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Crowdfunding in energy

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Smart financing and empowerment: crowdfunding in energy

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Crowdfunding in energy

  1. 1. Dr Chiara Candelise CEO Ecomill Bocconi University CROWDSOURCING WEEK Brussels 22 – 25 November, 2016 Smartfinancing andempowerment:crowdfunding inenergy
  2. 2. CROWD-FUNDING
  3. 3. Crowdfunding models
  4. 4. Crowdfunding market Source: Massolution 2013, 2015
  5. 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. 6. • Need for new sources of funding (since financial crisis) • Transformation of energy sector (liberalization energy markets, decarbonize energy systems, decentralized generation): Drivers
  7. 7. • 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
  8. 8. • 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
  9. 9. • 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
  10. 10. 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%)
  11. 11. Some numbers • Total volume raised:  ~ €165mil  ~ 0.75% of worldwide funding volume (at Oct 2015)
  12. 12. Larger projects
  13. 13. Higher success rate
  14. 14. … 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
  15. 15. Projects proponents Source: CrowdfundRES, 2015
  16. 16. 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
  17. 17. 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
  18. 18. • 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
  19. 19. THANK YOU chiara.candelise@unibocconi.it chiara@ecomill.it

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