The Democratization of Renewable Energy

Although I’ve done quite well over the years investing in publicly-traded renewable energy companies, the opportunity to get something more tangible for my investment dollars has always been very attractive. I’m talking about actually owning a piece of a real project, like a wind farm or micro-grid.

Fortunately, I’ve been given many opportunities to join accredited investors in early investment rounds for a number of these types of projects. Basically getting a piece of the action that simply wasn’t available for those who couldn’t invest a minimum of at least $50,000.

Certainly this is not something I’m complaining about. However, in an effort to help facilitate the continued integration of renewable energy, this avenue can only take us so far as it excludes thousands of other investors who can’t directly invest in specific renewable energy projects because they simply don’t have the kind of money needed to meet those minimum requirements.

For instance, a few years ago I had the opportunity to invest in a small wind farm in California. The minimum investment was $100k. Most folks don’t have that kind of money lying around. But I assure you, had the opportunity to invest in that same wind farm been available with a minimum investment of say $5,000 or $10,000 – there would’ve been a line out the door.

The fact is, there are droves of investors who are not only looking for a nice little profit, but are looking to invest their hard-earned money in companies that are aligned with their own personal beliefs regarding the importance of sustainability and cleaner energy and transportation fuels.

The bottom line is that there’s no shortage of folks who want to see more wind farms and solar panels instead of more coal-fired power plants. And they’re willing to pony up a few bucks to see that happen – especially if there’s a solid return on that investment.

So it should come as no surprise that I am a huge advocate of renewable energy crowdfunding.

The Evolution of Renewable Energy Financing

More and more I am convinced that the democratization of renewable energy is upon us thanks to the development of crowdfunding platforms and initiatives.

These are essentially operations that allow for the funding of renewable energy projects by raising small amounts of money from a large group of people.

Overall, crowdfunding operations (not just those backing renewable energy projects) raised about $5 billion in 2013. That number is expected to double to $10 billion in 2014. Now compare that to the $500 million raised just four years prior.

The truth is, crowdfunding is really evolving into a major vehicle for financing. Although perhaps “evolving” isn’t really the correct term to use as “evolving” suggests a slow transition. And there’s nothing slow about how quickly folks are turning to crowdfunding to finance their projects – particularly in the world of renewable energy and sustainability.

Using Capitalism as a Catalyst for Positive Change

Over the years, I have used this site, as well as my commentary on Energy & Capital to educate investors regarding the opportunities in renewable energy, organic food markets and sustainable business practices. I’ve used this platforms to make specific stock recommendations, too. But with the growth and success of renewable energy crowdfunding, I now plan to provide additional coverage and analysis on these opportunities as well.

Going forward, every week I will highlight a new crowdfunding opportunity that fits in with the overall message of Green Chip Stocks – using capitalism as a catalyst for positive change. This week. . .

Abundance Generation

To put it simply, Abundance Generation offers regular folks the opportunity to invest in various renewable energy projects which pay regular cash returns using debentures.

Debentures are certificates or contracts that represent loans you have made to a company. They’re similar to bonds, but pay a proportion of your capital back every six months, instead of paying everything at the end.

There are three types of debentures that Abundance offers. . .

• Variable Return – Returns are linked to the energy produced. As a result, these returns can vary from one period to the next.

• Fixed Return – You receive the same fixed amount regardless of the energy produced by the project.

• Inflation-linked – Capital and interest payments are linked to movements in inflation.

An advantage to debentures is that because they are not listed on a stock exchange, the value of those debentures doesn’t fluctuate with the financial markets. It’s a great way to diversify your risk.

For Ten Bucks. . .

Now only a couple of years old, Abundance Generation has already successfully funded eight wind and solar projects offering returns of between 6.3% and 9.3%. And there are another eleven projects now in the pipeline: Two solar projects, eight wind projects and one hydro project.

To date, Abundance has raised about $10 million with regular folks investing as little as $10.

You can learn a little more about Abundance in this short video. . .

To see if Abundance is a good fit for your portfolio, click here.

The Democratization of Renewable Energy originally appeared in Green Chip Stocks. Green Chip Review is a free 2x-per-week newsletter, is the first advisory to focus exclusively on investments in alternative and renewable energies.