Citizens keen to be part of energy transition

Expert blog - 22 August 2024

Wind farms play crucial role in energy transition Crowd funding platform Invesdor, which was founded in 2012 by StartGreen as Oneplanetcrowd, has already completed two highly successful civic engagement campaigns this year: Wind farm Fryslân and Westermeerwind wind farm. In both cases, the available bonds were 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, we guided two wind farms in their civic participation this spring, enabling local residents to invest in a wind farm in the IJsselmeer. We knew they were attractive projects, but the fact that they would be so popular took us by surprise. In both cases, the number of subscriptions exceeded the offer of bonds (worth EUR 10 and 5 million respectively) several times over. Not only the enthusiasm, but also the amount of money per person surprised us. Most depositors wanted the largest possible participation. To still allow as many people as possible to participate, we capped the amount people wanted to put in.

Strong interest

In Windpark Fryslân, 2550 people have taken a share and in Westermeerwind 592. These more than 3,000 people are also almost all new investors, who had not yet registered with our crowd. I think this huge interest is mainly explained by the fact that local residents want to be part of the energy transition. Some of these wind farms are already there, some are still under construction, in the IJsselmeer. That is not directly in someone's backyard, but if you live in Friesland by the IJsselmeer, you can see it happening. I can imagine that you then think: if they have to come anyway, I want to be part of it. Most really want to actively contribute to a sustainable society.

Filling funding gap

And of course, investors want to get something out of it too. Because let's face it: the interest rate on these bonds is a lot higher than that for your bank savings account. This is good news for the energy transition. After all, a lot of money is still needed to meet the 2030 climate targets - a lot of money. Estimates for this funding gap range from €30 billion to €100 billion. That money has to come from the government, companies and pension funds, but do not discount Dutch savers. According to the savings dashboard of the Dutch Central Bank all of us in the Netherlands have almost €500 billion in the bank. That is a bizarre amount of money and thus huge potential for the energy transition.

Need for citizen participation

Citizen participation not only helps finance wind farms, but also plays a crucial role in creating support for the energy transition. If citizens can co-invest and become co-owners of a wind farm, they feel more involved and responsible for the success of the project. Because no matter how you look at it, wind turbines affect your view or ambient noise. The sense of common interest and shared profit strengthens support for renewable energy projects.

Serious engagement

For this reason, the Dutch government encourages citizen participation in wind farms in various ways. Both the National Programme for Regional Energy Strategies (RES) and the Climate Act and the Climate Agreement put citizen participation at the centre. The government recommends that 50 per cent of project ownership be owned by local residents. That is not a hard requirement, but I think it is a good guideline. Twenty per cent, for instance, is not enough. With 50 per cent, you really take citizens seriously and signal that they really count. You thereby give local residents and local businesses a substantial role in the ownership and revenue of wind farms. Without public support, the energy transition cannot succeed.

By citizens for citizens

A third key benefit of citizen participation is that wind farm revenues accrue to the local community rather than to, say, big London investment clubs. By investing locally, the profits stay in the region and contribute to the community's economic growth and prosperity. So this is how you strengthen the local economy and ensure that the benefits of the energy transition are widely shared.

Value-added investment platform

Wanting citizen participation is one thing, but making it possible for an energy project is another. For a start, you need to register every investor and provide insight into the state of affairs. Moreover, compliance is a big concern: the Money Laundering and Terrorist Financing (Prevention) Act requires financiers to know who their customers are. As you can imagine, it is very difficult for property developers to verify the identity of every investor.

The Invesdor platform is well equipped for this; we can therefore also pick out rogue investors. Furthermore, we can relieve developers of a huge burden by taking care of 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 infomercials

Another plus is our flexibility: we are big enough, but not too big, to be able to think along well on how to make this as successful as possible. Based on our experience, we could, for example, advise citizens to be well informed in advance about the possibilities, the risks and how they could participate. Those interested in wind farm Fryslân were generally a bit older, some did not even have internet or mobile phones. Especially for them, we organised an information meeting in Emmeloord's village hall. We have now run two major campaigns: next time we can bring in even more experience.

Future wind projects

Because we expect to do more wind projects in the future. Wind has a number of advantages over solar power: wind is less weather-dependent than solar and, moreover, it is also there 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 included. And even if savings rates go up, we don't see lower investment interest. The 3.5 to 5 per cent offered by our projects is still considerably higher than the interest rates offered by major banks.

Win-wind

If you ask me personally, I am very proud that with our platform we can help enable citizen participation. Getting citizens to participate in wind farms is a win-win situation for all involved. Citizen participation provides funding, it increases acceptance of sustainable energy projects and stimulates a sense of ownership and commitment to the energy transition. Beyond that, it puts citizens' savings to work substantially for the production of green energy, instead of sitting unused in the bank at meagre interest rates. Moreover, in this way, we are building together a green future in which everyone can contribute and benefit.'