At a Glance
ESG Clean Energy is raising community-based capital from local investors to fund the development of a renewable energy project in partnership with the local power provider. Community-level renewable energy projects can be difficult to finance; its use of investment crowdfunding is filling a critical gap.
Problem Addressed
Community-level renewable energy projects are difficult to finance for several reasons, primarily because of their smaller scale (especially when compared with large renewable projects) and the lack of investor familiarity with renewables. ESG Clean Energy has one such community renewables project, a natural gas Combined Heat & Power system that produces both electricity and heat from one internal combustion engine. It is financially attractive - it provides predictable income returns from electricity sales, transmission, capacity and alternative energy credits - and will provide tremendous community benefits, including greenhouse gas reductions. But the project is not a good fit for traditional financing. ESG Clean Energy needed to investigate other financing options.
ESG Clean Energy used/is using Infrashares investment crowdfunding to address this/these challenge(s).
Solution(s) Used
ESG Clean Energy, in partnership with a local power provider, is utilizing Infrashares (a crowdfunding platform for infrastructure projects) to raise $5 million for a preferred equity tax advantaged offering. Organizations seeking to raise capital (including special districts, state and local governments) work with Infrashares to post offerings. Local accredited investors can then securely browse Infrashare's marketplace of investment opportunities and access a detailed investment page for any specific offering. They can also ask questions directly to the organization raising capital and invest capital directly through the Infrashares platform. Local governments can use Infrashares to raise capital for small infrastructure projects from local investors through innovative Public-Private Partnership (P3) models.
Outcomes
- Raising $5 million for a preferred equity tax advantaged offering
- Tapping into a new (an otherwise unreachable) finance source for renewable energy projects
- Creating more community buy-in for the renewable project, since investors are local
- Laying the groundwork for future offerings available to residents, not just to accredited investors
Something Unique
This project is an important validation of the legal & technical structure of how to use crowdfunding to finance infrastructure projects.
Who Should Consider?
Municipalities pursuing community renewables projects as a part of their Climate Action Plan & wish to involve affected communities in those projects; local governments facing financing gap for renewables.