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In order to meet the ambitions in the Dutch Climate Law, a transition from fossil fuel to renewable energy is inevitable. Bioenergy is an important source of energy in the future renewable energymix. However, the implementation of these projects faces multiple challenges in the Netherlands. Two of these challenges are acceptance and support of citizens and finding sufficient financing for the bioenergy projects. As a response to these challenges, crowdfunding has been increasingly recognized and used as an alternative means of finance to the traditional funding tools in the renewable energy sector to overcome these challenges. Crowdfunding in the bioenergy sector is still a relatively new concept. To see what crowdfunding can do for the energy transition, some learnings will be shared based on experiences from recently funded projects and insights from a study conducted by Stephanie Platschorre (Erasmus University) into funding behavior of the crowd with regards to investing in bioenergy projects. The research has been conducted among relations of Dutch crowdfundplatform OnePlanetCrowd and Crowdfundmarkt.

Examples of funded projects

Examples of previous successfully funded energy projects are: Peters Biogas in Luttelgeest, Van Eijck Groen Gas in Alphen and a bioenergy installation of BeGreen in Hilversum. For the project of Van Eijck Groen Gas there has been a successful second financing round for the expansion of the bioenergy installation.

 

Perspective of the entrepreneur

Based on these experiences, it shows that entrepreneurs are very positive about engaging with crowdfunders for the development of their renewable energy project. Crowdfunding provides the entrepreneur with the possibility to explain and present their project to the larger public. This is especially helpful for bioenergy projects since they more complex to understand for the larger public than for example solar or wind projects. When information is shared, bioenergy projects become more tangible and understandable which has a positive influence on the crowd. It can even happen that funders transform themselves into ambassadors for the project. This behavior is stimulated since crowdfunding provides the funders the possibility to receive financial benefits from the realization of the renewable energy projects.

Perspective of the investor

In order to host successful crowdfund campaigns it is important to understand the behavior and preferences of the crowd. Based on the research of Stephanie Platschorre, three motivations to invest money via crowdlending can be distinguished: financial return, impact and personal development. Most crowdfunders aim for a sustainable and/or social impact with their investment. However, investing via crowdlending is not the same as philanthropy because the investment needs to go hand in hand with a good financial return on investment. Also, some crowdfunders engage in crowdlending because they strongly feel that banks are not sufficiently supporting SME’s and smaller projects. Therefore, they take matters in their own hands by being the investor that support these projects. Furthermore, the crowd engages in crowdlending for their personal growth. Crowdlending is for the crowd an accessible manner to get in touch with new innovations and they learn from the project descriptions. The crowd’s motivations to engage in crowdlending resonate in the factors that the crowd considers while making their investment decisions.

 

Important factors in investment decision

Based on the research of Stephanie Platschorre multiple factors can be identified that are important in the crowd’s investment decision with regards to bioenergy investment opportunities: (un)certainties in the project, innovation, sustainability and financial return. Most crowdfunders believe that bioenergy offers an interesting return on investment. The crowd demands a high level of sustainability in the project and therefore only projects that use sustainable biomass or projects that incorporate sustainable innovations meet the demands of the crowd. Since the crowd focusses in particular on the sustainability of the biomass used, crowdfunding can have a positive influence on further stimulating sustainability within the biomass supply chain. Also, the Dutch subsidy for renewable energy projects from the Dutch government (SDE+ subsidy) is perceived as a positive element and a reason to invest in bioenergy projects. However, some respondents believe that the government should be more trustable in their policy for the energy transition and the related subsidies.

 

In order to make crowdlending work for bioenergy projects is important that information is shared about the sustainability of the project on the basis of transparent communication. It could be helpful to communicate and further develop certification about the sustainability the biomass so that it becomes more transparent and understandable for the crowd.

If these above factors are managed within the project than crowdfunding is a very effective and useful tool to bridge the gap between the larger public and the energy transition.

 

References:

 

For more information, contact: 

Leon Pulles
Energy Investment Management BV
Leon.pulles@energy-im.nl

Stephanie Platschorre
s.c.platschorre@gmail.com