From economic to social impacts – how do companies assess their solutions that advance the energy transition?

The energy transition can enhance energy independence and security of supply by reducing dependence on imported fossil fuels. It can also strengthen regional vitality through renewable energy production and decentralised solutions. Energy value chains extend to housing, transport, industry, food production and many other functions critical to society.

Public actors and industry need to commit to long‑term investments in clean technology, the development of regulation and market mechanisms, and active dialogue with citizens, so that the transition can be implemented in a fair, economically viable, and ecologically sustainable way. Fundamentally, this is about shifts in attitudes and values across society and industrial sectors.

To enable such broad reform, developers and users of new energy technologies and solutions need concrete and evidence‑based information on the wide‑ranging benefits of their innovations. In addition to economic impacts, companies need to understand the effects of their solutions on nature, people and society at large, so that the added value of their solutions can be optimally developed and communicated to the right stakeholders.

How do companies operating in the energy sector currently assess the impacts of new technologies and investments? To support the preparation of new research projects, we interviewed 12 companies about their approaches and needs related to impact assessment. The companies ranged from startups to large enterprises. The interviewed companies represented technology developers, project developers, and local energy utilities. We also gained additional insights from a consultancy supporting the energy transition, a venture capital investor, and a local development agency.

According to the interviews, the evaluation practices are most advanced in areas that are critical to business: assessing economic impacts and the emission reductions required by customers, markets and regulation.

Many of the interviewed companies use evaluation models and tools that allow profitability and emission reductions to be assessed from both the company’s and the customer’s perspective. Some technology and project developers have built broader techno‑economic feasibility assessment models to support sales and collaboration. These models combine anticipatory assessment of economic impacts and emission reductions in the local energy ecosystem. Companies also considered the environmental impact assessment required in project development permit processes important. However, this expertise is not typically built in‑house; assessments are largely outsourced to independent consultants.

In most interviewed companies, the assessment of social impacts remains unsystematic because the focus is on regulatory and customer‑driven impacts that are concrete and measurable. Social impacts are mainly assessed at the scale required in environmental impact assessment processes. Interviewees involved in project development emphasised interaction with local residents and decision‑makers as critically important, as local opposition was seen as a significant challenge in promoting the energy transition. In these societal interactions, fact‑based economic and environmental arguments often served as primary means of convincing local communities of the benefits.

Assessing social impact is challenging because these impacts are more difficult to analyse and quantify. When asked, interviewees nevertheless described social impact using many criteria, including direct and indirect employment effects, tax impacts, how municipalities can position themselves as promoters of clean energy, societal resilience, and cooperation with local educational institutions and other actors. Some interviewees felt that fact‑based and quantitative assessments could help elevate social impacts to be on par with other decision‑making criteria.

Summarised from the companies’ perspective, the key challenges in assessing the impacts of new solutions are:

• Practices for assessing economic and environmental impacts vary between companies and countries. Companies interviewed faced difficulties determining appropriate baselines for comparing emission reductions and calculating the carbon footprint of entire projects according to different market and customer requirements. Regulatory delays and uncertainty add to these challenges, especially for new technologies.
• Environmental assessment often focuses narrowly on emission reductions, leading to insufficiently comprehensive examination of broader ecological effects.
• Smaller companies, in particular, struggle to build internal assessment expertise. Different dimensions of assessment are examined separately in different decision‑making contexts, and many assessments are outsourced to consultants. While expert consultants help standardise and validate assessments, it becomes harder for companies to build a coherent knowledge base and overall picture of economic, social and environmental impacts.
• Companies lack methods for understanding how to improve social acceptance of new solutions. This would require interaction approaches that enable a deeper understanding of stakeholders’ values, concerns and assumptions.

The mapping shows that many companies in the energy sector already have assessment practices developed for recurring needs. These practices help justify solutions to customers using key business‑critical economic and environmental metrics. However, a central question remains: how can the added value of solutions and investments be demonstrated more holistically so that market entry of new solutions, local permitting processes and the clean energy transition can proceed?

Impacts are often directed at, for example, industrial renewal, regional economies or citizens. The interviews showed that companies recognise many of these positive impacts, even if they have not yet been made concrete or formulated into clear goals and indicators. Addressing this requires broader, future‑oriented and data‑driven impact assessment methods. On a larger scale, especially large companies have developed their sustainability reporting in response to EU legislation, but current ESG reporting, being company‑level and backwards‑looking, does not provide sufficient understanding of the overall or long‑term impacts of individual solutions.

In upcoming research projects, we will seek to deepen understanding of these challenges and develop assessment models and practices for companies operating in environments where changes and impacts are increasingly tied to local ecosystems. Anticipatory and data‑driven impact assessment offers an opportunity to make the value produced by companies visible on a much broader scale, help stakeholders identify shared goals, and support companies in making more impactful decisions.