Crossing borders to crowdfund renewables

December 28, 2016 by Alfredo Ranavolo, Youris.com
Credit: Andras Barta

Today energy crowdfunding platforms and investors experience many problems if they want to finance projects that cross the legal boundaries between the EU member states. International experts are striving to harmonise to European regulations in the sector

Renewable energy crowdfunding involves three different parties: the fundraising platform, the investors  who generally expect a return, and project developers needing money. They may come from different nations. And that is surely a complication, since there isn't one legislative framework for this business sector, nor one that is so recent and linked to the use of the web.

This challenge  has been under the lens of international lawyers, such as Osborn Clarke legal practice, who has produced a lot of relevant material. In the release named Crowdfunding crossing borders, they observe that if a platform aims to expand its business into other EU member states, it will need legal advice in those countries. And an investor wishing to invest in a cross border project listed on a foreign platform, should be aware of how the law differs from his or her home country. The same applies if the investment is related to a project owner abroad.

Thorge Drefke, an Osborne Clarke associate in Köln, Germany, explains that already in late 2014 the European Securities and Markets Authority (ESMA) published its opinion/advice on investment-based crowdfunding, which clarifies how crowdfunding models fit within existing EU legislation such as MiFID, Prospectus Directive, AIFMD and other financial regulations.

ESMA affirms that, where crowdfunding platforms operate within MiFID (the "Markets in Financial Instruments Directive" has been in force since 2007. It will be updated in 2018 to increase transparency across the EU financial markets), the current EU regime provides a reasonable degree of risk mitigation, due to disclosure requirements and classification of risk profiles of the investors. But for platforms operating outside MiFID, investor protection could be mitigated by measures at local level as national legislation doesn't require compliance with the directive.

Regarding the Prospectus Directive, it stipulates that producing a prospectus is not mandatory if the amount payable for all shares offered over a period of 12 months in aggregate across all Member States, is less than €5 million. But EU countries have chosen different thresholds under national law for the minimum size of offers for which a prospectus must be produced. 

ESMA assumes that the strong incentives for project sizes to be kept below the relevant offer size threshold, imposed under national regimes, pose challenges to the viability of the crowdfunding platform business model. Some platforms could limit the type or the number of investors in projects in order to benefit from one of the exemptions set out in the Prospectus Directive (which is currently under review and should increase the size limit to €8 million).

In 2016, for the first time, the European Parliament asked the European Commission to present an initiative to regulate and harmonise crowdfunding practices across the EU. "The main issue for platforms is that they cannot actively market investment opportunities across different member states without complying with each country's requirements", says Oliver Gajda, executive director of the European Crowdfunding Network (ECN).

Alex Raguet, founder of the French crowdfunding platform Lumo, confirms that few players have licenses for crossing borders. "We are only regulated for France. I can't translate my site into English, but we have a lot of English people living in France and we would like them to invest in our platform", he says.

To find solutions to such issues, ECN and Lumo have joined the international network of the European project CrowdFundRES, which aims to unleash the potential of crowdfunding for financing renewable energy projects.

The European Commission published a report on crowdfunding in May 2016. "This report gives a detailed description of the regulatory environment of crowdfunding in the EU", says Drefke, "But the EC states that currently, as crowdfunding remains largely local and the sector is changing rapidly, there is no strong case for a EU level framework. However, the EC will keep developments in the sector under close review, and meet twice per year with regulators and the sector".

Which legislation could be a benchmark for harmonising the regulatory situation? "According to our experience, for example, Austria and the UK have crowdfunding regulations which could be called advanced", Drefke points out.

Austria has a specific Crowdinvesting act, called Alternativfinanzierungsgesetz, providing for a legal framework for crowdfunding platforms. In the UK the specific regulations are left to administrative provisions published by the Financial Conduct Authority – FCA,  which allows for a flexible response to economic or social developments of crowdfunding business.

"In France you can't do nothing for two years while you wait for inspections and authorisations. In London small frameworks are required to let business start", Raguet says.

Bearing in mind that 81% of the whole European crowdfunding market volume in 2015 (including any types of crowdfunding such as peer-to-peer, equity or lending or reward donation crowdfunding etc.) is generated in the UK, the liberal British legislation playing a role in this strong market position.

Explore further: Energy crowdfunding: the new way to boost renewables

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26 comments

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gkam
1 / 5 (6) Dec 28, 2016
This is being done for nuclear plants, too. They are so expensive it takes more than one nation to build the Hinkley plants in England.

And there are serious economic risks with nukes:

https://www.thegu...sinks-in

The above referral is to the Vogtle plants in Georgia, now years past and billions over target.
WillieWard
3.7 / 5 (3) Dec 28, 2016
They are so expensive
Intermittent renewables are unable to meet energy demand without fossil fuels as backup to keep lights on when wind is not blowing or sun is not shinning or during prolonged droughts, because cost-effective batteries/energy storage does not exist.
"Renewables+Fossil Fuels" are cross-border killers.
"coal-burning countries are making their neighbours sick"
"German, Polish coal power causes thousands of cross-border deaths"
http://energyandc...-deaths/
http://d2ouvy59p0...port.pdf
"Germany's coal-fired plants: Study: thousands of deaths in Europe due to air pollution"
http://archyworld...llution/
Meanwhile Fukushima and Three Mile Island resulted in zero deaths.
gkam
1 / 5 (6) Dec 28, 2016
Yup, renewables are now first choice, and even Willie admits it.

Game's over, Willie. Nobody will want your 15 cent/kWh wholesale power when they can buy it for 3-4 cents from wind and solar. With no nuclear waste liability. No chance of meltdowns.

No $190,000,000,000 "clean-ups".
WillieWard
4 / 5 (4) Dec 28, 2016
Meanwhile Fukushima and Three Mile Island resulted in zero deaths.
and Chernobyl proves that carbon-free nuclear power, even in worst case scenario, is the most ecologically friendly, almost no disruption of wildlife's habitats, no wind blades/solar mirrors to hurt endangered species.
"Wildlife species diversity, populations in Chernobyl 'Exclusion Zone' now healthier than in most Eastern European forests"
http://www.montgo...bd3.html
gkam
1 / 5 (7) Dec 28, 2016
"Diversity"?

Those are mutations, Willie.
WillieWard
4 / 5 (4) Dec 28, 2016
Those are mutations
Natural radioactivity in Kerala, Guarapari and Ramsar are higher than Chernobyl and no meaningful mutations were detected.
https://en.wikipe...f_Kerala
http://news.natio...science/
http://www.youtub...Ax1yIKjg
http://www.youtub...HUGwFoJE
gkam
1 / 5 (7) Dec 28, 2016
Yes, and I am sure it is good for us.

If you like it, you can move to the Fukushima-affected areas. They won't let you live in Pripyat.
gkam
1 / 5 (6) Dec 28, 2016
Did you actually READ the link you provided?

Read it:

http://www.montgo...bd3.html

"The Chernobyl disaster confirmed everyone's worst nightmares about the awesome power of nuclear reactions. When the Ukrainian reactor collapsed, the radioactive fallout profoundly contaminated the surrounding environment, affecting any living beings located within the so-called "Exclusion Zone" of 30 kilometers around the reactor's shell. Acute radiation poisoning annihilated a large pine stand, since renamed "the Red Forest," while many animals suffered significant physical or mental abnormalities.

Invertebrates in the area suffered particularly dramatic population crashes, as most radioactive material resides in the topsoil layer where such insects survive and reproduce."
WillieWard
4 / 5 (4) Dec 28, 2016
Even so, it is almost nothing close to millions of birds and bats slaughtered by wind blades and solar mirrors, ruination of natural landscapes, disruption of wildlife's habits, toxic carcinogenics(gallium arsenide, hexavalent chromium, selenium, brominated diphenylethers, polybrominated biphenyls) spread into the environment by so-called eco-friendly renewables.
WillieWard
4 / 5 (4) Dec 28, 2016
...it for 3-4 cents from wind and solar.
cheap, almost for free since it's subsidized with taxpayers' hard-earned money.
"Solar & Wind Received 281x & 17x More in Federal Subsidies than Nuclear"
https://uploads.d...fcc7.jpg
https://uploads.d...a8d0.jpg
https://www.eia.g...subsidy/
gkam
1 / 5 (7) Dec 28, 2016
$190,000,000,000 is a lot of subsidy, Willie.

That's the low-ball figure for now.
gkam
1 / 5 (6) Dec 29, 2016
How many billion-dollar immense solar power sources could we build for $190,000,000,000? Wind farms and transmission lines?

The problem with nukes are they cost so much, they crowd out every other kind of power source.

Who is going to pay for that two hundred billion dollar disaster? Not the company which caused it, they passed it on to The People.
WillieWard
3.7 / 5 (3) Dec 29, 2016
they cost so much
"solar received 281 times more in subsidies per unit of electricity than nuclear, while wind received 17 times more, according to the Energy Information Administration."
"nuclear is our largest source of clean energy – and the only one proven capable of scaling up rapidly"
http://www.thecal...5929222/
https://uploads.d...fcc7.jpg
gkam
1 / 5 (6) Dec 29, 2016
That $190,000,000,000 is the cost to The People of Japan to "clean up" the disasters at Fukushima (whatever that means, so far they have no clue what to do).

We could have a complete system of alternative power for that kind of immense investment. Instead, it will go to spread the Fukushima radiation around as they try to "clean up" their messes.
WillieWard
3 / 5 (4) Dec 29, 2016
$190,000,000,000
Most of it goes into the pockets of the politicians and fake-environmentalists who helped the fossil fuel industry to sell more to Japan.
gkam
1 / 5 (6) Dec 29, 2016
It does not go to making us energy, does it, Willie? It is an immense waste of capital and talent, isn't it?

It is lost, dumped down the nuclear, radioactive rat-hole, isn't it?

We simply cannot afford another nuclear disaster here on Earth. No matter your argument, no matter your screaming or copy-and-pasting, nuclear power is dying of its own weight, in its own radioactive waste.
WillieWard
3.7 / 5 (3) Dec 29, 2016
is dying of its own weight
Most of the big investors in wind and solar energy are fossil fuel barons, because they know that wind/solar is intermittent and needs natural gas as backup forever. For each gigawatt of wind/solar, it is needed around a gigawatt from fossil fuels because cost-effective batteries/energy storage does not exist, and, to fill this gap, natural gas stations are cheap easy fast to build and maintain.
As solar/wind farms becoming aged it will be perceived that maintaining and replacing these behemoths is quite expensive, while natural gas stations are cheap to maintain and are ever operating in standby mode. So natural gas stations will assume full power generation displacing definitively the intermittent/inefficient wind/solar unicorn energy.
Pseudo-environmentalists claim that coal and carbon-free nuclear are a bridge to renewables, but in the end, renewables are being a bridge to natural gas/fracking for displacing carbon-free nuclear power. Sad!
gkam
Dec 29, 2016
This comment has been removed by a moderator.
WillieWard
5 / 5 (3) Dec 29, 2016
related to Baghdad Bob?
Carbon-free nuclear power is not losing terrain to wind/solar unicorn energy. Maybe in fairyland, intermittent energy is replacing fossil fuels everywhere. But in the real world, carbon-free nuclear power is being replaced by cheap coal and/or natural gas/fracking.
http://www.forbes...ewables/
https://www.green...il-fuels
gkam
1.7 / 5 (6) Dec 29, 2016
"Nuclear power, with its large upfront costs and inflexibility of generation, is clearly the most unsuited generator to the new vision for the power sector. Current trends show nuclear power is unlikely to be implemented in many countries in the future and therefore globally will become less and less significant. A recent assessment by UBS, the largest Swiss financial institution and a major international investment bank, puts it this way: ''Large-scale power generation, however, will be the dinosaur of the future energy system: Too big, too inflexible, not even relevant for backup power in the long run.''12 This is having a material effect on the industry and on November 20, 2014, the credit-rating agency Standard and Poor's downgraded the French state owned AREVA, largest nuclear builder in the world, to speculative grade BB+ or ''junk''."
http://ieeexplore...r=711043
WillieWard
4 / 5 (4) Dec 29, 2016
Natural gas/fracking is accounted as "renewable" but it is not carbon-free, believe it or not, it is a fossil fuel.
Nuclear power remains the cheapest way to deeply decarbonize modern electrical grids.
http://thebreakth...nization
Nuclear power is the only one proven capable of scaling up rapidly to stop global warming.
https://scontent-...58F8D06C
Estevan57
4.2 / 5 (5) Dec 29, 2016
Holy cow! Both of you actually put up a reasonable facsimile of a reference to support your views!

The end times must be upon us. The children are growing up. I'm so proud.
gkam
1 / 5 (6) Dec 30, 2016
It looks like "family funding" works, too.

"Largest Quarter Ever Recorded for Solar Installations"

http://www.power-...ns.html?

"The Solar Energy Industries Association reported the third quarter of the year shattered all previous quarterly solar photovoltaic installation records.

Approximately 4,143 MW of solar was installed in the United States during that quarter, a rate of one megawatt every 32 minutes.

However, that record might not stand long, as SEIA estimates the fourth quarter will record even higher solar installations."
WillieWard
3.7 / 5 (3) Jan 01, 2017
...A recent assessment by UBS, the largest Swiss financial institution and a major international investment bank...
Even so, Swiss were not fooled by the Green pseudo-environmentalists(pro-fossil fuel lobbyists) and other vested interests. Natural landscapes and wildlife's habitats are saved for while from wind/solar bird-choppers/landscape-destroyers backed up by fossil fuels.
http://blogs-imag...idth=960
http://www.bbc.co...38120559
gkam
1 / 5 (6) Jan 01, 2017
I'll send you some pictures of the "natural landscape" of Fukushima.
gkam
1 / 5 (6) Jan 01, 2017
It is not just renewables which can use crowdfunding. Nuclear plants have become so expensive to build and operate it now takes help from other nations. The British Hinkley C plant needs the Red Chinese Commies to help them out.

Of course, no technology will be stolen.

But the real concern is the quality of the materials. Already there are serious concerns of poor quality and dangerous conditions in the reactor vessels, built in China.

But, . . what could go wrong?

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