Financing instrument and amount
1.3 million euros (USD 977.4 thousand)* through crowdfunding
Background
Given the challenges in securing funding for renewable energy projects globally and strong public interest in climate action, crowdfunding has emerged as an alternative channel for communities to fund renewable energy projects. A number of platforms focused on crowdfunding for climate action have gained prominence.
Examples include cross-border platforms such as Citizenergy – a platform co-funded by the Intelligent Energy Europe Programme of the European Union (EU) which brings together energy-focused crowdfunding investment opportunities and investors across the globe into one place, country-focused platforms such as Abundance Generation – a platform which allows investors in Europe to invest their funds in a wide range of alternative energy projects within the United Kingdom (UK), as well as in-country platforms such as WindCentrale – a platform that was launched in 2010 in the Netherlands with the aim of accelerating the transition to renewable energy in the Netherlands.
Approach
WindCentrale enables the public to become co-owners of a wind turbine and derive benefits from using wind energy. It splits the wind turbines into wind shares, each with an expected production capacity of 500kWh. Through the platform, private individuals can become owners of these wind shares or “wind parts” as termed by WindCentrale. On a yearly basis, each investor would receive 500 kWh for each wind share. The energy produced through wind shares is deductible from annual electricity bills.
Results
During its launch in 2013, WindCentrale raised €1.3 million (USD 977.4 thousand)* in just thirteen hours by selling 6,648 shares in a wind turbine to 1700 Dutch households. As of 2018, it had successfully raised €15 million (USD 12.7 million)** through 60,000 wind shares for nine wind turbines, which have generated a total of almost 27,656,000 kWh in production capacities to 15,000 households. As of 2023, WindCentrale has ten wind turbines in operation for current and potential investors.
Key Learnings
Strong legal and financial regulatory frameworks are critical to garner trust in crowdfunding projects.
As of 2023, the use of crowdfunding for renewable energy projects tends to be concentrated in the US and Europe where there is a high level of trust in legal frameworks and the transparency and accountability of how collected funds would be managed. Abundance Generation is the first crowdfunding platform to be accredited by the UK Financial Conduct Authority (FCA).
Long-term sustainability of projects is critical to attract investors.
One key element of WindCentrale’s success was that it offered investors the benefit of enjoying lower energy prices as the energy produced through the wind turbines are offset against electricity bills - with actual savings differing based on fluctuations in the price of the wind share and the price of energy. Long-term sustainability and cash flow is critical to attract crowdfunding investors who have a plethora of investment options, and this must be clearly established in the business proposal.
Sources
- Citizenergy (n.d.). Our story. Available at: https://citizenergy.eu/story
- WindCentrale (n.d.). How does it work. Available at: https://www.windcentrale.nl/
- Nigam, Mbarek and Benetti (2018). Crowdfunding to finance eco-innovation: case studies from leading renewable energy platforms. Available at: https://www.cairn.info/revue-journal-of-innovation-economics-2018-2-page-195.htm&wt.src=pdf
- Crowdfund Insider (2013). Windcentrale Raises €1.3 Million, 1700 Dutch Households Get Wind Turbine. Available at: https://www.crowdfundinsider.com/2013/09/23211-windcentrale-raises-e1-3-million-1700-dutch-households-get-wind-turbine/
- *Note that the USD values are calculated based on the average exchange rate in the year 2013. Retrieved from the site: https://www.macrotrends.net/2548/euro-dollar-exchange-rate-historical-chart
- ** Note that the USD values are calculated based on the average exchange rate in the year 2018. Retrieved from the site: https://www.macrotrends.net/2548/euro-dollar-exchange-rate-historical-chart
