As much as 90% of world energy use comes from fossil sources. Meanwhile in 2017, only 0.7% of global energy use derived from solar power and 1.9% from wind (Statistical Review of World Energy, 2021). Some of the highly contested issues stopping the energy transition from materialising are land requirements and high upfront investment costs. Decentralising renewable energy production through cooperatives could be a solution to both. Local renewable energy cooperatives allow the financial burden of purchasing renewable energy equipment to be spread amongst a voluntary group of people, all while relying less on new land.

Cooperatives, then, allow residents without renewable energy potential, perhaps due to lack of space or property rental restrictions, to gain the potential through others. A cooperative project, for instance, may involve a street of houses in which the participants collectively decide to install solar PV panels on the roofs of suitable participating homes, whilst all participants' equally benefit from the renewable electricity production. This enables more people to consume renewable electricity and save on costs. Furthermore, all participants have a democratic say within the decision-making of the project, unlike a traditional electricity utility contract. This type of model can also be applied for microgrids, local biogas installations, gasifiers and other projects.

Local governments can support and facilitate such initiatives. They can set up a so-called “support coalition” that can support experiments, aid cooperative agreements, mobilise resources and provide regulatory support, such as subsidising part of the energy system. Municipalities can also become cooperative members themselves, directly consuming or selling the energy produced and gaining an additional instrument to implement municipal energy policy.