Crowdfunding is the donation, reward, debt and equity campaigns launched by organisations raising capital for off-grid energy projects
Crowdfunding for energy access refers to the donation, reward, debt and equity campaigns launched each year by social enterprises, charities and other organisations raising capital for off-grid energy projects. This market is currently very small, with $3.4 million raised for projects in Africa and Asia in 2015. Debt campaigns currently dominate the market, accounting for 75% of funds raised and 95% of campaigns. Much of this is for micro-loans. Recent shifts in solar crowdfunding and the emergence of in-house financing across energy access business models will continue to alter the crowdfunding landscape significantly.
Over the short term, equity and debt crowdfunding could grow substantially as more early-stage business ventures, unable to raise capital from traditional financiers, seek funds from the crowd. Regulatory changes could also assist this growth. The off-grid energy sector is capital-intensive, with the leading market players offering pay-as-you-go (PAYG) financing, with high working capital requirements. Longer term, as these companies reach scale, the role of the crowd is likely to reduce as other investors in the sector will be better placed to provide the required financing.
Cogan, D.; Collings,S., Crowd Power: Mapping the Market for Energy Access, Energy4Impact (May 2016), 20p