smart financing and empowerment: crowdfunding in energy
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Dr Chiara CandeliseCEO Ecomill
Bocconi University
Smart financing and empowerment: crowdfunding in energy
CROWD-FUNDING
Crowdfunding models
Crowdfunding market
Source: Massolution 2013, 2015
Crowdfunding in energy
Candelise, C. “The application of crowdfunding to the energy sector”. In Crowdfunding for Sustainable Entrepreneurship and Innovation. Ed. W. Vassallo, IGI Global. 2016
• Need for new sources of funding (since financial crisis)
• Transformation of energy sector (liberalization energy markets, decarbonize energy systems, decentralized generation):
Drivers
• Need for new sources of funding (since financial crisis)
• Transformation of energy sector (liberalization energy markets, decarbonize energy systems, decentralized generation):
-> smaller, modular energy projects-> open entry to new players, e.g. small firms, local authorities, citizens-> energy consumer can become producers (prosumer)-> Communities, local authorities, can become energy producers
Drivers
• Need for new sources of funding (since financial crisis)
• Transformation of energy sector (liberalization energy markets, decarbonize energy systems, decentralized generation):
-> smaller, modular energy projects-> open entry to new players, e.g. small firms, local authorities, citizens-> energy consumer can become producers (prosumer)-> Communities, local authorities, can become energy producers
• Diffusion of community energy and shared ownership approaches
Drivers
• Need for new sources of funding (since financial crisis)
• Transformation of energy sector (liberalization energy markets, decarbonize energy systems, decentralized generation):
-> smaller, modular energy projects-> open entry to new players, e.g. small firms, local authorities, citizens-> energy consumer can become producers (prosumer)-> Communities, local authorities, can become energy producers
• Diffusion of community energy and shared ownership approaches
citizens as participatory actors, invest little amount of money, harvesting benefits of clean energy investments, contribute to CO2 emission reduction
Drivers
New, but dynamic
• Begins in 2012• At Nov 2015
29 active platforms 13 in pipeline ~ 390 projects
• PV, wind, hydro, biomass, energy efficiency
• Majority investing crowdfunding
Financial/Investing (~80%)
Some numbers• Total volume raised:
~ €165mil ~ 0.75% of worldwide
funding volume
(at Oct 2015)
Larger projects
Higher success rate
… who is investing (and why?)
Source: Abundance generation (2014)
Experienced older investors, who plan for their financial futures
Younger investors, looking for new opportunities to expand their portfolio
Actively consider the impact of their investment activities
Projects proponents
Source: CrowdfundRES, 2015
Community vs institutional finance?
ModelNumber of
projectsMoney raised €
Average raised per project €
Average returns
Lending (with Trillion Fund's lending projects ) 219 127,555,407 768,406 9.29%Equity (community shares) 38 22,740,049 733,550 7.00%Hybrids (no Trillion Fund's lending projects) 40 13,949,090 348,727 4.58%Donation/reward 93 814,883 14,050 -
Trillion Fund Equity Community shares Loan Fund
Money raised € 4,747,208 6,972,470 34,017,910 56,358,206
Number of projects 1 9 13 3Average return 9.5 5.29% 7.34% 15.13%Average raised per project € 4,747,208 774,719 2,616,762 18,786,069
• Peer to business lending dominates (more projects, more money raised, larger size) – third party financing
• Still, strong environmental and public engagement mission and explicit community and local focus (e.g. Lendosphere)
• However, loan and fund raised over 50% of total worldwide funding volume
Trends• From ‘family and
friends’..• ..grass root
projects• to scaling up:
Larger projects New instruments (e.g.
loan and fund) Collaboration with
utilities and institutional finance
• Improved citizens access to investments in clean energy• Started as a niche practice in grass root, community energy projects• Showing signs of scaling up and entrance of institutional actors
Open questions:
• will participatory and shared ownership approaches coexist with institutional and structured finance?
• Financing energy efficiency? In EU: reducing policy support to renewable energy sources (RES) and increasing need to develop and implement energy efficiency
Looking forward
THANK YOUchiara.candelise@unibocconi.it
chiara@ecomill.it
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