BY Clare Taylor, Crowdfunding of renewable energy projects is growing fast in Europe. If this grassroots movement gets organized in time to access the big money available in the next round of cohesion funding, it could have far reaching effects on the European energy sector.
In recession era Europe, much talk is of ‘innovative’ or ‘alternative’ financing for sustainable energy – meaning money other than the public purse. In 2012 crowdfunding in Europe saw an estimated 65 % growth compared to 2011 and reached €735 million. With industry insiders Massolution forecasting an 81 % increase in global crowdfunding volumes in 2013, it looks like crowdfunding might just get serious.
Crowdfunding has several things going for it compared to traditional funding, as was noted recently in a report published by the European Capacity Building Initiative. First, crowdfunding can provide finance to small business and community organizations otherwise excluded from formal finance. This support for entrepreneurship is also touted as a leading advantage by lobby group European Crowdfunding Network. Speed in mobilising funding is a another characteristic of crowdfunding– as neatly demonstrated in the recent new world record where €1.3 million was raised in just 13 hours by selling shares in a wind turbine to 1700 Dutch households in a deal brokered by Windcentrale. Risk-taking, necessary for marketing novel renewable energy products which still need to be tested in large scale, can also be addressed by crowd sourced finance as it taps into a more risk-tolerant segment of lenders or investors.
Accelerated through social media and online communication, crowdfunding is a financial power tool for energy cooperatives.
To realize the ambitions of local sustainable energy plans, ‘community finance’ – which may be regarded as a form of crowdfunding – could be a big part of the solution. Given the speed with which both crowdfunding and the energy cooperative sector are expanding (the number of European energy grew cooperatives grew from 1200 last year to some 2000 this year), community-financed cooperatives could seriously shake up the energy market in many countries.
Energy cooperatives have perhaps been most successful so far in Denmark. According to Dirk Vansintjan of Belgian renewable energy cooperative Ecopower, ‘For Danes, it is the natural way of organizing themselves. Since the Middle Ages they’ve been doing it, and today most renewable projects in the country are organized this way.’
Germany too is a leader in the field of community energy, with 65 % of its renewable energy capacity community-owned. There are over 600 energy cooperatives in Germany, the number having increased tenfold in the period from 2000-2010.
Despite a long tradition of cooperatives, Spain just gained its first in the energy sector – Som Energia. By June 2013, this cooperative had 8000 members and had invested more than €3 million in renewable energy production projects – an impressive result in an acutely recession-struck country in less than two years.