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Crowdfunding for Renewable Energy: Can India become part of this club?

, September 19, 2014, 0 Comments

crowdfunding india renewable energy-MarketExpress-inInvestments in the renewable energy sector has fallen by 14% ,the largest fall in investment seen in ten years. Barriers that prevent renewable energy from mainstreaming into the energy portfolio are endless, but access to capital is the primary inhibiting factor.With traditional banks becoming close fisted, alternative financing has gained fast popularity, the most prominent form being crowdfunding.

Renewable energy crowdfunding platforms have gained tremendous popularity with sites like Trillion Fund, de Windcentrale, Mosaic and Abundance Energy taking the main stage in the area. These platforms have used equity model of crowdfunding primarily, allowing investors to reap rewards from investing in large scale renewable energy projects.

These platforms have not only managed to create sustainable energy options for various communities but are successful business ventures as well. For example, Wind centrale tops the list with a whopping 14.3 Million Euros ; Abundance Generation has made 8 Million Euros in a short span ; Mosaic has made 6.3 Million Euros and Trillion Fund has around 1.4 Million Euros. These platforms feature in the top list and have an average ROI for their contributors at around 6.5%.

The concept of crowdfunding isn’t new to India where platforms like ‘Start51’,’Ignite Talent’ and  ‘Pik a Venture’ have established themselves , but none of these platforms include India’s biggest growing concern, energy. We are a country of 74 million urbanized population with access to internet (the 3rd largest!) and also with 400 million people who don’t receive electricity. Instead of blaming National Grids and large scale utilities, choosing renewables allows us to opt for decentralized structures benefiting communities around the country. The option has the potential to leverage the growing concept of Crowdfunding for Renewable Energy.

Communities in India can fund a temple overnight,yet we struggle to realize the benefits of investing in energy ourselves-benefits, not only in the form of energy supply but money,straight into our banks. There are global platforms ,like SunFinder and Pollinate Energy that invest in India ,but there is yet to be an Indian platform dedicated to sustainable energy.

We could easily blame it on our regulatory systems and the greyness of our legal structure. We could blame it on a large demographic with no internet access. We could blame it on the millions who have no idea what crowdfunding is. But at the end of the day, our energy scenario is looking very weak and micro finance is a system to which we can adopt and adjust to.

There are social, cultural, technological and economic factors that are needed to be considered in creating an ecosystem for renewable energy crowdfunding.

The most essential factor, though, is to inculcate a feeling of trust that we don’t have. Online shopping didn’t take off in India until the Cash on Delivery model came into being; this just goes to show the real issue is of trust. Despite being a country with a ‘giving’ psychology, the ordinary middle class demographic shies away in this context. Policies and regulations must create an online marketplace where people could put their trust in. Awareness amongst the largely urbanised population with broadband access must be made; not only in the concept of crowdfunding but in the plight of the millions in the country without energy supply.

In UK, a platform called GenCommunity follows a system where communities invest in energy poverty communities. Thus, they help other neighbourhoods receive energy, whilst reaping benefits from the sale of the energy as well. If such models could be replicated within India, the reality of Power to the People could be seen. We are a country of the wealthiest and the most poor.

We are a country of the largest growing entrepreneurial base amongst developing countries. We are a country with abundant renewable energy resources, yet a place where millions don’t have access to energy. We are a country with the most graduate engineers in the world. The potential for microfinance in renewable energy is immense and it has come to a point where it is inevitable.