Department of Energy Security & Net Zero consults on community benefits schemes and shared ownership models for low carbon energy infrastructure

On 21 May 2025, the Department for Energy Security and Net Zero (DESNZ) published a working paper outlining significant proposed reforms to introduce mandatory Community Benefits schemes and Shared Ownership models for low carbon energy infrastructure across England, Wales, and Scotland. The proposals, currently under consultation, are applicable for both the Town and Country Planning Act regime and the Planning Act regime. These proposals are expected to have wide-ranging implications for developers, investors, local authorities, community organisations, and other stakeholders. Early engagement with the consultation is strongly encouraged to help shape the final framework and ensure readiness for the potential changes.

Mandatory community benefits scheme

The proposed reforms would introduce primary legislation to create powers for a mandatory Community Benefits scheme, with secondary legislation and guidance to set out the technical details. The scheme would include low carbon energy infrastructure with at least 5 MW installed capacity.  The aim is to ensure a consistent and fair approach to community benefits across all developers and communities, levelling the playing field and promoting transparency.

Timing and Application

The scheme could come into force by the end of 2027 at the earliest, with no retrospective effect. A specific development stage will be set as the cut-off for inclusion. Until the scheme is in force, DESNZ expects developers of projects outside the cut-off to continue engaging with local communities and agreeing voluntary benefits packages in line with existing guidance.

Scope and Thresholds

The scheme is proposed to apply to a wide range of low carbon energy infrastructure, including offshore and onshore wind, solar, marine (tidal stream and hydro), nuclear, power CCUS, hydrogen to power, battery energy storage systems, and long duration energy storage. District heat networks are excluded.

The minimum threshold for inclusion is proposed at 5 MW installed capacity, with projects below this encouraged to provide voluntary benefits. DESNZ is also considering technology-specific thresholds to account for differences in financial models and viability.

Level and Use of Benefits

Two models are under consideration for calculating the level of benefit:

Fund contribution based on installed generating capacity (£/MW), or

Fund contribution based on actual generation output (£/MWh per year over the asset’s operational lifetime).

The working paper explores the administrative and financial implications of each model, including reliability of income for community funds and potential impacts on consumer costs.

Community benefit funds are intended to be flexible and tailored to local needs, with early engagement between developers and communities to determine their use. DESNZ does not intend to prescribe specific uses for these funds, recognising the diversity of local priorities.

Administration

The scheme proposes transparent governance structures, with a Fund Administrator appointed by the developer and led by the community. All governance arrangements must be in place at least one year before the first payment is due. DESNZ will issue guidance to support administrators and ensure fair representation and engagement of communities.

Enforcement

Developers will be ultimately responsible for compliance, including the actions of appointed fund administrators. Enforcement will focus on dispute resolution, with civil penalties for non-compliance or malpractice, calculated based on the seriousness of the breach and its impact. Penalties will be redistributed to affected communities. The scheme will not be linked to the planning system, as community benefits are not a material planning consideration.

Mandatory shared ownership

DESNZ is also consulting on the introduction of mandatory shared ownership for new renewable electricity generation projects in Great Britain with an expected installed capacity of 5 MW or more, including onshore and offshore wind and solar. Shared ownership includes any ownership structure which involves a community group as a financial partner for the lifetime of the project for example joint ventures, shared revenue and split ownership.

The government is required under the Infrastructure Act 2015 to review the effectiveness of the current voluntary approach to shared ownership and, if found lacking, to consider mandating it. The consultation seeks evidence on the success of voluntary shared ownership, barriers to participation, and the potential benefits and risks of a mandatory approach.

Implications and Next Steps

Mandatory shared ownership is intended to increase community participation, deliver financial and social value, and support the rapid deployment of low carbon energy to achieve net zero by 2050. 

However, DESNZ acknowledges that this could introduce additional complexity and costs, potentially affecting project viability and delivery timelines. A regulatory framework and enforcement regime would underpin any mandatory approach, with policies to support community engagement.

Next steps

These proposed reforms represent a significant shift in the approach to community benefits and shared ownership in the low carbon energy sector. Stakeholders are strongly encouraged to engage with the consultation process to help shape the final framework and ensure that it is workable, transparent, and delivers value for both communities and developers. For further information or assistance with the consultation, please contact the CMS team.

The article was co-authored by Anna Andráskó and Jasmine Kobewka.