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Ludovic Deblois' Column - The citizen-led renewable-energy-sharing boom
More and more people are devoting a portion of their savings to funding renewable energy projects. When the sharing economy meets energy transition, everyone wins.
It all started one day when someone realized the roof of their home could be put to smarter use if they installed a few solar panels. Now many people in Germany and other countries have joined the renewable energy movement – Energiewende – or the transition from nuclear power to sustainable energy.
Some have installed solar panels on their roofs and become micro-providers of energy—to themselves or to the grid. Others have taken the idea further and combined forces to crowdfund large-scale projects that require too great an investment for most individuals. Most of these solar or wind projects are regional in scope.
A team of researchers from Leuphana University in Lüneburg, Germany, and from Trend Research Inc. are working to identify to just what extent citizens are involved in renewable energy. They started from a strict definition of the actual individuals and/or farmers who install solar panels on the roofs of their homes or farms, as well as local and regional energy production cooperatives.
Greater energy citizenship
The researchers then broadened the definition of citizen funding to include investments by individuals in inter-regional facilities, or even in entities that acquire minority stakes in public energy supply activities alongside local communities and public credit institutions.
Using this broader definition, the researchers came up with impressive—albeit slightly dated—numbers. In 2012 Germany’s total renewable energy capacity was 72.9 gigawatts (GW). And 46% of that capacity came from private individuals as broadly defined. That’s a lot. Institutional investors ranked second, with 41% of the installed capacity. And bringing up the rear, the energy industry held the remaining 12.5% (see image).
According to the researchers, nearly half of all German biogas and solar facilities are owned directly or indirectly by the public, as well as half of all wind facilities.
The website Clean Energy Wire notes that the overwhelming public support in Germany for Energiewende—60 to 90% of the population depending on the year—explains why the average person is so interested in investing in renewable energy. Germans are financially involved in the movement and take real pride in being a part of it. It’s worth it to them to commit a little hard cash to the transition out of their long-term savings. There’s almost no risk, and the returns are great with the feed-in tariffs guaranteed on long-term contracts (20 years). The portion of Germany’s electricity generated by renewables jumped from 7% in 1990 to 27% in 2014.
France, the Netherlands, the U.K., the U.S., Africa—the list goes on
Germany is not the only country to do this. People in France, for example, have also been investing remarkable amounts in renewable energy. One of the main driving forces is Energie Partagée, which is both an association that promotes renewable energy and an investment firm. The investment firm regularly raises money from ordinary citizens in France and in regions where it is financing renewable wind, photovoltaic, biomass, and solar energy projects.
“Backing fixed-price energy sales contracts over 15 to 20 years provides economic stability,” claims the Énergie Partagée Investissement website, which reports that 4,785 private citizens have made investments. For several months, the organization has been working with the equity crowdfunding platform 1001pact, which raised €13.2 million in the first half of 2017.
At least 33 crowdfunding platforms in Europe
Each year, trade media GreenUnivers lists French renewable energy projects funded via 13 different crowdfunding platforms. GreenUnivers notes that there are four platforms exclusively for renewable energy: Lendosphere, Lumo, Enerfip, and AkuoCoop. Also according to GreenUnivers, €11.5 million were raised in 2016 on active platforms. These were all loans and not capital. Over half the money was earmarked for wind energy, outstripping solar energy at 36.7%. Water power at 3.04% and biomass at 0.68% trailed far behind.
In the U.K., Abundance has given new momentum to renewable energy crowdfunding. The platform has raised nearly 54 million pounds to date. The movement is so powerful that the European Union has lent its support by creating an Internet portal dedicated to renewable energy project crowdfunding. Called Citizenergy, the portal has identified and validated 33 platforms to date.
Invest at home and abroad
Many market players have decided to join forces and work on the European project CrowdFundRES. Various cross-border projects have been funded through this initiative. The Toreilles solar park in France was jointly invested in by 480 French and Dutch citizens through Lumo in France and Oneplanetcrowd in the Netherlands.
The Trine platform is a way for EU citizens to fund vital electricity projects in Africa for as little as 25 euros. Just under €2 million has been invested to date, providing 170,000 people in Africa with access to solar electricity.
Italian researcher Chiara Candelise, director of the platform Ecomill, widened the scope in 2016 by developing an overall picture of the sector throughout the world. The numbers are staggering: 29 active platforms, 13 in development, and 390 projects in various stages of development.
What about the politics of it all?
According to three researchers who looked at the Netherlands, crowdfunding for renewable energy shows elected officials that the public is committed to the issue. It’s a way of influencing policy and driving energy transition. The movement is also a way to develop stronger incentives for crowdfunding renewable energy, according to researchers Vasileiadou, Huijben, and Raven.
Citizen engagement, via crowdfunding or otherwise, helps to shake up an energy market dominated by old players, according to Heinrich Degenhart of the University of Lüneburg. “Citizen involvement switches the market from quasi-monopoly to multiplayer,” says Degenhart.
Self-consumption and the blockchain: the future of citizen revolutions
What will the next revolution be? On the user-producer side, the hopes are great for self-consumption, which is only just getting started. On the funding side, it’s interesting to note that the crowdfunding revolution is starting to intersect with the blockchain, such as with the birth of SolarCoin. Each megawatt-hour produced is worth one SolarCoin of this virtual currency for renewable energy producers.
As Chiara Candelise points out, the renewable energy crowdfunding movement was started by activist groups. Digital platforms made it easy for engaged citizens to access the movement and invest in it without breaking the bank. Now longstanding industrial actors, the traditional banking sector, and the general public are getting involved.
This new access to huge amounts of private savings is sure to accelerate the trend toward decentralization and move production closer to citizens. And the benefits? Lower production costs and a wealth of job creation. Renewable energy will give the power back to the people, no pun intended.