Crowdfunding: A new form of participatory financing for renewable energy projects*

1. Crowdfunding: A new form of participatory financing for renewable energy projects* Martha Bißmann, Thomas Maidonis |WIP Renewable Energies Crowdfunding Convention| 13 October 2016 | Zagreb, Croatia * Contributions: S. Betz (WIP Renewable Energies); K. Kohl (ECN); A. Bergmann, B. Burton, M. Klaes (University of Dundee); T. Aschenbeck-Florange, T. Drefke (Osborne Clarke), K. Harder (Abundance), A. Raguet (Lumo)

2. Definition of Crowdfunding “… a collective effort of many individuals who network and pool their resources to support efforts initiated by other people or organizations. This is usually done via or with the help of the Internet. Individual projects and businesses are financed with small contributions from a large number of individuals...” Source: K. De Buysere, O. Gajda, R. Kleverlaan, D. Marom, “A Framework for European Crowdfunding” www.crowdfundres.eu

3. „Thereisnoscarcity in this World“

4. Power to the People! Power tothePeople!

5. Crowdfunding for Renewable Energy The part of the public that has an interest in investing even very small amounts of their savings in renewable energy projects www.crowdfundres.eu

6. Crowdfunding for Renewable Energy Community members Other citizens www.crowdfundres.eu

7. Crowdfunding for Renewable Energy intermediaries facilitating the financial transaction between the public and the project developers www.crowdfundres.eu

8. Crowdfunding for Renewable Energy Renewable energy project developers whose access to financing is getting more challenging www.crowdfundres.eu

9. Crowdfunding for Renewable Energy Commercial developers Cooperatives ESCOs Public entities + PPPs www.crowdfundres.eu

10. Aim: Contribute to the acceleration of the renewable energy growth in Europe by unleashing the potential of crowdfunding for financing renewable energy projects. Objectives: • Deepen understanding of adoption of crowdfunding for financing renewable energy projects • Analysethe challenges faced by the application of crowdfunding for renewable energy projects in Europe • Develop and apply guidelines that support more effective practices • Help improve the market and regulatory framework in Europe • Promote the crowdfunding concept and its advantages among those who could contribute or raise funds Review and Update of Crowdfunding Regulation & Market Developments EU wide survey for contributors, platforms & developers Case studies

11. (40 platforms & 132 developers) www.crowdfundres.eu

12. Developers: Organisation structure www.crowdfundres.eu

13. RES technologies Valid responses: 66 / 132 developers & 15 / 40 platforms; multiple answers possible

14. RES project size Valid responses: 66 / 132 developers & 15 / 40 platforms; multiple answers possible

15. Developers: Familiarity with crowdfunding www.crowdfundres.eu

16. Developers: Traditional financing vs. Crowdfunding How difficult did you find the process? www.crowdfundres.eu

17. Developers: Crowdfunding experience • Most of the project developers had positive experience: • It reduced local public opposition of the project • It made financing easier or faster • It was cheaper than traditional financing • It was more expensive than traditional financing • No delays on the implementation of the project because of it • No impact on the permitting process www.crowdfundres.eu

18. Developers: Future intentions Would you consider using crowdfunding for financing your project (again) in the future? www.crowdfundres.eu

19. (478 respondents) www.crowdfundres.eu

20. Public: RES CF Experience • 389 useable responses of which • 330 (85%) familiar with crowdfundingof which • 149 (38%) had invested via crowdfunding of which • 75 (19%) had invested in RES via crowdfunding www.crowdfundres.eu

21. Public: Decision factors Factors taken into account in RES investment decisions amongst those planning to invest in CFRES in next 3 years:

22. Review of Crowdfunding Regulation & Market Developments www.crowdfundres.eu

23. Crowdfunding regulation in the EU The goalis a uniform pan-European regulatedmarket but weare still farawayfrombeingthere. 8 of 28 EU MS have implemented a specific crowdfunding regulation → Austria, Belgium, France, Germany, Italy, Portugal, Spain, UK • 5 of these 8 MS have a "Crowdfunding exception" from regular regulation • Alternative Financing Act – (Alternativfinanzierungsgesetz) - considered to be the "forefront of Crowdfundinglegislation of Europe" • Also the Eastern EU MS have taken or plan steps to implement specific crowdfundingregulation. Most MS without specific crowdfunding regulation apply regular financial services regulation → Crowdfunding often does not fit properly into persisting regulatory regimes. www.crowdfundres.eu

24. Crowdfunding regulation in the EU European Commission report on Crowdfunding in May 2016 –main points: • detailed description of regulatory environment for Crowdfunding in EU, • local nature of Crowdfunding does not demand EU level policy intervention, and • developments will be carefully monitored by European Commission • goal of uniform pan-European regulated market still far away • European Commission refuses to initiate legislative measures – Crowdfundingmarket needs space for evolving its potential • European Commission forgets that Crowdfunding market  was and is already a European market which may develop stronger and faster if "regulatory borders" would not stop it • cross-border Crowdfunding will continue to be difficult since Crowdfunding platform must comply with every local regime www.crowdfundres.eu

25. Crowdfunding regulation in the EU Potential changewithenteringintoforceof European ProspectusRegulation: • only proposals of European Commission and European Council until now! • by beginning of 2018 • will potentially bring much higher thresholds up to EUR 10 mio. no prospectus required Thresholds for exception from prospectus requirement very diverse throughout EU, e.g.: • 100.000 € in Greece • 300.000 € in Belgium • 1.000.000 € in France • 2.500.000 € in Germany/the Netherlands • 5.000.000 € in Italy/UK www.crowdfundres.eu

26. Crowdfundingregulation in Croatia Relevant general legislation and other legal instruments as applied to Crowdfunding: No legal obstacles with regard to crowd donating and sponsorship. Crowdlendingis strict regulated by the law on capital markets (Capital Market Act) In case the platform operator deals with financial instruments, authorization is required from the Financial Services Supervisory Agency or from the Croatian Central Bank in case of credit institutions Crowdfunding platforms cannot be properly considered as AIFM's authorization needed from the Croatian National Bank for transmission of funds between the investor and the crowd-funded business via the Crowdfunding platform www.crowdfundres.eu

27. RES Crowdfundingregulation in Croatia Crowdfunding not yet fully integrated as an instrument of gathering funds;general business financing legislation is applied. Reward – based investment models used for rare RES CF projects (IndieGoGo) with Energy Cooperatives as investment holders (energetskezadruge). Significant potential for the development of the Lending model for future CrowdFundRESplatforms, as cooperatives usually obtain finance for their RES projects via bank loans. Cooperatives (Zakon o zadrugama) governed by the general provisions of the Cooperative's Act. Initial examples (“Energy self-sufficient” primary school in Zaostrog) show that energy cooperatives could be the RES CF pioneers. www.crowdfundres.eu

28. RES Crowdfundingregulation in Croatia • As of 1 January 2016: • Act on Renewable Energy Sources and High-Efficient Cogeneration (Zakon o obnovljivimizvorimaenergijeivisokoučinkovitojkogeneraciji) – target: 20% RES by 2020. • The Act introduces premium prices, possibility of obtaining building rights on state property, obligatory quotas, the ECO balance group, possibility to repurchase surplus from the RES producer. • Feed in tariffs and loans main incentive instruments • Transition to tender based allocation of new RES projects: • Tender based allocation of funds has managed to produce some results regarding production of RES based energy. www.crowdfundres.eu

29. Crowdfunding actors and support in Croatia Crowdfunding.hrblog: analysis, reports and projects on CF in Croatia Croinvest.eu: first Croatian CF – platform (entrepreneurial and infrastructural projects) Doniralica: Funds for civil sector activites; hybrid between CF platform and charity organisation Brodoto: not-for profit organization promoting CF through education and support Crowdfunding Academy: UNDP backed initiative www.crowdfundres.eu

30. http://www.crowdfundinghub.eu/current-state-crowdfunding-croatia/http://www.crowdfundinghub.eu/current-state-crowdfunding-croatia/

31. Download full Report here: „Review ofCrowdfunding Regulation & Market Developmentsfor RES projectfinancing in theEU“ Osborne Clarke GermanyTanja Aschenbeck-Florange, Alexander Dlouhy December2015 www.crowdfundres.eu

32. Case Studies www.crowdfundres.eu

33. Case study: Crowdfunding for a cooperative developing a Wind Farm

34. Case study: Crowdfunding for a cooperative developing a Wind Farm • Upper PitforthieWindgen • Location: Stonehaven, Aberdeenshire, UK • Investment duration: 1 year • Installed capacity: 500 kW • Project underconstruction • Amount raised: £2,175,000 from 418 investors - IRR: 12% www.crowdfundres.eu

35. Case study: Crowdfunding for buyingan existing wind project

36. Case study: Crowdfunding for buyingan existing wind project • Bought from energy companies, financial institutions and project developers • Crowdfunding record • Raised €1.3 Million in just 13 hours • Sold 6,648 shares of €200 to 1700 Dutch households • Each share corresponds to 500kWh per year www.crowdfundres.eu

37. Case study: CONDA Solar power plant Lärchenholz, Austria

38. Case study: CONDA Solar power plant Lärchenholz, Austria • Project GmbH (LTD) was founded • 150 kWp solar power plant + roof renovation • Project finance volume: 330.000 Euro • 50% bank loan, 50% equity • Crowdfunding share “subordinated loans”: 145.000 Euro (2.500 Euro average inv.) • Feed in tariff of 18,12 Cent granted for 13 years • Platform CONDA used, but most investors mobilised by developer Clean Capital www.crowdfundres.eu

39. Get involved: Visit www.crowdfundres.euand Check out our project results: http://www.crowdfundres.eu/results We can help: We can get you in touch with a crowdfunding platform matched to your profile and plans, to help launch and finance your project: Send your inquiry to info@crowdfundres.eu

40. Thomas Maidonis Martha Bißmann WIP Renewable Energies Sylvensteinstr. 2, 81369 Munich,Germany Phone: +49 89 720 12 720 Email: martha.bissmann@wip-munich.de www.wip-munich.de Join our Crowdfunding for Renewable EnergyGroup on LinkedIn