The sustainable energy sector is just the latest market to be added to the equity crowdfunding landscape in Italy. Energy crowdfunding is an agile form of financing open to a large number of investors for the realisation of sustainable and energy transition projects, in order to reduce dependence on fossil fuels and contribute to the development of innovative infrastructures and technologies. Through crowdfunding platforms, stakeholders can support, participate in and invest in the most innovative projects in the energy sector.
Energy crowdfunding emerged in Italy in 2012. Currently, there are about thirty platforms offering energy investment opportunities. The number of projects financed on the platforms has grown steadily over the years. The biggest developments are in Europe, where Great Britain, France, the Netherlands and Germany are the best performing countries, both in terms of presence of platforms and volume funded.
Which energy projects to finance
Energy crowdfunding typically offers investments in renewable energy projects: solar, wind and biomass. Of these, solar photovoltaic is the most common type of project and accounts for around 70% of the total funded. In the countries where it is more widespread, however, energy crowdfunding shows an increasing differentiation in terms of technologies: projects in the field of energy efficiency and bioenergy are growing, and the first marine and geothermal energy projects are appearing.
In Italy, the equity crowdfunding market is still dominated by innovative start-ups and many are located in the North-West of the country - 27% in Lombardy, 5.6% in Piedmont and 1.7% in Liguria. Equity crowdfunding platforms are also mainly concentrated in Lombardy, which makes dialogue with issuing companies easier.
Who invests in energy crowdfunding
Energy crowdfunding was born as a response to the need for citizen involvement in the energy sector, initially by proposing investments in community and bottom-up projects. A study conducted by EuroHeat and Power in 2017, shows how the sector is progressively differentiating, including not only local energy communities but also more institutional players.
The study points out that, for energy project promoters, two factors are key to the use of crowdfunding:
· Being in fact an innovative and alternative form to institutional finance for financing energy projects, crowdfunding allows access to capital faster and easier than other alternative forms of financing.
· The possibility of involving citizens and local stakeholders; this allows on the one hand to widen the pool of potential investors and on the other hand to increase the visibility of projects and, potentially, to overcome any local opposition thanks to the implicit redistribution of resources on the territories through the recognition of economic returns to local investors.
The study shows that the projects presented on the platforms offer average returns of between 4 and 9%.
Among the motivations of those who have invested on energy crowdfunding platforms, transparency and the positive environmental impact of the investment are as important as the expected economic returns.
Forecasts for 2021
The economic and social crisis triggered by the Covid-19 pandemic has put the issue of access to credit for small and medium-sized enterprises back in the spotlight, pushing equity crowdfunding in 2020. We expect this momentum to continue in 2021, as the slow journey out of the pandemic progresses.
For this year, we still expect a huge demand for liquidity from Italian SMEs, and already in the first weeks of 2021 we can see considerable movement in the sector and an acceleration of funding requests.
#crowdfunding #energy
Sources:
https://www.euroheat.org/publications/crowdfunding-novel-financial-tool-district-heating-projects/
https://www.ilsole24ore.com/art/energia-e-mobilita-e-corsa-crowdfunding-ACy6QuBB