Wind Energy Community Benefits Guide

Authored by National Renewable Energy Laboratory

Introduction and Purpose

Wind energy development can provide a variety of benefits to the communities where energy projects are located and beyond, with benefits coming in many forms— such as tax revenues, supply chain and manufacturing activities, and job creation. This guide focuses on community benefit agreements (CBAs) and related funds and investments that serve as voluntary mechanisms that developers may utilize to provide additional financial and/or nonfinancial benefits for communities impacted by wind energy projects.

While CBAs and related mechanisms have been utilized for several decades in the U.S. and internationally, the topic of community benefits is continuously evolving as wind energy deployment expands and can have different meanings in different contexts. The approach to establishing community benefits in the wind energy sector is not standardized, and thus, they can be delivered through different means, such as direct payments to a local government or the establishment of a community fund with a local nonprofit or foundation. Community benefits have been provided for both land-based wind energy and offshore wind energy projects, though there are some differences in how they have been used in these sectors. In some cases, community benefits may help advance principles of energy equity and justice through the equitable distribution of benefits within a community.

This guide is intended to serve as an introduction to the concept of community benefits for decision-makers, local stakeholders, and developers as they seek to identify what community benefits mean for them.

What Forms Can Wind Energy Community Benefits Take?

Community benefits can be structured in many ways, but three of the most common structures are:

• Formal community benefit agreements (CBAs) signed by developers and local governments, tribal governments, and/or community organizations
• Community benefit funds established by developers
• Direct investment in local priorities or programs.

Other ways that community benefits may vary include:

• Amount of financial investment
• Methods of distributing funds (i.e., awarded in grants by developer, paid directly to local government)
• Timelines for distributing funds (i.e., one-time payment, annual payments over project lifetime, before and/or after operations begin, tied to project development milestones)
• Stakeholders who are party to agreements or receive funds (i.e., local governments, organizations, schools).

Community benefits may include nonfinancial benefits that often reflect community values or priorities, such as environmental protection, local economic and workforce development, or education. For example, developers might provide benefits like expanding Internet access in a community, sponsoring community events, building a new school playground, or providing training opportunities for local workers joining the wind energy industry.

What Types of Wind Energy Benefits are Not Covered in this Guide?

CBAs and related forms of community benefits may be provided alongside other agreements or economic impacts that serve different purposes, such as:

• Land lease payments to landowners that host wind turbines
• Project labor agreements for construction of wind energy projects
• Tax agreements like payment in lieu of taxes (PILOTs)
• Direct compensation to impacted stakeholders, such as commercial fishermen.

This guide does not seek to cover these other types of wind energy benefits, as they differ from CBAs and related benefit mechanisms in several key ways; namely, the community benefits explored by this guide are unrelated to taxation, are intended to provide benefits to the community as a whole rather than a specific group of people, like landowners, and are separate from impact mitigation measures required by permitting agencies.

Are Community Benefits Required for Wind Energy Projects?

Though community benefits are required by law in some other countries, community benefits for wind energy projects are not currently required by the federal government or most states in the United States.

Some states have issued support or guidance for the use of community benefits, with the state of New York being a notable example; as of 2023, New York requires host community benefits in order for developers to access a more streamlined state permitting process for renewable energy projects.

There is no federal government requirement for community benefits, though some federal agencies encourage the use of community benefits; for example, the Bureau of Ocean Energy Management used a bidding credit in the California offshore wind energy sale in 2023 to incentivize offshore wind energy developers to form community benefit agreements.

Given that most governments do not require community benefits, there is a wide range in the type of benefits that communities that host wind energy infrastructure have received. Developers have different processes for deciding when and where to utilize community benefits, so there is no standard or typical context in which community benefits are provided.

How Are Community Benefits Used for Land-Based Wind Energy?

Community benefits have not been used frequently for land-based wind energy in the U.S., as other mechanisms such as tax revenues and land lease payments have made up a majority of financial benefits.

However, in some cases, developers do provide community benefit agreements and funds for their land-based wind projects. These benefits have taken forms such as host community payments (often based on the size of the project), the creation of community funds attached to projects, and direct donations to community programs.

How Are Community Benefits Used for Offshore Wind Energy?

Community benefits are becoming increasingly common in offshore wind energy development. Community benefit agreements and funds have been established for coastal and island communities impacted by offshore wind energy projects, cable landings, and port projects.

Generally, formal community benefit agreements have been used for offshore wind energy more often than the creation of funds or direct donation to community programs. Outside of these formal agreements with local governments, though, offshore wind energy developers may establish or donate to programs or causes (i.e., workforce development) that benefit a state or region as opposed to a specific community.

Community benefits for offshore wind energy have also included nonfinancial provisions, like:

• Preserving recreation access to beaches throughout construction
• Expanding Internet access for island residents
• Establishing local workforce development programs
• Reducing the local environmental impacts of the supply chain.

How Are Community Benefits Established?

Processes to establish community benefits can vary widely, depending on factors like community context and type of project (e.g., land-based wind project, offshore wind cable landing).

For offshore wind energy, the community benefits process can involve extensive discussions between representatives of impacted communities and wind energy developers. Local representatives may choose to facilitate processes to define and explore potential local impacts from wind energy development, as well as opportunities for investment in community facilities or programs. This work may leverage existing resources that detail local priorities, such as comprehensive plans.

Depending on availability of financial resources and timing, communities may choose to enlist staff, facilitators, or others with technical expertise such as lawyers, to bring additional capacity and perspectives that help forward local priorities. Local stakeholders may choose to initiate these processes on their own, proactively, or in response to outreach from developers which may include proposals of specific benefits.

Learn more about the processes used to develop offshore wind community benefit agreements in the Local Process Examples section.

For land-based wind energy, community benefits have not been used in a uniform manner by wind energy developers, making the process difficult to generalize. Community benefits for land-based wind energy are less commonly delivered through a formal agreement between a government and developer, so there may not always be official discussions between the developer and community about community benefits.

Rather, benefits are often delivered in the form of a community benefit fund or direct payments to local organizations determined by the developer, and the local community may have a varying amount of involvement in decisions about what form benefits take. In some cases, the developer may decide how to set up the benefit mechanism and communities decide where funds are directed; for example, local residents or organizations may decide how to distribute grants from a developer’s community benefit fund.

Additional insights into the process used to develop land-based community benefit agreements can be found in the Local Process Examples section.

How Are Community Benefits Connected to Energy Justice and Equity Issues?

Energy justice can be defined as “the goal of achieving equity in both the social and economic participation in the energy system, while also remediating social, economic, and health burdens on those historically harmed by the energy system.”

One dimension of energy justice is distributive justice, which refers to how equally the benefits and burdens of the energy system are distributed, while another dimension is procedural justice, or fairness within energy decision-making processes; both of these dimensions of energy justice can be connected to community benefits.

By giving communities their fair share of benefits through a community benefit agreement, developers can help ensure that host communities do not receive more burdens than benefits from wind energy projects. Community benefits mechanisms are meant to distribute benefits across the entire community, rather than benefits being concentrated with a smaller group like landowners with turbines on their property, so they can help ensure that there is equitable distribution of benefits within a community, as well.

Additionally, community benefits may in some cases have provisions that are directed toward disadvantaged community members or community members that have historically borne the brunt of burdens from the energy system, which can help advance equity across the energy system.

In terms of procedural justice, the decision-making processes involved in creating community benefit mechanisms and determining where funds are directed can be more or less fair depending on how processes are designed and carried out. If community members have a seat at the table and significant decision-making power over how benefits are used, then the process will be more equitable and benefits are likely to be more aligned aligned with community priorities. On the other hand, if community members don’t feel included or listened to within the community benefit process, they may be less likely to feel that wind energy development was fair or beneficial for their community.

Local Process Examples

Many communities have expressed an interest in better understanding not only the content of community benefit agreements but also the process by which they were established. The following examples provide insights into the ways that local entities and developers collaborated to establish commitments to voluntary benefits within each community.

Offshore Wind Energy Community Benefit Examples