Individual investors could join forces with utilities to develop projects

Solar energy projects in Britain could increasingly be funded by individual investors to complement the regime of subsidies for the industry under the government's new Contracts for Difference scheme.

Solarplaza, which has organised more than 60 solar industry events from Chile to China, including trade missions, said that it expected 'crowdfunding', or the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet, to play an important role in funding for future solar projects.

Paul van der Linden, vice president, Solarplaza, told PE that finance “was one of the major bottlenecks” to development of the solar industry. He said that the subsidies structure in the UK made it one of the most promising markets in Europe for solar. This was despite the curtailment of the Renewables Obligation for the sector next year, meaning that large-scale projects would be stopped. “The UK, because of subsidies for solar, is the fastest-growing market in Europe, but it is stopping the RO scheme next year, which was the main incentive to build large projects.

“So we will have to see how the market develops. Beyond that there are many more opportunities.”

In the future, individual investors could invest in solar schemes through crowdfunding platforms, allowing them to contribute to projects. This could give utilities access to funds outside the financial mainstream to build solar energy schemes. Given the situation with the Renewables Obligation, it was possible that many smaller schemes could be built in the UK.

The new Contracts for Difference scheme, paid for by the consumer, will help underwrite the development of renewable energy and reduce reliance on imported gas. Some £40 million a month is currently sourced through crowdfunding, including many real estate developments, according to Solarplaza. Rather than web-based schemes such as Kickstarter, which allows investors to develop products, crowdfunding focuses on investment in projects for financial returns. “Huge infrastructure projects used to be only for institutional investors. You can now invest from £5 up in these kinds of projects,” said van der Linden.

The major crowdfunding platforms will attend the Solarplaza Renewable Energy Crowdfunding Conference, which will be held on 30 October at Dexter House, London.

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SOURCE: Institution of Mechanical Engineers