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Abundance Generation: crowdfunding the future of energy

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Bruce Davis talks to Blue & Green Tomorrow about Abundance Generation – a democratic renewable energy funding platform that allows investment of as little as £5.

This piece originally featured in Blue & Green Tomorrow’s Guide to Limitless Clean Energy 2013.

What is Abundance Generation?

At its simplest, we provide finance for renewable energy projects direct from the general public. We do that through a regulated platform, which allows people to invest directly into a project that they choose, and they get a return based on the energy produced.

We offer products called debentures, which are bonds or debts lent to the wind farm or the solar project, and then they are secured on a share of the revenue that that project generates over its lifetime.

Click here to read The Guide to Limitless Clean Energy 2013

So people lend the money as an IOU, and they get their money back – not as a lump sum at the end, but over the lifetime of the project – and a bit of income return on the top, which works out somewhere between 6-9% as an IRR return. It’s not an interest rate; it’s called an internal rate of return (IRR).

On the wind farm, for example, people can expect to get between 2-2.3 times the money they’ve put in – but obviously some of that is the capital that they’ve invested.

What problem is Abundance uniquely trying to solve?

We were originally set up because there was a massive hole in the financing of renewable energy. It’s also a realisation of the infrastructure that needs to be built to accommodate renewable energy in the grid and make it work. Fundamentally, that’s what we set out to do.

At that point, it wasn’t just a focus of the financial crisis, but you were seeing a massive retreat from the banks from smaller-scale projects. You still had the Co-operative and Triodos and so on, but they’re relatively small and their balance sheets can’t grow at the pace required.

The clever thing about Abundance in a way is that we don’t have a balance sheet. We’re not holding capital or working like a bank.

Because we’re doing this direct finance model, 100% of our customers’ money goes into the project. So the growth is only really at the pace at which people are prepared to invest.

We’re saying we’re a more sustainable model, because we use actual money. We’re not using the confidence of banks to lend to the industry; we’re using people’s cash.

On the other side, I think people are looking for high yields on their money. At the moment, they’re happy to chase riskier assets to get those yields, but we think renewable energy is a good middle ground. There are a lot of reasons to be confident about what we’re investing in.

Was renewable energy always going to be the sector Abundance was going to work in or were there other options?

As a start point, it was the first one because it exists as an investment sector already for high net-worth individuals. We can see that they were making a lot of money from it, and making it accessible to the general public was a good idea.

At the time, there was a lot of talk about social impact investment, and we haven’t really seen that develop enough to offer it to an ordinary retail investor. The risks are not as easy to understand.

As part of our authorisation process with the Financial Conduct Authority, as it was, it was agreed that renewable energy projects presented a set of risks and rewards which were understandable by the general public and that you didn’t need to be sophisticated as an investor to put money into a wind or solar project.

Has the government’s politicking and infighting over renewables affected investor confidence?

In 2013, I don’t think we‘ve seen a lot of that. But at the back end of 2012, there was a lot more hot air being blown around. We have a lot more questions about the regulatory framework and I think a lot more confusion from pretty poor quality media reporting that meant that people thought feed-in tariffs no longer existed, for example.

Do you think your model – community ownership – could really help push renewable energy into the mainstream?

Bruce Davis

I think it will address this local noise that you get. The majority of people are in favour of renewable energy. I think politicians are misreading the runes, as it were.

At a micro level in terms of the planning process, you have to examine why it is these people are feeling that they need to protest. Some of it is a little bit more insidious, in that they seem to be funded by organisations beyond their community. But others, they’re just operating because they’re either misinformed or just don’t like renewable energy.

It’s not a clearcut picture, but as a general rule of thumb, I think the industry does need to always engage with the community. It is part of the environment; it doesn’t have a God-given right to develop anywhere, even though it acts like it does.

What are the overall aims for Abundance?

We’re kind of spoilt for choice at the minute. I think renewable energy, for the next two years, is going to be 99% of what we do. There’s plenty to do and there’s some interesting projects coming down the pipeline in solar and wind.

We will continue to do that and the aim is to double the business year-on-year. That’s really in terms of the amount invested; that’s how we measure our success.

And then, more broadly than that, we’re always examining how we can work with other types of investment. So, for example, social housing is something that we’ve considered quite carefully.

We’ve very proactive and we’re having lots of conversations about social investment, but we haven’t, as yet, seen an opportunity that we would want to put our effort behind to make it available for the general public.

There’s still some work to do to make these projects more bankable and investable by the general consumer.

Further reading:

Bruce Davis, Abundance: ‘we can do something different with money’

Abundance seeks investment in rooftop solar project

Why investing directly in renewables projects is a worthwhile venture

Top 10 reasons to invest in renewable energy projects

The Guide to Limitless Clean Energy 2013

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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