Crowdfunding for renewables projects

“It’s a win-win situation”

Lothar Lochmaier, 30 May 13
Dr Michael Stein, founder and director of Trillion Fund, talks about the potential of crowdfunding for renewables projects.

How was the idea to start a Trillion Fund born, that is, to start a crowdfunding platform for the renewables energy sector?

I met James Lovelock and had a one-to-one with him and his wife Sandy about two years ago. (Editor’s note: James Lovelock is an environmentalist and a professor of chemistry. His best-known book, “The Ages of Gaia. A Biography of Our Living Earth”, was published in 1988.) After reading his books and then looking at the data myself (I am a scientist by training), I realised the scale and urgency of the need to punch through the powerful fossil-fuel lobby and persuade politicians to change policy.

The only realistic way I could think of was to engage directly with “people and their pockets”. Profit is a powerful motivator and I realised there is a big profit opportunity being overlooked. The problem is that infrastructure projects of a large enough scale to generate big profits are not easily accessible to ordinary investors – you need tens or hundreds of thousands of euros to get into the deal.

So crowd financing, or as I prefer to call it, “connected-community finance”, was an obvious way to go. The community then effectively becomes a group of lobbyists and promotes its interests to politicians through its own actions. Just look at what has happened in Germany. More than 50 percent of its citizens are direct investors. And look at what has happened to energy policy there as a result. Now we need to take that out to the rest of the world by quickly leveraging the internet and social media.  

What are the targets? Is it more about making money or about bringing people together to drive decentralised energy projects forward?

The aim is both to bring people together to make money and to fund energy projects collectively. It is a win-win situation. The buying power of the crowd is much stronger than that of the individual.

On the one hand, crowdfunding is a fashionable topic, but it also needs to be transparent for the users and to comply with the rules of the financial authorities. How do you manage that in the Trillion Fund?

We decided to go down the more onerous but in the end, much more credible route of getting registered under the regulatory umbrella of our partner, Sapia Partners LLP. We believe absolute transparency is essential to gain the trust of our members (investors) and developers. But we also want to encourage people to feel confident about making their own decisions with their own money as far as possible within that regulatory framework.

Who are the Trillion Fund’s possible user groups?

In a word: everyone! This is a global challenge of enormous scale. We want to encourage everyone to come to us to see what their options are and educate themselves on how to make good, ethical investment decisions. We think our users will like the deals we offer, but we will be equally happy if they come and learn from our site, absorb some of our ethos and then invest elsewhere. We will be delighted if everyone uses us as their jumping-off point by reading our blogs, tweets and web information to become better educated about renewable energy investment, so that they can hopefully enjoy the experience of investing in this way.  

Have you already funded local or global projects successfully?

We are focused on launching at a local level in the next few weeks. We think small steps are required to learn and evolve and also to ensure the regulators are happy. We want to do this right and most importantly we want to have the “crowd” guide our development: ultimately it will be our members who tell us what investments to go out and find.

Do you see crowdfunding (or more concretely in your case, crowdfinancing) as just an additional part of the finance industry for the switch to renewables, or could it create a new independent movement that also poses a challenge to the traditional banking and energy sector?

We feel that the world needs a fresh and powerful brand to help lead the way away from fossil fuels and towards renewables. A challenge to traditional financial and energy models is already taking place, as people who are dissatisfied with the current status quo find their voices through online social networks.

There has been a sudden surge of technological innovation in the financial sector, but this has come later than in other industries, such as travel. This innovation is enabling people to act upon their growing desire to take more control over their own financial affairs. There is a general shift towards greater financial capability and independence for everyone. We are tapping into this shift to create our own “renewable financial movement”. 

What are the next steps for the development of the Trillion Fund?

We want to achieve global recognition for as a place where people, communities, organisations and big retail brands can channel more money into scaling up renewable energy sources. Time is pressing and every day over 90 million tonnes of greenhouse gas emissions are pumped into our atmosphere. Fossil fuels are causing climate change, as well as acidifying our oceans.

Our planet’s buffer systems are exhausted so we need to act now. Everyone knows in their gut that something is wrong. Trillion Fund gives everyone the opportunity to invest and to make a difference. Ten thousand people investing GBP 100 achieves the same monetary outcome as ten people investing GBP 100,000.

But if you have 10,000 people involved, those individuals together are a much more powerful force for an overall change in the way we think about our relationship with the environment, other people and our money. A little contribution from everyone is of huge benefit for all of us. Our next step is getting this message out.

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