Engineering news
'Crowd-funding', or the practice of funding a project by raising money from a large number of individual investors, typically via the internet, is likely to play an increasing role in building new renewable energy projects in Europe, a solar industry finance event has heard.
The conference, organised by Dutch firm Solarplaza, heard that investors were pioneering “participation in multi-million European renewable energy projects with investments from £5 up”. “How big can crowdfunding for wind and solar energy projects become?” asked Bruce Davis, founder of Abundance Generation. The European Commission made a statement in 2012 on the potential of crowd-funding to play a role in long-term projects. Individual investors in renewable energy could be motivated by the belief that their money was being invested in ethical, community-friendly schemes. “That makes them investors who are there for the long-term, rather than people who are into crowdfunding based on hype,” Davis said.
Abundance Generation has so far raised about £7.3 million from more than 1,500 investors via crowdfunding. It is currently backing 11 projects. Returns for investors can be fixed or variable and have an 18-25 year life.
The subsidies structure in the UK makes it one of the most promising markets in Europe for solar, according to Solarplaza. This is despite the curtailment of the Renewables Obligation for the sector next year, meaning that large-scale projects would be stopped. In the future, individual investors could invest in solar schemes through crowdfunding platforms, allowing them to contribute to projects. This could give utilities access to funds outside the financial mainstream to build solar energy schemes. Given the situation with the Renewables Obligation, it was possible that many smaller schemes could be built in the UK.
The new Contracts for Difference scheme, paid for by the consumer, will help underwrite the development of renewable energy and reduce reliance on imported gas. Some £40 million a month is currently sourced through crowdfunding, including many real estate developments, according to Solarplaza. Rather than web-based schemes such as Kickstarter, which allows investors to develop products, crowdfunding focuses on investment in projects for financial returns.
Davis said: “Crowdfunding is about the involvement of the individual investor in the project. They need to feel it's about more than just returns.”