The Renewable Energy Directive of the European Union is now six years old. All of the more recent initiatives, most notably the momentum now behind a European Energy Union, build on the groundwork that the Directive has laid. It symbolically stands for a pioneering strategic policy commitment of the kind that is finally taken for granted today by most advanced industrialised nation states as they have recognised the imperative to rebalance their economies towards more sustainable energy futures. We are making progress towards the targets of achieving a 20% share of renewables in final energy consumption by 2020 across Europe, and of 27% by 2030. Nevertheless, it is important to recognise that these remain very ambitious goals. While it is true that the current share of renewables has increased beyond 15% already, it is also clear that we have reached a point now where further increases will face an ever steeper gradient as they will have to come from more radical forms of reshaping energy production and governance.
It would be perilous to ignore the role of public finance as a key driver to the direction of energy sector reforms. Initiatives under way will stand and fall with nationally sustainable ways to finance such reforms, and the pressure points following the fallout of the various financial and economic crises that have swept the global economy over recent years have presented policy makers with stark choices when it comes to supporting the shift to renewables.
It is here where alternative finance has assumed an increasingly prominent role. In a public sector climate where national governments have been hesitant at best to push reform through public subsidies, and where the traditional sources of venture finance for SME level projects have been much harder to come by too, developments in FinTech such as the rise of crowdfunding platforms across Europe have opened up the potential for complementing traditional funding channels for the energy revolution that the planet demands of us at ever increasing urgency with non-traditional funding sources that are carried, not by national governments or by highstreet banks, but by growing numbers of private investors, by civil society itself.
Much of this shift towards alternative finance and crowdfunding is presently understood incompletely at best. What are the challenges faced by non-sophisticated small-scale private investors when it comes to engaging with crowdfunding platforms to invest in renewable energy projects? What is the balance between rational financial decision making and emotive investing in their considerations? How can renewable energy project developers most effectively tap into this growing stream of alternative funding opportunities, and how best to position crowdfunding platforms between these two stakeholder groups to help maximise the added value from the rise of crowdfunding for all?
It is questions like these that have brought the CrowdFundRES consortium of sector leading crowdfunding platforms, renewable energy projects developers, industry associations, consultants, legal specialists and academics together to help better understand how the potential of crowdfunding may be realised for renewables. We are in the midst of an exciting phase of the project now, with three Europe wide surveys of public perceptions, project developers and platforms underway in full swing and the release of first results imminent. The Paris Climate Summit in November will further help galvanise attention on energy sector reform.
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Professor of Commerce at the Centre for Environmental Change and Human Resilience (CeCHR), University of Dundee.
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