Commentary on Sections Schedule 6: Community electricity right regulations Part 1: The Right to Buy
221.Paragraph 1 defines ‘right to buy regulations’ as those regulations made under subsection (1) of section 38.
222.Paragraph 2 sets out the parameters for the kinds of renewable electricity facilities that will come under the community electricity right regulations. Paragraph 2(2) provides that these regulations will not apply to any renewable electricity generation facility under 5MW of total installed capacity.
223.Paragraph 2(3) allows the Secretary of State to specify that the community electricity right regulations may apply to a particular type of renewable electricity facility; such facilities may be defined in terms of the renewable source of energy used, the technology used, the electricity generation capacity, and whether the facility is land-based or offshore.
224.Paragraph 3 requires the Secretary of State to set out the criteria for identifying qualifying renewable electricity facilities under the community electricity right regulations. Paragraphs 3(2) and (3) make further provision about sites that have been expanded or where there is more than one renewable electricity facility. In relation to existing sites that have been expanded these regulations may apply to any facility where the total installed capacity of that site is expected to be 5MW or more.
225.Paragraphs 3(4) to (6) allow the Secretary of State to make further provision about the kinds of renewable electricity facilities that may be excluded from the community electricity right regulations; this is defined as an excepted facility. Excepted facilities may include community owned facilities, facilities where the community owns a stake, and those facilities that are not participating in statutory energy schemes (for example those not participating in the Feed-In Tariff, Contracts for Difference or Renewables Obligation schemes).
226.Paragraph 4 defines the promoter of a qualifying facility as the person responsible for developing the qualifying facility, and makes provision to identify the promoter in cases where that person is not also the facility operator.
227.Paragraph 5 requires the Secretary of State to make further provision in secondary legislation about the community who could exercise the right to buy. This may be in reference to the community’s geographical location relative to the facility, its distance from the facility, the number of residents or any administrative boundaries.
228.Paragraph 6 requires the Secretary of State to make further provision about which individuals and groups may exercise the right to buy. Further detail on how this may be defined in relation to individuals and groups is set out in this paragraph. Paragraph 6(3), (4) and (7) allow the Secretary of State to make further provision about the individuals and groups who may not exercise the right to buy. Sub-paragraphs (8) and (9) provide further provision about people who may be connected for the purpose of the regulations.
229.Paragraph 7 makes further provision about the kinds of stake that may be offered through the community electricity right regulations. This may include shares, any other interest in a body other than a company, an equitable interest, a royalty instrument or a loan.
230.Paragraph 8 provides that the regulations must give the designated promoter or facility operator a choice of at least two different kinds of stake that may be offered. It is then for the promoter or facility operator to make a decision on the kind(s) of stake offered to the community. The promoter or facility operator must consult (e.g. with the community) and take the results of this consultation into account before choosing the kind(s) of stake that they will offer.
231.Paragraph 9 requires the Secretary of State to make further provision about setting the price of the stakes in a qualifying facility. It includes reference to ‘a measure of fair value’ when setting the price of the stake offered to communities; this means that the price of the stake should not be offered at a discounted price to the community.
232.Paragraph 10 makes further provision about the total value of the offer to communities. Paragraphs 10(2) and (3) specify that the minimum size of stake that must be offered by developers is to be set in secondary legislation, but that this must not be greater than 5% of total capital costs of the development of the facility. Paragraph 10(5) allows the Secretary of State to make further provision about the calculation of the total capital costs. The minimum size of stake prescribed in secondary legislation may vary depending on the technology or size of the development up to this 5% cap. It is intended that very large developments will not be required to offer a stake which it would be unrealistic to offer the community.
233.Paragraph 11 makes further provision about the procedure for buying a stake, which is defined as the purchase procedure in paragraph 11(1). It establishes an initial application procedure in paragraph 11(4) where the stakes in the renewable electricity facility are offered. The offering of stakes cannot begin until after the renewable electricity generation facility has secured planning consent. The meaning of planning consent is defined further in paragraph 11(6).
234.Paragraph 12 makes further provision for when there is either excessive or insufficient take up of the stakes offered for a renewable electricity facility. For example, paragraph 12 (2) establishes a secondary period following the application period. In this secondary period it may be possible to offer stakes to a wider community.
235.Paragraph 13 allows further provision in regulations on the subsequent disposal of a stake after it has been bought. This may include imposing restrictions or prohibitions on the disposal of a stake on individuals or communities, with exceptions.