Benefit payments; the portion of intermediate inputs being sourced from within the local economy; and the level of any local community ownership of the project. By a substantial margin, local ownership confers the greatest economic impacts for the local community.",
keywords = "renewable energy, rural economic impacts, revenue sharing, community ownership",
author = "Grant Allan and Graham Ault and Peter McGregor and Kim Swales",
note = "Discussion paper.",
year = "2008",
month = "10",
language = "English",
volume = "08",
pages = "1--75",
publisher = "University of Strathclyde",
edition = "11",
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The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project : A Social Accounting Matrix Approach. / Allan, Grant; Ault, Graham; McGregor, Peter; Swales, Kim.

11. ed. Glasgow : University of Strathclyde, 2008. p. 1-75.

Research output: Working paperDiscussion paper

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T1 - The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project

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AB - As demand for electricity from renewable energy sources grows, there is increasing interest, and public and financial support, for local communities to become involved in the development of renewable energy projects. In the UK, “Community Benefit” payments are the most common financial link between renewable energy projects and local communities. These are “goodwill” payments from the project developer for the community to spend as it wishes. However, if an ownership stake in the renewable energy project were possible, receipts to the local community would potentially be considerably higher. The local economic impacts of these receipts are difficult to quantify using traditional Input-Output techniques, but can be more appropriately handled within a Social Accounting Matrix (SAM) framework where income flows between agents can be traced in detail. We use a SAM for the Shetland Islands to evaluate the potential local economic and employment impact of a large onshore wind energy project proposed for the Islands. Sensitivity analysis is used to show how the local impact varies with: the level of Community Benefit payments; the portion of intermediate inputs being sourced from within the local economy; and the level of any local community ownership of the project. By a substantial margin, local ownership confers the greatest economic impacts for the local community.

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BT - The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project

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