Green gain: how crowdfunding can deliver dividends from cleantech

Crowdfunding is giving private investors the opportunity to invest and prosper from cleantech, says Joe Warren, CEO of Powervault

Fundamental change is afoot in the energy sector, with two-thirds of all existing power stations across the UK expected to close by 2030 as aging coal, nuclear and gas fired plants are retired.

Accordingly, the UK’s mission to deliver secure, affordable and sustainable energy for future generations is in full swing, and energy minister Amber Rudd earlier this year provided a clear articulation of how the government would like to achieve those objectives: namely, a ‘course correction’ to a smart, low-carbon, consumer-led and competition-focused energy system that has energy security as its heart.

The opportunity for consumers to benefit from this mission is huge. The National Infrastructure Commission believes that removing barriers to smart power innovation (especially storage, demand flexibility and interconnection) could save a massive £8bn from consumer bills per year by 2030, while also helping the UK meet its 2050 carbon targets and securing the UK’s energy supply for generations to come.

Signs of the energy transition away from traditional models of centralised energy generation and towards cleaner, more efficient distributed supply and management are everywhere. For example, just a few days ago Britain generated no electricity from coal for what is believed to be the first time since the 19th century.

Financial flows are also shifting as savvy investors are moving away from the old world of fossil fuel assets. Indeed, investors who have dumped holdings in fossil fuel companies have outperformed those that remain invested in coal, oil and gas over the past five years according to the world’s leading stock market index company, MSCI. As such, many high profile investors are recognising the opportunity and moving towards diversified cleantech portfolios with huge financial pledges. One of the most notable being Microsoft co-founder Bill Gates’ launch of a multi-billion-dollar clean energy research and development initiative on the opening day of the U.N. climate change summit in Paris.

The energy transition will break up the old monopolies of the past and allow homeowners to reap the rewards through self-generation, storage, trading, Smart Homes and new types of charging that incentivises more sustainable consumption.

There has been an upsurge of interest from private individuals looking to invest in new cleantech start-ups which, like Powervault, are looking to commercialise their businesses via crowdfunding platforms. Investing through crowdfunding represents an added route for individuals across the country to benefit from the energy transition. A number of factors have converged in recent months to make the home energy storage market, in which my own company, Powervault, is a leading UK player, a particularly compelling crowdfunding investment proposition.

With around as many as one million homes having roof-top solar installed across Britain, there is a ready-made market for domestic-scale storage in the UK. Retail price forecasts suggest bills will continue to rise in line with a decade-long trend (electricity prices rose 41 per cent between 2007 and 2013 alone). The gap between peak and off-peak prices will widen while the price of batteries is falling rapidly (the cost of Lithium-ion batteries has already halved in a year and, according to Deutsche Bank, is likely to fall by 20 per cent-30 per cent a year up to 2020). Domestic solutions will also be the perfect partner to forthcoming smart electricity tariffs in providing consumers with the opportunity to store cheap, off-peak power and slash their energy bills.

Accordingly, demand for Powervault’s home energy storage system, which stores free renewable energy from solar panels during the day and releases it in the evening when household energy demand peaks, is growing by the month. Powervault’s first fundraising campaign broke a world record in 2014 raising £150,000 of seed funding in just eight hours. Last year we raised a further £750,000 in three and a half days, and today we are already more than 125 per cent of the way into our third raise, having secured more than £950,000 against our original target of £750,000.

Excitingly, the appetite for investing in companies such as Powervault represents a broader socioeconomic shift towards empowered consumers who are ready to take back control of their energy production and consumption. The technology is proven and the government is showing its support. Crowdfunding provides the crucial platform for individuals to align their interests by both investing in and prospering from the energy transition.

Joe Warren is CEO of Powervault