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Unleashing the potential of Crowdfunding for Financing Renewable Energy Projects

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Crowdfunding a perfect solution to boost renewable energy projects

A new financial model promises to increase funding for renewable energy projects exponentially. Crowdfunding platforms have already produced impressive results in propagating renewable energy in northern Europe.

Society
Energy

The shift to renewable energy systems (RESs) in Europe is losing steam due to tighter financing. Enter CrowdFundRES, an EU-funded project focused on speeding up renewable energy growth by leveraging crowdfunding to finance renewable energy projects. “The project is aimed at both individual retail investors who want to invest even small amounts in renewable energy projects and RES project developers who face financing challenges through conventional avenues,” says project coordinator Pablo Alonso from WIP Renewable Energies. CrowdFundRES also targeted high-quality renewable energy crowdfunding platforms which facilitate transactions between citizens and project developers. New guidelines to help RES crowdfunding To achieve its aims, the project first researched the public perception of crowdfunding and its challenges across Europe with respect to renewable energy through detailed surveys, case studies and workshops. “We developed and applied guidelines that support better practices in crowdfunding such projects, in addition to supporting the relevant market, regulatory framework and policymakers,” highlights Alonso. The project team then vigorously promoted the crowdfunding concept and its advantages to stakeholders and funders. One of the project’s key outcomes is the ‘Guidelines for Investors in Clean Energy Projects via Crowdfunding’, which frees investors from having to research and analyse potential renewable energy investments. CrowdFundRES has also articulated guidelines for crowdfunding platforms and RES project developers, along with an eBook that helps platforms, investors, developers and policymakers to exploit crowdfunding as a mechanism to deliver new market access to investors of sustainable projects and improve policy. Western Europe is already benefiting By showing how crowdfunding can finance renewable energy projects, CrowdFundRES deliverables will contribute to increase the share of renewable electricity, heating and cooling. The project has successfully analysed 18 crowdfunding renewable electricity project campaigns run by the crowdfunding platforms involved, resulting in 110 MW of additional installed capacity. “One such project showed energy savings of 37 % and around 270 tons in CO2 reductions each year,” reveals Alonso. “Overall, around EUR 29.5 million has been successfully crowdfunded through these project campaigns,” he adds. At least 30 new crowdfunding platforms will emerge across the project’s six target countries – Belgium, Germany, France, the Netherlands, Austria and the United Kingdom – helping to realise more than 300 MW of new renewable energy projects by 2020. The figure is expected to grow exponentially as crowdfunding expands to other countries and involve larger projects. People power advances renewable energy In France alone, incentive schemes supported by the project may have an immense impact. The French Ministry of Energy is offering a new incentive to sell electricity at a higher price of around 5 % for 20 years if RES developers use a crowdfunding platform to co-finance 40% of its equity to ‘local’ investors for at least 3 years. It is expected that around 8 GW of renewable capacity will be built between 2018 and 2021. This means that French citizens could contribute up to EUR 300 million to the roll-out of renewables. “This financing model can be a very useful tool in building public support for RES projects,” clarifies Alonso. “If citizens are involved with renewable energy development through crowdfunding, they will accept renewable energy infrastructure in their areas more easily and will develop a sense of ownership,” he explains. Other project impacts and benefits include reduced time for investment authorisations, as well as improved policy, regulatory and market operations for crowdfunding in target countries. Overall, the project reached 660 000 people, including crowdfunding experts, renewable energy developers and professionals, NGOs, environmental organisations, policymakers and the wider public. It is more than likely that the successes of the platforms will be replicated in other EU countries, breathing new life into renewable energy projects. With or without state funding, renewable energy is here to stay.

Keywords

CrowdFundRES, renewable energy, crowdfunding, investors, RES project, financing model, energy infrastructure, citizens

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