Making the Case for Community Shareholding in Utility-Scale Solar Energy Projects
By Juan Dumas
By adopting a community shareholding model, energy companies can align business objectives with social impact, delivering value to stakeholders while de-risking investments and enabling broader market access.
Stella Zapata, from the Millaqueo Mapuche Community, and Juan Dumas (Meliquina) deliver a pitch at Galicia Bank inviting investors to support the ANTU 18 MW solar project (December 13, 2024).
Addressing Limitations of Current Approaches
While their contribution to climate change mitigation is undisputed, utility-scale solar projects often struggle to demonstrate long-term positive social impact. Construction phases generate short-term employment (typically lasting about 12 months) and temporary procurement opportunities for local businesses, whereas operational phases offer minimal ongoing employment—mainly in maintenance and security. Corporate Social Responsibility (CSR) programs linked to such projects are often underfunded and fail to deliver transformative benefits to communities.
Financial institutions and corporations tend to focus on avoiding harm by mitigating social risks through grievance redress mechanisms, ongoing stakeholder dialogue, and adherence to frameworks such as IFC Performance Standards, particularly PS5 (Land Acquisition and Involuntary Resettlement) and PS7 (Indigenous Peoples). However, even full compliance with these standards does not always address the primary driver of social opposition—communities feeling excluded from economic opportunities generated by projects in their territories.
The Case for Community Equity Partnerships
Partnering with communities as co-developers and shareholders under market-based terms and clear governance structures, offers energy companies key strategic advantages:
1. Demonstrable Positive Social Impact: Provides communities with a sustainable revenue stream, enhancing long-term economic stability.
2. Risk Mitigation: Reduces the likelihood of social opposition through transparent ownership arrangements and alignment of interests.
3. Improved Project Design: Co-developing communities contribute their traditional knowledge from the pre-feasibility stage of the project.
4. Accelerated Permitting: Facilitates faster regulatory approvals and smoother permitting processes when local support is strong..
5. Market Differentiation: Enables companies to operate successfully in complex environments where social opposition is a barrier.
6. Broader Access to Finance: Attracts funding from development banks and impact investors seeking projects that go beyond minimum compliance to deliver measurable positive social outcomes.
7. Enhanced Reputation: Positions the company as a leader in social innovation and ESG performance, increasing eligibility for industry awards and recognition.
ANTU: A First-in-Region Opportunity
The ANTU 18 MW solar PV project, developed in partnership between the Millaqueo community, Meliquina and Sustentar, represents a pioneering model for Latin America. It offers a corporate partner the opportunity to lead the implementation of the region’s first utility-scale solar PV energy project with community equity participation and set a benchmark for future projects in Latin America and globally.