For many of us, renewable energy is important, but not something we’re able to do much to support ourselves. We can switch to a greener energy supplier and lobby our representatives for better policy, but not everyone can afford solar panels or help to fund a wind farm. There’s been a gap in the market for ways to invest smaller amounts of money in renewable energy for a while, all the more so since interest rates are very low.
Ecotricity’s bond scheme is an exception. Rather than go to a bank, the company has raised millions of pounds for investment from its customers and other individuals, and issued eco-bonds.
The eco-bonds are £500 each, but for something more crowd-sourced try Abundance. It’s the first platform for community funding renewable energy projects, and you can start with as little as £5. Users can view specific projects and buy debentures, and these will pay a return through the energy generated once the installation comes online.
It’s a smart idea. It bypasses the banks, who are reluctant to lend at the moment, and doesn’t depend on government backing. It generates a small income for investors in an economic climate that is currently hostile to savers. Because investors are paid back through the energy generated rather than a fixed payout, renewable energy capacity can be built without adding a debt burden to the developer. Those that want to reduce their carbon footprint are able to put their money where their mouth is. If you have a couple of grand to spare, you could even invest enough to cover the cost of your energy bills and enjoy the benefits of free renewable energy.
The downsides? Like any investment, it’s a risk. Not every project is going to deliver a decent return, and you might not want to put everything in one project. Debentures are designed to hold for 20 to 25 years and that’s a long term investment that will suit some and not others. You can sell your stake informally, but you can’t just cash it in on demand. And needless to say, those convinced that renewable energy is not economic will not be investing. That’s fine. If you’re one of those people, this is not for you.
To find our more, visit the Abundance website.