Energy – it powers our society and fuels the advancement of civilization. But in our world today, it’s not sustainable. We continue to burn fossil fuels at an unprecedented pace, while the global energy industry continues to push the exploration of coal, heavy oil, and shale gas reserves. The time for change has arrived – and thanks to the advent of crowdinvestment, we can make strides towards reinventing the way we produce energy and move towards a fully sustainable model of consumption.
“If we don’t do something about this (energy) it could take your future away” (29:15)
Former US President Bill Clinton kicked off last week’s One Young World summit with a bang. In the midst of a hectic Democratic campaign schedule, Clinton arrived in Pittsburgh, USA to shed light on the biggest problems facing the world in front of 1,300 youth delegates from around the world. The basic roots of the problems relate to one of three core issues: inequality, instability or unsustainable development. While the challenges may seem daunting, each presents an extraordinary opportunity, in particular the latter:
“Changing the way we consume and produce energy and use local resources could be the greatest economic opportunity this world has ever seen” (29:30)
The question is how?
Clinton gave three high-level examples of countries that have undertaken sustainable development agendas in the Western Hemisphere:
- Mexico – the rapid development of the eco economy in Mexico City
- Costa Rica – a hydro power program that provides the country with 92% of its energy and a future green car industry
- Brazil – ‘the worlds finest biofuel, cane ethanol,’ which apparently has limited negative environmental affects
While these are great initiatives, they are top-down government lead initiatives and only represent a tiny fraction of what will be required in the future. Luckily, many factors are starting to align that will help bring renewable-energy initiatives to the masses, including the democratization of finance through crowdinvesting.
Crowdinvesting, unlike crowdfunding, allows individuals and investors to take an equity stake in a company. While the donation-based crowdfunding model is useful for a variety of early-stage creative, social and entrepreneurial projects, it is not ideal for projects that require a large amount of invested capital, like a renewable energy project.
As crowdinvesting becomes legalized, new opportunities will be open for everyday people to help bring renewable energy projects to life. What type of projects are we talking about?
Wind, solar and hydro projects are the earliest examples. Abundance Generation in the UK, for example, has created a unique crowdinvestment platform (using convertible debentures) that allows UK citizens to invest as little £5 in renewable energy projects. How does it work?
Project creators post their project on the platform and define the amount they are looking to raise. All of the information related to the potential investment is posted on the project page, allowing potential investors to evaluate the merits and drawbacks of the investment. As an example, two projects are open on the site right now, a solar project (seeking £500,000 to £1,000,000) and a wind project (seeking £300,000 to £1,400,000):
If the posted projects get enough of the crowd’s support, then the project creator receives the funds while all of the ‘crowd investors’ receive their stake in the project, in this particular case a percentage of future returns. It’s a new model of investment for energy, where rather than raising large amounts of capital from a few funds, energy entrepreneurs can raise small amounts of money from a large number of people to fund future-focused endeavours.
And this is only the beginning. We need to think bigger, much bigger.
Trillion Fund, a new crowdinvestment site in the UK, is in the process of creating a large-scale platform for renewable energy projects. Trillion’s mission is to bring renewable energy to the same scale as fossil fuels over the coming decades:
“we aim to influence a trillion dollars of investments – a mind boggling number, but we believe this is the scale of ambition and investment required for the cost of renewable energy to reach parity with fossil fuels.”
It’s a bold vision, but it is exactly the type of scale we need to strive towards in order to become a sustainable economy. Beyond the large-scale economic potential, we have an unprecedented opportunity to shift our antiquated industrial production methods towards a brilliant clean-energy future.
While government and large-scale initiatives like the Clinton Global Initiative are a good start, we need to get the crowds involved to bring it to the scale the world requires. As the democratization of finance continues around the world, we will finally be able to work collectively to move sustainable development beyond concept status. 2013 will be a big year for these types of initiatives, so look for energy-focused crowdinvesting platforms in an economy near you.Tweet