Renewable Energy Benefit Sharing: a win-win for climate and communities 

25 February, 2025

By Duygu Kutluay

Shifting from fossil fuel-based energy to renewables isn’t just a matter of swapping one energy source for another; it’s about fundamentally rethinking who benefits and who bears the costs. In the fossil fuel era, profits often flowed to a single company, while the externalities—pollution, health impacts, and economic disruption—were left to burden entire communities.

Renewable energy, on the other hand, offers a completely different paradigm. It comes in all sizes and shapes, from small-scale solar panels on rooftops to massive wind farms offshore. The beauty of renewables lies in their versatility and adaptability, allowing solutions to be tailored to meet the unique needs and priorities of each community. This diversity opens the door to creating a fair, clean, and prosperous energy future.

Benefit sharing mechanisms are at the heart of this transformation. They ensure that renewable energy projects don’t just “land” in communities but actively involve and benefit them. When done right—not as a greenwashing exercise but through meaningful engagement and participation—benefit sharing creates win-win outcomes for developers and communities alike while advancing climate goals.

So, what exactly does benefit sharing look like? Let’s explore the array of options and measures that can, when done right, make the renewable energy transition lead to a fairer and more inclusive future. 

Benefit-sharing can take many forms. Financial compensation models, such as direct payments or land leases, inject immediate funds into local communities or through municipality taxes, along with formation of community funds. Infrastructure investments, like improved roads or schools, provide enduring local value, while in-kind contributions—such as job training or environmental conservation initiatives—enhance long-term community capacity and resilience. Other strategies, like energy discounts and job creation during project construction, offer direct economic relief. Community ownership, where locals share in profits and decision-making, builds pride and engagement, while spending its profits on things that are more difficult to deliver, like smart retrofit for households or local businesses in need. 

Across Europe, municipalities, communities and local businesses are harnessing renewable energy to not only address climate challenges but also deliver tangible benefits to their communities. These models demonstrate diverse approaches, ranging from solar energy cooperatives to wind farm initiatives, showcasing how renewable energy projects can foster financial savings, enhance local engagement, and stimulate economic growth.

In Amsterdam, solar cooperatives like Ecostroom enable local residents to save on electricity bills while generating fees for host businesses. Similarly, London’s community-owned solar panels on social housing estates fund educational grants and provide financial returns to investors. 

Wind farms in Austria’s Burgenland region have achieved energy independence and economic growth by transforming the area into a renewable power exporter, while Poland’s Margonin project contributes a quarter of the municipal budget, funding infrastructure and social services. 

In Greece, wind farms on Evia generate €3.9 million annually in local taxes, supporting fire trucks, flood protection, and rural hospital improvements. Spain’s Andévalo photovoltaic park, has managed to create a habitat of bees with 162 hives and a crop of honey plants donating the produced honey to the local women’s association and London’s Energy Garden initiative combines solar power with community gardening, fostering local engagement and addressing environmental challenges.

It is obvious that benefit sharing is the key to achieving the speed, scale and fairness of the energy transition. It isn’t just about spreading the wealth; it’s about building trust. Projects that engage communities early and transparently tend to face less opposition and enjoy greater success. On the flip side, poorly executed benefit sharing can deepen divides. Benefit sharing must go beyond scattered, goodwill (or greenwashing)-driven examples implemented at the discretion of developers. It should become a standard practice that every renewable energy project is required to uphold.

To ensure benefit sharing mechanisms in renewable energy projects have meaningful impact and are not perceived as greenwashing, it is vital to address key concerns through robust governance, strategic planning, and community-centric approaches. Strategic coordination among governments, developers, and communities is essential to prevent duplicated efforts and engagement fatigue. 

Project developers must prioritise procedural fairness by involving communities early and transparently, ensuring trust and equitable distribution of benefits. As benefit sharing could mean so many different things, it is of vital importance for communities to be equipped to negotiate for what they feel is important. Clear guidelines and support from central governments can empower local authorities to manage these programs effectively, while holding developers to certain standards to foster long-term community resilience and acceptance.

Note: All examples included in this blogpost and much more can be found in our Local Energy Solutions map that showcases hundreds of  inspiring examples of how individuals, communities, cooperatives, municipalities, and businesses are successfully implementing energy transition solutions.