Crowdfunding for Solar PV: An interview with Abundance Generation
Crowdfunding has been traditionally associated with the development of new software tools or online applications. Only in the past year has this innovative investment tool started to gain traction within the infrastructure field, with Solar PV being seen as a prime candidate for this diversified source of funding. The Milk the Sun blog spoke to Abundance Generation’s Tom Harwood on how their platform is seeking to blend the often challenging nature of Solar PV project financing with an open crowdfunding platform.
One of the advantages of the crowdfunding model appears to be a greater sense of societal ownership over a project, how many projects have reached full funding so far? How many investors have you attracted?
Abundance launched in the summer of 2012 and have since raised money for seven PV projects. Five of those PV projects are fully funded and closed for investment. The other two projects are funded (they have reached the minimum target for the project and investment to go ahead) but are still open for investment and looking to raise their maximum target. Most of our projects will have a minimum target needed to raise for the project and investment to go ahead, and a maximum target. We now has nearly a 1000 investors with most individuals investing in at least two projects.
What is the company’s business model? Does the company work with specific established developers or can anybody approach with a project that is in need of funding?
Anyone can approach us with a renewable energy project that needs funding. We are looking to work with professional experienced developers and community groups that have projects using the more mature renewable energy technologies (onshore wind, Solar PV, hydro, biomass, anaerobic digestion). We have specific developers that we have worked with in the past and are now looking at new projects with them, but we are always looking for new partners who have the same objectives and values as Abundance and who can deliver and manage successful renewable energy projects. When a new developer or community group approaches us for crowdfunding, we will go through our due diligence process with them to assess whether they are a suitable partner and have the experience and team to deliver and manage the project they propose.
Could you give any broad details on how the projects are financially structured? Does Abundance hold the equity in the projects on behalf of investors or is it owned directly?
Projects raise debt-funding from the local community and general public in the form of a Debenture, which is like a loan or an IOU from the project. Abundance chose to offer debt-funding rather than equity as it opens the door for community participation to a greater number of commercial renewable energy projects that previously would have been funded by the banks or other traditional forms of funding. The project issues a Debenture which is marketed through Abundance. Individuals in the UK and across the European Economic area can invest in projects from as little as £5 through the Abundance online platform.
What great successes/ hurdles has Abundance met with?
Our first hurdle and then success was to be the first crowdfunding platform in the UK to be authorised and regulated by the Financial Conduct Authority (the financial regulator here in the UK). This allowed Abundance to market renewable energy investments to as many people as possible and create what we call ‘democratic finance’. Since then we have helped to fund 7 renewable energy projects raising a total of £4 million from nearly a 1000 investors. We have also received three industry awards recognising the work we are doing to support renewable energy. We have an exciting 2014 ahead with £20m of new projects already in the pipeline.
Milk the Sun also runs a platform for the trading of functioning plants and project rights between parties, what have you found the advantages to be of using an open platform model rather than a closed shop?
We feel it is very important to be open to everyone. Traditionally, renewable energy investment has only been available to the banks or the very wealthy. We want to make it easy and understandable for everyone to benefit from renewable energy. In turn, with a financial connection to renewable energy projects, more people will actively support the growth of renewable energy and help change our energy supply for the better.
Milk the sun would like to thank Tom and the guys at Abundance for their time.