Analysts believe such payments would make many renewables schemes unviable
Published 18th Oct 2026, 06:00 BST
Every home in the Outer Hebrides would receive a share of the money generated by wind farms under plans being devised by Western Isles Council.
The move is aimed at helping tackle fuel poverty in the islands, which the council said is the highest in Scotland.
It follows a community in the west of Lewis negotiating a £4.5 million-a-year deal over the planned Spiorad na Mara - Spirit of the Sea - offshore wind farm, which would be used to improve housing to cut residents’ energy bills.
However, moves by other councils to secure voluntary agreements with renewables firms have met with mixed success.
Only two firms have signed up to Highland Council’s social value charter, which was launched two years ago to gather income for local communities based on wind farm generating capabilities.
Analysts Biggar Economics said the charter will cost the region’s economy £2 billion because it would make four in five planned onshore wind farms unviable.
Western Isles councillors have agreed to “look at creating an Outer Hebrides energy dividend (or similar scheme) that would give every household a share of the wealth from renewable energy projects, with extra support for low-income families and social housing tenants to help with energy bills.”
It is due to be approved next month. The potential size of dividend to islanders has yet to be disclosed.
A council spokesperson said: “Members of Comhairle nan Eilean Siar [Western Isles Council] have made clear the significant investment in major renewable developments in the Western Isles should result in direct benefit for members of the community.
“It is proposed that the creation of a renewable energy dividend or a similar scheme could create a mechanism to achieve this direct lasting benefit.”
Sustainable development committee chair Donald Crichton added: “While community benefit payments from renewable energy developments are already well established, the Comhairle believes future investment should deliver wider and more transformational benefits than simply annual payments linked to generating capacity.”
He said it would form part of an “investment charter” which was “intended as a framework for constructive negotiation and partnership working.
“Community benefit arrangements, and therefore sign-up by developers, are voluntary and cannot influence planning or consenting decisions.”
However, Simon Cleary, energy transition director at Biggar Economics, said “effective community wealth-building initiatives” should focus on areas such as land payments and business rates, which would produce more income than the Highland Council charter.
Neil Mackinnon, development manager for the Galson Estate Trust in Lewis, where community-owned wind turbines have reaped £4m for locals over the last decade, said a dividend scheme would amount to a further tax on top of business rates, which the sector could not afford.
A renewable industry source said: “These energy ‘dividends’ simply push up the price of electricity to the consumer.
“The councils can ask, but the industry, particularly in the north of Scotland and islands is battling significant cost headwinds, primarily incredibly high transmission charges, rampant inflation in grid connection costs and higher turbine procurement and construction costs, which are threatening the viability of a lot of projects.”
However, a Highland Council report said “developers...support and are willing to contribute to a partnership-led fund, where decisions on spend are taken by a range of partners, including community voices.”