Wind farms play a crucial role in the energy transition. Crowdfunding platform Invesdor, founded by StartGreen in 2012 as Oneplanetcrowd, has already completed two highly successful citizen participation campaigns this year: Windpark Fryslân and Windpark Westermeerwind. In both cases, the available bonds sold out in no time. In this blog, Ellen Hensbergen, Managing Director of Invesdor, explains the great success of citizen participation in wind farms.
Surprising rush
‘At Invesdor this spring, we managed the citizen participation for two wind farms, allowing local residents to invest in a wind farm in the IJsselmeer. We knew they were attractive projects, but the sheer speed of the rush surprised us. In both cases, the number of subscriptions exceeded the supply of bonds (worth 10 and 5 million euros respectively) several times over. We were surprised not only by the enthusiasm but also by the amount of money per person. Most investors wanted the largest possible participation. To allow as many people as possible to participate, we capped the amount people could invest.
Great interest
In Windpark Fryslân, 2,550 people took a share, and in Westermeerwind, 592. These more than 3,000 people are also almost all new investors who were not yet registered with our crowd. In my opinion, this enormous interest can mainly be explained by the fact that local residents want to be part of the energy transition. These wind farms are already partly there, and partly still under construction, in the IJsselmeer. It’s not directly in anyone’s backyard, but if you live in Friesland by the IJsselmeer, you see it happening. I can imagine you thinking: if they have to be there anyway, I want to be part of it. Most really want to actively contribute to a sustainable society.’
Filling the financing gap
And of course, investors also want to get something out of it. Because let’s be honest: the interest rate on these bonds is a lot higher than the one on your bank savings account. That is good news for the energy transition. A lot of money is still needed to reach the 2030 climate goals—a lot of money. Estimates for this financing gap range from 30 billion to 100 billion euros. That money must come from the government, companies, and pension funds, but don’t count out Dutch savers. According to the savings dashboard of the Dutch Central Bank, we collectively have almost 500 billion euros in the bank in the Netherlands. That is a bizarre amount of money and therefore an enormous potential for the energy transition.
The necessity of citizen participation
Citizen participation not only helps finance wind farms but also plays a crucial role in creating public support for the energy transition. When citizens can co-invest and become co-owners of a wind farm, they feel more involved and responsible for the project’s success. Because no matter how you look at it, wind turbines affect your view or the ambient noise. The sense of common interest and shared profit strengthens support for sustainable energy projects.
Serious engagement
For that reason, the Dutch government encourages citizen participation in wind farms in various ways. Both the National Program for Regional Energy Strategies (RES) and the Climate Act and Climate Agreement place citizen participation at the center. The government advises giving fifty percent of a project’s ownership to local residents. That is not a hard requirement, but I think it is a good guideline. Twenty percent, for example, is not enough. With fifty percent, you take citizens seriously and send the signal that they really count. By doing so, you give local residents and local businesses a substantial role in the ownership and proceeds of wind farms. The energy transition cannot succeed without public support.
By the citizens, for the citizens
A third important advantage of citizen participation is that the proceeds from wind farms go to the local community instead of, for example, large London investment clubs. By investing locally, profits stay in the region and contribute to the economic growth and prosperity of the community. In this way, you strengthen the local economy and ensure that the benefits of the energy transition are widely shared.
Added value of an investment platform
Wanting citizen participation is one thing, but making it possible for an energy project is another. To start with, you have to register every investor and provide insight into the state of affairs. Furthermore, compliance is a major concern: the Wwft (Anti-Money Laundering and Anti-Terrorist Financing Act) requires financiers to know who their customers are. You can imagine that it is very difficult for project developers to verify the identity of every investor.
The Invesdor platform is well-equipped for this; it allows us to pick out rogue investors as well. Furthermore, we can significantly unburden developers by handling the registration and issuance of bonds. For private investors, the Invesdor platform is also super accessible, very user-friendly, and can be accessed from all over Europe.
The power of informing
Another plus point is our flexibility: we are large enough, but not too large to think along effectively on how to make this as successful as possible. Based on our experience, we could, for example, advise informing citizens well in advance about the possibilities, the risks, and the way they could participate. Those interested in Windpark Fryslân were generally somewhat older; some didn’t even have internet or a mobile phone. Especially for them, we organized an information meeting in the community center of Emmeloord. We have now run two major campaigns: next time we can bring even more experience to the table.
Future wind projects
Because we expect to do more wind projects in the future. Wind has a number of advantages over solar energy: wind is less weather-dependent than sun and is also available at night. Moreover, you can turn off a wind turbine if too much power is generated, so wind does not lead to grid congestion as quickly. Wind farms are also often built with batteries. And even though savings rates are going up, we see no decrease in investment interest. The 3.5 to 5 percent that our projects offer is still significantly higher than the interest rates of major banks.
Win-wind
If you ask me personally, I am very proud that we can help make citizen participation possible with our platform. Letting citizens participate in wind farms is a win-win situation for everyone involved. Citizen participation provides financing, increases the acceptance of sustainable energy projects, and stimulates a sense of ownership and involvement in the energy transition. Besides that, it puts citizens’ savings to work for the production of green energy, instead of it sitting unused in the bank at a meager interest rate. Moreover, together we are building a green future in which everyone can contribute and from which everyone can benefit.’
