Crowdfunding has grown substantially over the last few years, largely as a direct result of people wanting to have a greater control of where they put their money. Crowdfunding is essentially individuals investing small amounts of money into a business or project.
Individuals can invest from as little as £5 in some projects; however, others have strict minimum criteria. Although many crowdfunding schemes can be seen as a ‘punt’ or donation, most consider it an alternative to a pension scheme or investing in shares as they are investing in an asset that they can physically see and monitor its performance themselves without any jargon from a middleman. As these are major infrastructure projects, the returns are for a minimum of 20 years with relatively low risk and they provide a good return on investment.
Crowdfunding for renewables is a growing trend globally; in the US one solar fund raised around $313,000 in its first 24 hours of trading for a solar project. Germany has one of the most developed crowdfunding models where projects are mainly community driven. Private individuals are responsible for over 35% of renewable energy power production. Since 2004 some 137 billion Euros have been invested in renewables by Germany. Around 80,000 Germans are involved in a cooperative, largely for their local communities, be it solar rooftops or wind farms.
Greg Barker, the UK Minister for Energy and Climate Change, stated that crowdfunding will “help deliver my ambition for a far more decentralised energy system and achieve the goal of turning the Big Six into the Big 60,000”. Another benefit of crowdfunding is within planning permission. Far too often we see wind farm projects imposed on local communities, hence a lot of objections. If we were to turn the tables where it is the community leading the investment, it is truly advantageous for everyone.
