Could Crowdfunding Shape the Future of Energy?

Crowdfunding has become increasingly popular and when Facebook acquired the virtual reality start-up, Oculus VR for $2 billion it raised the profile of crowdfunding as Kickstarter, the crowdfunding platform that aided in Oculus' success. Kickstarter helped them raise $2.4 million. No other project on Kickstarter has sold for that much money and Oculus is proof that crowdfunding has entered the big-time. 

This increasing profile for crowdfunding has the potential to fill the gaps left by major banks especially as they are refusing to lend to community energy firms. The world needs to find $1tn (£590.3bn) a year of clean energy investment if we are to have any chance of avoiding runaway climate change. Last year, just $254bn of finance was found globally – which is 12% less than 2012 and down a fifth on 2011's record $318bn of investment. Europe in particular is seeing a fall-off in finance: in 2013, investment in clean energy slumped by 41% to $58bn. The UK was one of the more positive areas of Europe last year, with investment falling just 8% from 2012's record figure of $14.3bn

The UK will need to tap new sources of finance to be able to move forward with renewable energy and they can't rely on energy providers or banks for finance and to drive change as they are too involved in their large fossil fuel assets. Many countries have used a combination of community energy generation and crowdfunding to achieve finance. In the US, the country's largest solar power provider has predicted that crowdfunding will provide rooftop solar projects with $5bn of investment within five years.

Further support for crowdfunding has been set out in the proposal that theThe Financial Conduct Authority is to move beyond its narrow focus on risk protection and play a much greater role in facilitating a diverse financial sector. Regulation should allow smaller and more innovative crowdfunding and peer-to-peer initiatives to thrive and not restrict them. There also needs to be greater incentives to encourage more people to invest in order to utilise crowdfunding to shape the future of energy.