Smart financing and empowerment: crowdfunding in energy

1. Dr Chiara Candelise
CEO Ecomill
Bocconi University
CROWDSOURCING WEEK
Brussels
22 – 25 November, 2016
Smartfinancing andempowerment:crowdfunding inenergy

2. CROWD-FUNDING

3. Crowdfunding models

4. Crowdfunding market
Source: Massolution 2013, 2015

5. 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

6. • Need for new sources of funding (since financial crisis)
• Transformation of energy sector (liberalization energy markets, decarbonize energy
systems, decentralized generation):
Drivers

12. • 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

14. • 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

16. • 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

17. 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%)

20. Some numbers
• Total volume raised:
 ~ €165mil
 ~ 0.75% of worldwide
funding volume
(at Oct 2015)

21. Larger projects

22. Higher success rate

23. … 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

24. Projects proponents
Source: CrowdfundRES, 2015

25. Community vs institutional finance?
Model
Number of
projects
Money 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 3
Average 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

26. 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

27. • 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

28. THANK YOU
chiara.candelise@unibocconi.it
chiara@ecomill.it