The renewable energy industry has predicted the Localism Bill published yesterday by the government will result in the biggest shake-up in UK planning law since the 1950s, presenting fresh challenges and opportunities to the fast-expanding sector.

The bill looks set to have a major impact on renewable energy projects as councils, communities and individuals are permitted a much greater say in planning decisions, raising the prospect of more intense battles between developers and local groups opposed to projects such as wind farms.

Arguably the biggest change contained in the bill are new rules allowing for local referendums where people, councillors and councils can instigate a vote on any local issue, including planning proposals.

The new referendum powers are likely to present a major challenge to wind farm projects, some of which have faced fierce opposition from local groups. Whilst non-binding, the results of any referendum must be taken into account by decision-making public authorities and will increase pressure on planners to block projects that are unpopular at a local level.

Meanwhile, new powers will allow communities to give planning approval to chosen sites on local land. By creating neighbourhood plans, residents can define specific developments that have automatic planning permission or, for more complex cases, automatic outline permission so only the details need to be approved. Neighbourhoods can also establish general policies that will steer decisions on traditional planning applications.

In addition, the bill will introduce a new requirement for prospective developers to consult local communities before submitting planning applications for very large developments, in a similar manner to the soon-to-be abolished Infrastructure Planning Committee.

Councillors will also be free to champion or oppose developments without being challenged or their decisions being overturned because of accusations of inflexibility or unreasonable bias.

“We believe that communities should have the freedom to manage their own affairs in their way, and be empowered, not suppressed, by Government,” Decentralisation Minister Greg Clark said. “The Bill will enact new rights allowing local people to shape and influence the places where they live, revolutionising the planning process by passing power down to those who know best about their neighbourhoods.”

Publicly the renewable energy industry offered the new proposals a cautious welcome, although privately there are bound to be concerns the reforms will make it easier still for councils to block wind farm developments, despite the fact the planning approval rate for renewable energy projects is already at an historic low.

Good Energy chief executive Juliet Davenport said she was confident the regulations would not pose problems for new wind farms if implemented rationally.

“Good Energy is reassured that this bill will not cause any additional planning complications for renewable projects, so long as communities are kept properly informed and decisions are based on sensible, intelligent information, not made-up science,” she said. “However, we are disappointed that references to business rates in this Bill do not go far enough to include Greg Clark’s proposal that would see communities benefit from wind farms operating in their areas.”

Meanwhile, trade body RenewableUK predicted the changes would encourage wind farm developers to step up efforts to collaborate with local communities when developing project proposals.

“There is no doubt that this bill, once it becomes law, will dramatically alter the rules for developing renewable energy projects, and the industry will have to follow suit,” said Charles Anglin, RenewableUK’s director of communications. “We could be looking at a radically different planning process, with councillors allowed or even encouraged to campaign ahead of the decision, and the result in some cases being made by referendum. We will need to consult with communities ahead of logging an application and make sure that the economic and community benefits are clear.”

In addition to the planning reforms, the bill also confirms that the coalition will retain the community infrastructure levy, which was introduced under the Labour government earlier this year and allows local authorities to impose charges on developers to contribute towards supporting infrastructure costs