Crowdfunding for renewables in the energy transition

Crowdfunding can be a highly effective way to bring the public closer to the energy transition

In order to meet the ambitions in the Dutch Climate Law, a transition from fossil fuel to renewable energy is inevitable. However, the implementation of renewable energy projects faces multiple challenges in the Netherlands.

Two of these challenges are acceptance among citizens and finding sufficient financing for the projects. As a response to these challenges, crowdfunding has been increasingly recognized and used as an alternative means of finance to the traditional funding tools in the renewable energy sector to overcome these challenges.Crowdfunding for a green energy future

Crowdfunding for renewable projects is still a relatively new concept. To see what crowdfunding can do for the energy transition, lessons can be learned from recently-funded projects.

Three examples of previous successfully-funded energy schemes are Peters Biogas in Luttelgeest, Van Eijck Groen Gas in Alphen and a bioenergy installation of BeGreen in Hilversum.

For the Van Eijck Groen Gas project there has been a successful second financing round for the expansion of the bioenergy installation. There have also been some successful crowdfunding campaigns for solar and wind, such as the Apeldoorn solar project and Westermeerwind windfarm.

These experiences show that entrepreneurs are very positive about engaging with crowdfunders for the development of renewable energy projects.

Crowdfunding provides the entrepreneur with the possibility to explain and present their project to the larger public. When information is shared, renewables projects become more tangible and understandable, which has a positive influence on the crowd. It can even happen that funders transform themselves into ambassadors for the project. This also happens because crowdfunding offers the funders the possibility to receive financial benefits from the realization of the renewable project.

Investor perspectiveà‚ 
In order to host successful crowdfund campaigns it is important to understand the behaviour and preferences of the crowd.

We can learn more about this from a study conducted by Stephanie Platschorre of Erasmus University which examined crowdfunding behaviour with regard to investing in bioenergy projects. The research was conducted among three Dutch platforms: OnePlanetCrowd, Crowdfundmarkt and crowdfundplatform. à‚ 

Based on the research, three motivations to invest money via crowdlending can be distinguished: financial return, impact and personal development. Most crowdfunders aim for a sustainable and/or social impact with their investment.Stephanie Platschorre of Erasmus University

However, investing via crowdlending is not the same as philanthropy, because the investment needs to go hand-in-hand with a good financial return on investment. Also, some crowdfunders engage because they strongly feel that banks are not supporting SME’s and smaller projects. Therefore, they take matters in their own hands by being the investor that support these projects.

Furthermore, the crowd engages in crowdlending for their personal growth. Crowdlending is for the crowd an accessible manner to get in touch with new innovations and they learn from those project descriptions. The crowd’s motivations to engage in crowdlending resonate in the factors that the crowd considers while making their investment decisions.

Based on Platschorre’s research, multiple factors can be identified that are important in the crowd’s investment decision with regards to bioenergy investment opportunities: (un)certainties in the project, innovation, sustainability and financial return.

Most crowdfunders believe that bioenergy offers an interesting return on investment. The crowd demands a high level of sustainability in the project and therefore only projects that use sustainable biomass or projects that incorporate sustainable innovations meet the demands of the crowd.

Since the crowd focusses in particular on the sustainability of the biomass used, crowdfunding can have a positive influence on further stimulating sustainability within the biomass supply chain. Also, the Dutch government subsidy for renewable projects, the SDE+ subsidy, is perceived as a positive element and a reason to invest in renewable energy projects.

However, some respondents to Platschorre’s research believed that the government should be more trustable in their policy for the energy transition and the related subsidies.Leon Pulles makes the case for crowdfunding renewable energy projects

If all of the above factors are managed within a project, then crowdfunding can be a highly effective tool to bring the public closer to ” and indeed, be a part of ” the energy transition.

Leon Pulles is Managing Partner at Energy Investment Management BV. He is also an Ambassador for this year’s European Utility Week, which takes place in Paris in November and includes Initiate!, an innovative forum where young entrepreneurs and start-ups work with established industry players to deliver ground-breaking innovations to drive forward Europe’s energy transition.à‚ 

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