Market Insights

Green funds draw ethical investors in clean energy

Crowdfunding—a future-ready concept is gearing up to conquer the renewable market space. For those who take the green funding route seriously, opportunities in ethical investments along with attractive interest rates are becoming popular. Notably, UK can be considered a leader in this space, with an approximate 80% share of Europe’s crowdfunded clean energy projects. France, Germany and Netherlands follow suit with a considerable market share.

However, investing in firms that specialise in authentic ethical investments may create social and environmental benefits. Abundance, a UK based firm generated US$2.1 mn from 874 crowdfunding investors. The returns was used to install more than 400 solar panels on home rooftops in Berwickshire, Scotland. Karina Sidenius, marketing executive at Abundance said, “The tenants in those homes get to use as much of the electricity produced as they can free of charge, which is helping some of the most vulnerable people in the UK save money on their energy bills.”

Green fund companies such as Premier Ethical, Royal London Sustainable Leaders Trust and Alliance Trust Investments are going up by as much as 65%, 55% and 45% respectively.

For newer investors, French crowdfunding platform Lumo encourages citizens to directly invest in renewable energy-based projects. One of their most important projects is situated in Iteuil, France. The project’s crowdfunding raised US$ 160,795 from 193 investors. The money bore eight percent of the cost of setting up 13,000 sqm of photovoltaic panels—and the rest was covered by the developer and a bank loan. The installation is expected to generate 1.3 GW hours of electricity per year, and will accordingly impact investors’ returns. According to a news feature on Renewable Energy World, Lumo expects investors to make 3.19 percent gross interest per annum, during the course of the project’s nine-year lifespan.

The relative novelty of crowdfunding energy projects has its share of drawbacks. According to The Guardian, ethical investment advice firm Castlefield has forewarned its brands that some counterfeit ethical funds do exist, where they mainly invest in non-ethical industries such as oil and gas instead of clean energy. Due to this, investors may not receive expected social and financial returns.

MI Newsdesk

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