Crowdfunding pushes the energy transition, fills in gov’t funding gaps

In a two-part series by Matt Chester, the first article will look at the most interesting successfully funded energy transition projects on crowdfunding sites.  The second article will highlight the most intriguing projects that were ultimately unsuccessful in raising their funds through crowdfunding. photo.

In a two-part series by Matt Chester, the first article will look at the most interesting successfully funded energy transition projects on crowdfunding sites.  The second article will highlight the most intriguing projects that were ultimately unsuccessful in raising their funds through crowdfunding. photo.

By Matt Chester

This article was posted on the Chester Energy and Policy blog on June 25, 2018. 

When someone comes up with an idea for the next great technological breakthrough, one of the first roadblocks to seeing that idea through to fruition is determining how to fund its production.

The typical answers to that question used to be to find a wealthy private investor, a venture capital firm who lets their money work for them, or a government grant. All of these traditional methods have been crucial to the history of energy innovation.

But we are now in the age of the Internet, where we share everything from our houses on Airbnb to our cars with Uber. As such, budding inventors and entrepreneurs (both in the energy space and elsewhere) have taken to sharing their funding needs through crowdfunding websites like Kickstarter and Indiegogo.

Perusing through these websites, I noticed that there are a host of energy-related products that have sought funding through crowdfunding– both successfully funded projects and ones that failed to meet their goals.

As a part of what I plan to become a running series highlighting active energy-related projects on crowdfunding websites, I figured I’d start with a look back at some of the most interesting and unique projects that were successfully funded through crowdfunding to survey what type of projects are out there, see if I could get a comment from the people behind the projects, and analyze why these types of projects were pushed to crowdfunding websites instead of more traditional fundraising methods.

This first article will look at the most interesting successfully funded energy projects on crowdfunding sites, but stay tuned for the soon-to-come follow-up article that will highlight the most intriguing projects that were ultimately unsuccessful in raising their funds through crowdfunding.

Top 10 most interesting successfully funded projects

The categories of successfully funded energy projects on crowdfunding websites include those dedicated to residential energy generation and management, lighting technologies, and projects intended to educate on energy:

1. The GEN- Produce renewable energy for your home

This project received funding from 125 backers and exceeded the $60,000 goal to fund the innovative “world’s first patent pending solar and wind renewable energy generator” for residential energy generation.

Promising a 3-year payback period and 17 subsequent years of free energy, this project sought to expand renewable rooftop energy generation from your typical solar photovoltaic (PV) system to one that includes wind, thus increasing total capacity and providing additional energy even when the sun isn’t shining.

2. NanoLight- The world’s most energy efficient light bulb

NanoLight uses innovative design and LED technology to give customers the best of both worlds– high efficiency and low cost light that emulates the omnidirectional nature of the classic incandescent light bulb, while also offering extremely low heat loss and instant-on capabilities. While other LED light bulbs are already on the market, NanoLight operates at 133 lumens per watt, blowing out the competition.

Given that lighting uses about 10 per cent of a building’s energy, this type of innovation can be huge. Backers apparently agree, because in two months this team crushed their $20,000 goal and received over $273,000 from over 5,700 different backers.

When reached for comment, the entrepreneurs behind NanoLeaf noted that crowdfunding was beneficial as it allowed them to not give up any equity and they got a lot of early adopter supporters.

They also found that energy projects are common on crowdfunding sites because not only do most people care about sustainability today, but many energy projects “may have a hard time getting [virtual capital] funding initially with no proof of success/potential, which makes crowdfunding an appealing starting place.”

3. Clean Energy Empire- The card game

This card game is one of the more creative energy-related crowdfunding projects I came across, using the tabletop game craze to promote energy literacy and education, getting people (from middle-school aged and up) to think about the consequences of different energy sources in an engaging way.

The goal for this project was modest, but 56 backers were happy to shell out over $4,750 to see Clean Energy Empire  become a reality. Despite the success, the entrepreneur behind Clean Energy Empire noted to me that “crowdfunding is exhausting work” but was necessary “out of need, as going into debt to fund the project wasn’t an option.”

4. Game of Energy Board Game

I could have included this project as 3b to the previous game’s 3a, as it also seeks to educate the players using a tabletop game focused on the clean energy transition, the difficulties that are slowing down that transition, and the consequences of waiting too long. Instead of a card game, though, the Game of Energy’s mechanism is a board and tile game (in the style of Settlers of Catan).

The support behind this game was even greater, garnering 252 backers for over $18,000 of funding.

5. ‘The Power Families’- Clean energy kids’ books

In another unorthodox but exciting way to try to educate the public (and young people, specifically), this project sought to bring a three book adventure series into print for schools. The books followed several families and their renewable energy farms (a wave farm in the United States, a wind farm in Scotland, and a solar farm in Australia).

This project needed just 45 days for 94 backers to exceed the $25,000 goal, even garnering publicity from Steve Buscemi and

6. Cow Power

A last project to provide energy-related education is in the form of a documentary.

Cow Power sought to tell the story of Vermont citizens supporting a program that turned cow manure into renewable energy, which was able to save the environment and ensure the continued existence of their cherished rural farms.

In just one month’s time, this project had 59 backers to thank for over $6,000 funded towards  (in their words) “giving a $#*!”

7. HomeBiogas 2.0- Transform your food waste into clean energy

Taking the crowdfunding projects back to inventors’ corner, the HomeBiogas project is a machine that allows you to recycle your food scraps in a safe and convenient way, but it also uses that food waste along with bacteria to break organic matter down into biogas that can be piped directly into your kitchen’s stovetop for cooking.

This project is one that made me wish I had the setup in my home that could accommodate the product because of how ingenious and cool it is– but alas, a city apartment several stories up is not the ideal location for HomeBiogas.

Backers agreed, though, and despite only seeking $75,000, the HomeBiogas raised $565,000 from 677 backers across Kickstarter and Indiegogo.

8. Light Salone- Small-scale renewable energy for Sierra Leone

The Light Salone project is definitely the most inspiring one I came across, as it focuses on the humanitarian desire to build small-scale renewable energy systems (hydropower generators built from spoons, windmills built from scraps, electricity generation from vegetables, and other clever projects using recycled materials) to be deployed in rural areas in Sierra Leone.

After successfully building a pilot program on his own dollar, this crowdfunder sought to expand Light Salone to go further in his home country and eventually his dream is to “light up the African continent from being called the darkest continent to be called the lantern continent.”

Backers shared this vision, with 34 people contributing over $2,400 to fund this endeavor. What was really inspirational about this project and others like it is that it wasn’t just an entrepreneur seeking to make his or her first million dollars, but rather crowdfunding coming together to try and make something good happen for the world.

9. Glow- The smart energy tracker for your home

Seeking to add to the smart home devices like Alexa and Next already on the market, Glow is designed to be an attractive and intuitive means for homeowners to track their energy use in real time.

By installing a sensor right on a home’s electricity meter, Glow changes colours to alert homeowners when they are using a greater than usual amount of energy and allows them to turn off lights or appliances and watch the energy use (and electricity bills) go down.

Glow even comes with an app to let you track energy use from your phone wherever you are in the world and provides notifications if energy use appears out of the norm.

Glow’s 439 backers exceeded the $75,000 fundraising goal and brought this clever project to fruition.

Similar to the responses from NanoLeaf, when reached for comment the entrepreneur behind Glow noted that “traditional venture capital is hesitant to invest in early stage energy companies” which leaves the “remaining funding options outside of bootstrapping [as] crowdfunding and government grants.”

Because grants are narrow and competitive, crowdfunding became the go-to strategy for them.

10. EcoBreeze 2- The world’s smallest window fan

This window fan promises energy savings and health benefits by using the fresh, cool air from outside to cool your home when it’s available, and then switching to air conditioning automatically when the need arises.

In doing so, this invention prevents the pollen and bacteria from outdoors from getting into your home (like would happen if the window was simply left open), but also helps slash your power bill.

Backers were excited about the EcoBreeze 2, with 132 people contributing to blow past the $10,000 goal and raise over $28,000.

How does this relate to government funding of energy technology?

One of the points to this article is to highlight the different ways in which innovative energy technologies get funded, ultimately opening up the hotly debated question of what role the government should have in funding potential technology breakthroughs for the energy transition (or even funding research and applied science generally).

This question is complex, nuanced, and evolving as the landscape of energy evolves. But the emergence of energy technologies on these crowdfunding sites shows that private investment in the traditional sense isn’t keeping up pace with the breakthroughs entrepreneurs are putting out there, and government investment might not be adequately filling in those gaps.

But again, what is the role of the government in funding energy technology, both historically and today? Some deeper investigations into the question only beget more questions and topics for investigation. For example, some thoughtful quotes and recommended deeper reading on the topic follow:

If the development of energy storage technology is all that is stopping a country from being able to deliver a grid 100% powered by renewable energy, what would stop the government from funding the development of such technology? – Andrew Blakers, Bin Lu, Matthew Stocks

Last year, the world invested a record $257 billion in renewable energy, but with that number needing to grow is it prudent for the government to lead the way (prioritizing the social returns to investment as greater than the private returns) or should we leave it to the market (finding that clean energy technology costs have decreased over time, and it would be inefficient for government to invest in uneconomic technologies too early)? — Kai Graylee

If an energy technology cannot stand economically on its own, either at early stages or when it comes time to scale, is government investment to help the technologies to the next step overtly political in its ‘choosing of winners and losers’?– Martin LaMonica

As with most highly charged topics like this one, you will find intelligent and well-intentioned people on both sides of the argument. So what’s the right answer? It’s hard to say, but there are many considerations beyond just ‘government vs. free market’ for funding.

As it stands today, the US market does not include pricing for the difference in externalities among energy sources– namely the cost to people, the climate, and the planet from the carbon dioxide (CO2) emissions of fossil fuels.

Since US policy does not currently charge a carbon fee to emitters of CO2, the environmental benefits of carbon-neutral energy, such as renewables and nuclear, are not yet priced into the equation.

In the absence of such pricing, it would appear to benefit the nation as a whole for the government to intervene in some way– whether that be to institute carbon pricing, to subsidize the use of carbon-neutral fuels, or the funding of clean energy innovations so they can be brought to market.

Regardless of the exact path taken, the clean energy transition is a world-changing endeavour and, in my opinion, it’s too important to wait.

If that means government investment in the technologies today is necessary, then that is what we have to do.

When debating about winners and losers, we should recognize the critical nature of ensuring that the Earth is chosen as the most important winner, lest we all be losers. Luckily, despite annual attempts by the Trump administration to slash clean and renewable energy funding and eliminate ARPA-E, Congress has continued to rebuke and reject such attempts.

In fact, a Yale study showed that energy subsidies have been a constant in American history, and when adjusted for inflation the subsidies today are lower than at any other point in history.

These government funds are critical for filling in the “gaps in private sector’s appetite for investment, due to the risk profile or longer-term horizon of investments.”

This point, to me, is the most crucial reason for government investment in potentially transformative energy technologies, as the level of risk or long time before payoff could scare away investors and minimize any chance for commercial survival if left to private investment alone (a point that was echoed by a couple of the entrepreneurs to which I reached out).

In the absence of adequate government funding, though, crowdfunding at least allows the innovator to find creative new ways to gather funds and split up the risk of investment among many backers.

But that’s just my take on the question of government funding energy technologies– do you agree, disagree? Are resources like the crowdfunding website and virtual access to investors changing the equation? Let me know on Twitter.

Matt Chester is an energy analyst in Washington DC, studied engineering and science & technology policy at the University of Virginia, and operates this blog and website to share news, insights, and advice in the fields of energy policy, energy technology, and more. For more quick hits in addition to posts on this blog, follow him on Twitter @ChesterEnergy.

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