Will Crowdfunding Be Solar's New Champion?

In many nations around the world, the pace of large-scale investment in solar is not keeping up with public demand. Everyday citizens not only want more solar in their homes and businesses to lower costs but also to see more substantial installations go ahead in their local community and the wider country.

The rationale for this is easy to understand, given solar installations create local jobs, reduce reliability on foreign sources of power—which can be dangerous in a turbulent international system only becoming more turbulent as the 2020s progress—and offer a clean and green energy source.

But what can the public do in circumstances where public and commercial stakeholders drag their feet?

This is where crowdfunding solar installations could offer an alternative. This is not simply a theory, there is already a notable precedent for it in existence. So let’s now go through the ins and outs of the crowdfunding concept in the solar sector.

How crowdfunding works

For anyone yet to be familiar with the concept of crowdfunding a brief overview will be useful. At its simplest, crowdfunding is where an individual or organization puts forward a business proposal on an online platform where people can financially contribute to the proposal, in return, they’ll be incentivized for doing so by getting a special benefit in return. The Pebble Smartwatch (and its sequel), the Coolest Cooler, and The World’s Best Travel Jacket have all been among the most successful crowdfunding campaigns in history.

Benefits can range from a straightforward perk like early access to a product once it goes into production (after sufficient capital has been raised via crowdfunding to make it), to benefits that could become very substantial, such as partial ownership in a company. Making a financial contribution in return for partial ownership in this vein is known as equity crowdfunding.

Of course, crowdfunding in solar power is more complex than consumer products, but the basic principles remain the same, and DC Power Co has shown it's doable via equity crowdfunding.

Crowdfunding Business Model

DC Power Co powers up

DC Power Co was founded by Nic Frances Gilley, Monique Conheady, Emma Jenkin, and Nick Brass in late 2017. In 2018, it raised AU$2.5 million via its equity crowdfunding campaign. In its second equity crowdfunding round in 2019, it raised AU$1.63 million. For the founders, seeking capital via equity crowdfunding was not just about getting the money on the books to drive their plan forward, but also about engaging with a new segment of the market.

DC Power Co has also made a point of illustrating the everyday characters among their investor pool. Such investors are not the typical financial titans and whizzkids you’ll usually see on the scene across a new cutting-edge investment concept. Instead, among DC Power Co’s investors is Helmut, a stone sculptor from Tasmania. Helmut previously had a 3kW solar system installed and more recently acquired a 5kWh battery via DC Power Co.

For Liz Greenbank, General Manager of DC Power Co, the multifaceted mission of DC Power Co was key to its success and provides its blueprint for the future.

“DC Power Co's vision is an Australia powered by renewable energy and it was established because the energy industry and government just don't recognize the over two million solar homes as a critical part of the energy mix. That's why we launched the business with a crowdfunding campaign, the world's largest at the time, to really give solar homes a voice. The campaign had a two-fold strategy—to fund the initial setup of the business (we raised over AU$2m, and then went on to raise another AU$1.6m in a second campaign), but also for us to grow our base in a very short period of time (we have ended up with over 12,500 investors)”, Ms. GreenbankSolar Magazine Interviewee Avatar told Solar Magazine.

The best part about this journey is the enthusiasm of those 12,500 people—they want to shout about us, sometimes shout at us and they take part in trialing our ideas. They're a passionate bunch, and we love that. Because if we're going to disrupt a system that's been the same for a century, we need a little passion.

While this is surely a sunny and inspiring perspective, Ms. Greenbank contends it also comes with a clear-eyed view of the industry, and its challenges.

“The energy sector is one of the toughest, most competitive, and poorly trusted industries I've ever worked in. Consumer confidence is quite rightly at an all-time low—people have been slammed with misleading discounts, dodgy providers and have been conditioned to not expect any level of customer service”, Ms. Greenbank told Solar Magazine.

“Coming into this space is a double-edged sword—we have this great opportunity to stand out as a trusted company made for solar homes, with a focus on transparency and education, but at the same time, consumers can be wary of our motives. The reality is, if you have solar panels, it is still really hard to understand what energy plan is right for you and to find a company that will support you to make the right decision. DC Power Co fills that gap.”

As well as offering solar batteries for sale, DC Power Co also provides solar installations alongside their partner business Redback Technologies. In turn, DC offers solar insights, where—among other services—customers will get a call or SMS in the event their feed-in tariff isn’t being received on a particular day. Given many Australians install solar panels not only with a view to cutting their electricity but receiving some income in return for the surplus power they feed back to the grid, such a service can represent a safeguard on seeing feed-in tariff income lost due to an error.

Caution amongst the crowd

Just as DC Power Co has many admirers in the solar industry for what they’ve done, there are also those who fairly note the risks that come with any equity crowdfunding investment must be factored into any consideration of a campaign.

Crowdfunding Driving a Decentralized Solar Power Network

For Thijs VrieselaarSolar Magazine Interviewee Avatar of The Solar Power Co, an Australian organization that assists consumers in saving on their energy by switching to renewables, the existing risks must also be considered alongside future growth in this area.

“Equity crowdfunding, as done by DC Power Co, is a great way for a business to create interest and raise capital. Likewise, it’s a way for regular people to support a company and/or a cause they believe in. Yet I do believe it’s important to remember that equity crowdfunding comes with the same, very real risks that come with normal investments in young companies. Especially as more companies get into the same space and competition becomes fiercer”, Mr. Vrieselaar told Solar Magazine.

In turn, Mr. Vrieselaar contends the broader dynamics in the solar industry must also be considered when there’s any ambition in mind to bring "people power" to the market.

The grid is owned and controlled by just a handful of billion-dollar for-profit companies and solar on its own is not going to change that. Not even in combination with battery storage. Something needs to change in the distribution model. I believe that change will come in the form of a decentralized energy network. With enough solar and batteries installed in a community, there wouldn’t be a need for a coal plant hundreds of kilometers away or all the cabling to get the energy produced there to your home.

—Mr. Vrieselaar told Solar Magazine.

“In an ideal world, a community is able to generate all the energy they need themselves. The challenge in such a scenario will be keeping track of all these energy transactions. How is a producer of energy properly compensated by the user and how are people incentivized to add and invest in the network.”

The solution to that, I believe, is in the blockchain. And it’s a solution people much smarter than me are already working incredibly hard on. I also believe AI will play a big role in this, balancing production, storage and demand. AI is already being used by energy companies all over the world to help with exactly that job.

Leading the masses

Solar Magazine: Solar Industry News and Insights

Unquestionably a great deal of social good can be achieved via the crowdfunding model. But as noted earlier in this piece, there are risks to the equity crowdfunding model. In turn, the greatest action in this area will always require movement from its most substantial stakeholders. After all, the reality is—as distinct from other sectors where the causes (important in their own way though they are) are less urgent—there’s no doubt the growth of renewable energy, and transition to a clean and green economy cannot occur via grassroots funding alone.

Governments and business leaders ultimately have to be at the forefront given the regulatory and commercial complexity of such a transition .

Organizations like DC Power Co should be commended for their innovative path—it’s just also essential we continue to see other stakeholders play their part and do more in the future in growing green energy.


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