ECrowd! launches a program to streamline the due diligence process to finance sustainable energy projects

Horizon 2020 Call: H2020-SMEINST-1-2015
Topic: SIE-01-2015-1
Type of action: SME-1
Proposal number: 719958
Proposal acronym: ECROWD2D

Behind this mouthful of ugly and senseless acronyms hides a powerful innovation proposal set to boost the financing of small to medium size energy efficiency and renewable energy projects through the power of the crowd.

The European commission agrees about the potential of the ECROWD2D project, launched by Ecrowd! with the support of Visum Solutions, as it has just awarded a substantial amount of money to support its development through its SME instrument Call included in the Horizon 2020 Program.

So why is ECROWD2D so important? Let’s start by setting some context.

According to the European Commission, residential buildings and the tertiary sector represent 40% of all energy consumption in Europe. Improving the energy performance of buildings and facilities is critical to achieving the EU’s goal of a 90% reduction in CO2 emissions by 2050. The investment needed to achieve this goal is estimated at €95 billion annually!

Today, large-scale sustainable energy projects are financed by banks, corporations, investment funds as well as public development funds for regional-national infrastructure projects.

However, to develop a truly sustainable energy society across Europe and reach the EU’s Sustainable Development goals, more small and medium-scale sustainable energy projects (between 50.000€ and 1.000.000€) must be realised.

Project developers and investors in this sector confirm that many such projects in Europe are currently stalled due to a lack of financing. There is a solid consensus formed that in order to bridge the 95Billion Euro gap, large investment funds must view small and medium-sized sustainable energy projects as safe and reliable assets. Several are looking to do just that with many institutional investors planning to invest large sums in ‘bundled’ clean energy projects over the next decade, both in the US and in Europe.

An ideal solution to cover this financing gap is the rise of the crowdlending model such as offered by ECrowd!. However, three barriers have prevented Crowdlending to really scale up to its full potential:

1. Institutional Investors are not focused on smaller energy projects because the expected return per project is relatively small compared to the excessive time needed to complete the contract negotiation process and due diligence process to ensure viability of the technical, economical, legal and sustainability aspects of a project;
2. The indispensable due diligence process is overly complex and currently consumes excessive, valuable time;
3. Crowdlending is growing fast but is not yet top of mind among small investors who could invest a part of their savings in energy projects, and project owners who could use crowdlending as a financing alternative.

ECROWD2D aims to simplify and streamline the due diligence process through the power of the crowd.

When it comes to due diligence, a promising solution is the Investor Confidence Project (ICP). The ICP is currently developing standard documents and Energy Performance Protocols (EPP’s) tailored to the European sector that will define a clear roadmap for bundling small to medium sustainable energy projects into a single investment. The final EPP’s are not scheduled to be released until mid-2016.

ECrowd! however aims to adapt and fully streamline its due diligence process before the release of the EPP’s. And to do that, it will leverage what it knows best by sourcing the due diligence through the crowd.

A crowdsourced due diligence process.

An independent due diligence process is essential for investor confidence. However, this phase is slow and expensive. Crowd sourced due diligence unlocks the vast technical knowledge and experience in ECrowd!’s investor database by involving these experts in the due diligence process.

The ECROWD2D programme is about developing a set of standardized processes and tools that will enable the participation of technical, economic and sustainability experts previously selected and registered as investors on the ECrowd! platform, to evaluate projects.

This will make the overall due diligence process faster and better for each project, thus allowing more projects to enter the ECrowd! pipeline.

As a result, ECrowd!2D will accelerate the development of sustainable, low carbon communities in Europe by:

1) Reducing energy consumption and carbon footprint in buildings. Our platform enables agile financing. More public and private organizations can realize their projects to upgrade lighting fixtures, heating and cooling systems and install renewables. By unlocking energy savings potential, the end customer enjoys lower bills and reduces their CO2 emissions.

2) Boost investment in low carbon technologies. Our online financing tool harnesses the power of the crowd, empowering both citizens and large investment funds to invest in sustainable energy technologies. More investors means faster, widespread adoption.

3) Engaging users. Our 700+ investors care about making a positive impact in local communities. Many of them are experienced engineers and financial experts that want to participate directly in a project. Our solution goes beyond existing financing platforms by ‘crowdsourcing’ multiple experts from our investor database to evaluate specific aspects of a project. The result is a faster, more robust due diligence process.

In effect, ECROWD2D has one simple and ambitious goal:

Leverage collective intelligence to enable the rapid financing of clean energy throughout Europe.

P.S: If you wish to contribute as an expert in our projects, please register with ECrowd! and let us know your area of expertise. We look forward to welcoming you as part of our clean energy crowdsourced revolution!