Crowdfunding The New Powerhouse For Renewable Energy
By Tadhg Walker
Powerhouse Wind, a Dunedin based company producing single blade wind turbines for domestic and small scale commercial use, want to take their product throughout New Zealand and the world. Having already developed and tested their patented idea, they need a boost of capital to increase production and hire staff to market their turbines to customers. More money is required, and, as with many start ups, banks were not supportive as their idea is too new and too innovative. Powerhouse Wind turned to the New Zealand crowdfunding site PledgeMe, in a fitting attempt to find alternative finance for their off the grid renewable energy. They are one of an increasing number of renewable energy companies that are turning to crowdfunding worldwide.
Tim Mepham, shareholder and advisor to Powerhouse Wind, was initially wary of crowdfunding. The idea of a single, cornerstone shareholder was appealing as they could have direct input into the running of the business. Finding such a shareholder, however, proved fruitless due to the risks associated with start ups. Bill Currie, director at Powerhouse Wind, deduces that “as a society we have become incredibly risk averse as the current model we have works quite nicely. However we are starting to kick up against the limits of that model and we are losing the ability to be experimental.”
Losing the ability to be experimental means losing the ability to innovate, an unfathomable option for start ups like Powerhouse Wind. Crowdfunding fulfills this niche neatly by spreading the risk of investment over many investors. Entrepreneurs’ ability to experiment remains, without the need for overtly risky investments.
Powerhouse Wind are currently trying to source around $400,000 from their campaign on PledgeMe, which closes on 25 June. They are the first renewable energy start up to crowdfund for equity in New Zealand, and are currently almost halfway towards their goal.
Renewable energy equity campaigns are multiplying worldwide. There is an increasing desire to wrest control of energy supply from big energy companies back to the community. This is particularly evident in Germany, where there are now over a million small scale energy producers contributing to a decentralised power network.
A 2012 Bloomberg White Paper stated “crowdfunding commitments to clean energy would become meaningful to clean energy in an absolute sense, even if they remain a tiny relative proportion of all retail funds available for investment.” More and more people are buying into this idea, with over $30 million USD already invested on renewable energy specific crowdfunding platforms.
Windcentrale allows investors to purchase shares in windmills. By splitting windmills into thousands of pieces they allow investors to buy a share in a windmill and produce their own electricity. Mosaic connects borrowers to lenders for the purchase of solar panels throughout the United States. Investors lend money to borrowers below the market rate, allowing borrowers to invest in renewable energy and produce their own electricity. Abundance provides a platform for renewable energy projects to raise capital through the issue of debentures with fixed or variable rates of return. Another UK based platform, Trillion Fund, provides a variety of funding options for renewable energy projects. Impressively the above crowdfunding platforms boast between 5 – 8% returns on investment.
Innovative ideas often require innovative ways of funding. In the case of Powerhouse Wind, crowdfunding appears poised to offer the financial alternative necessary to see innovation fructify into success. Indeed, on a larger scale, the marriage of crowdfunding and clean energy has the capacity to shake up the entire renewable energy sector. With a little help, Powerhouse Wind may be able to say it has played its part in this revolution.
You can watch Powerhouse Wind’s crowdfunding video below.
Editor’s update 26 June 2015: Powerhouse Wind met their campaign target & raised NZD $542,051.