Crowdfunding: a growing solution for energy access financing
As energy access companies seek innovative ways to finance their operations, many are turning to crowdfunding platforms. Between 2016 and 2020, these platforms helped raise $315 million for energy companies, with 90% of the funds secured through debt-based campaigns. This approach is gaining popularity among energy companies as it provides much-needed flexibility in terms of loan size and timing, while also diversifying funding sources. Borrowers report that crowdfunding offers faster transaction times compared to traditional financing, making it an attractive option for businesses in the sector.
Debt-based crowdfunding is unique in that it allows everyday people to invest in projects that align with their personal values, giving them the opportunity to contribute to sustainable solutions while earning returns. It has attracted the attention of donors as well, who are exploring this tech-driven financing method as a tool to close the funding gap in the off-grid energy sector. Several donors have already begun to support crowdfunding efforts by offering loan guarantees and covering platform costs, helping drive greater investment into energy access projects.
The role of Crowd Power
Recognising the potential of crowdfunding, Energy 4 Impact launched Crowd Power in 2015, an initiative funded by UK aid through the Transforming Energy Access platform. The programme aims to expand energy access crowdfunding by addressing systemic and operational challenges faced by fundraising companies and crowdfunding platforms. These challenges include limited financial inclusion for small borrowers, a small pool of investors and the high operating costs borne by platforms.
Since its inception, Crowd Power has had a significant impact on the sector:
- Supported over 300 crowdfunding campaigns by 72 energy access companies, non-profits, and micro-entrepreneurs.
- Raised over £26 million through these campaigns on 15 crowdfunding platforms.
- Leveraged 8x co-funding from private capital.
- Enabled 800,000 people in over 30 countries to gain access to clean energy.
In addition to providing financial support, Crowd Power conducts in-depth research on renewable energy crowdfunding and peer-to-peer (P2P) lending. This includes the annual Crowdfunding Energy Access: State of the Market reports from 2018 to 2024, offering valuable insights into the trends and opportunities in energy access crowdfunding. Other topics covered in dedicated reports include, syndicated financing, conditions of a successful campaigns and strategies for attracting investors to energy access projects.
Read the Crowd Power reports here:
Crowdfunding Energy Access – State of the Market Report 2023 – 2024
Crowdfunding Energy Access – State of the Market Report 2022
Crowdfunding Energy Access – State of the Market Report 2021
How to attract investors to energy access crowdfunding
Equity crowdfunding for energy access: Opportunities for scale-up?
Crowdfunding Energy Access – State of the Market Report 2020
Syndicated Financing with Energy Access Crowdfunding Platforms
Crowdfunding Energy Access – State of the Market Report 2019
Crowdfunding & P2P Lending for Energy Access – State of the Market 2018
Powering the Crowd into the Future
Crowd Power - Who is the Crowd?
Crowd Power - Success & Failure – The Key to a Winning Campaign