The Welsh Government must find a way to retain a greater share of the incomes produced from commercial renewable energy projects in Wales so that communities can enjoy genuine social and economic benefits from the transition, the IWA argues in its new report, Sharing Power, Spreading Wealth. 

The shift to renewable energy sources like wind, hydro and solar presents an opportunity to retain income and build resilient communities. But currently, this wealth all too often leaks out of Wales.

Setting up a Wales Wealth Fund, an approach used by countries such as Norway, could be the first step towards making sure wealth generated in Wales flows back into Welsh communities.

Former coalfield communities in particular have suffered from the extraction of Wales’ resources, and seen little to no long-term positive impacts.

This has contributed to sustained economic stagnation after the decline of mining and large-scale de-industrialisation. We must avoid repeating past mistakes. Across the whole of Wales, communities that host renewable energy projects must not only retain income from commercial developments but play a meaningful part in owning local renewable energy projects to ensure long-term benefits are retained.

Facts and figures

• 54% of wind farm proposals and 44% of solar farms at various stages of development are located within the heart of the South Wales Valleys, which remains one of the most deprived areas in the UK (The Coalfields Regeneration Trust, Wales)
• Economic benefits from renewable energy projects flow out of Wales’ communities and into the commercial sector, and often to other nations, due to a lack of Welsh Government policy guidance
• Lack of policy guidance has led to an inconsistent and uneven playing field across Community Benefits Funds (CBF) that limits the long term economic benefit of renewables developments for host communities in Wales
• Welsh Government must set the terms of exchange with the commercial renewable energy sector and look to new approaches to retain a greater share of economic benefit within communities across Wales and secure a socially just transition
• Welsh Government should establish a sovereign wealth fund for Wales, to capture at least 15% of net revenues made from future large scale onshore and offshore wind projects with an installed capacity over 50 MW in Wales
• Other recommendations include policy guidance to reform and mandate CBF and compelling all new commercial renewable projects above 5MW to have a minimum level of 15% of community and local ownership by 2028.