The British crowdfunding industry is poised to get a shot in the arm from the United Kingdom’s newly released £1-billion Local Power Plan, the government’s strategy to build 1,000 community energy projects by 2030. The plan has been cautiously supported by community energy and crowdfunding representatives who believe they can build on years of experience in raising capital for renewable energy.
The Local Power program is “a significant opportunity for the U.K.’s community energy and crowdfunding sectors,” says Lisa Ashford, co-CEO of Ethex, an ethical crowdfunding platform, in an email statement. The policy framework and government support “should help to unlock a larger pipeline of investable local power projects, creating more opportunities for communities to directly invest in renewable energy in their own areas.”
Ethex has pledged to work with Great British Energy (the agency responsible for implementing the Local Power Plan) to bring local communities, individual investors and institutional capital together to help leverage the billion-pound grant and loan program promised by the government.
“However, we want to emphasize that public funding should complement retail investment, not replace it,” Ashford says, adding that public funding can act as “catalytic capital to get more projects off the ground, reduce risk and co-exist with community and retail finance.”
What is investment crowdfunding?
The purpose of the Local Power Plan is to build community energy projects financed with public funding and crowdfunding, a strategy that proponents see as a way to democratize the capital markets. Distinguished from reward- or donation-based crowdfunding, investment-type crowdfunding is offered with the expectation of financial returns through interest, dividends or rising share values.
In some cases, investment crowdfunding is done through community bonds or innovative investment savings accounts as a way for local people to finance a non-profit or civic project. In others, it can enable investors to buy an equity share in a private company, usually as a start-up but sometimes in a more advanced growth stage.
In either case, the investment is typically locked up for a considerable period – usually five years or more – to prevent participating investors from exiting before the project or company matures to a stage in which investors can get their money out.
Capital crowd-surge – and slump
Historically, private investments have been restricted to wealthy sophisticated investors or institutions like pensions and venture capital. Starting in 2014, the U.K. Financial Conduct Authority began to amend the rules, reducing restrictions and setting specific conditions for crowdfunding purchases. Since then, the domestic market has grown considerably. In 2024 (the most recent figures), the value of the total U.K. crowdfunding market was US$1.06 billion, including loans and bonds, equity and even donation-type offerings.
While loans and bonds are gaining ground, market growth has tapered off in recent years in the equity segment of investment crowdfunding, which involves buying shares in private firms. In the United Kingdom in 2021, there were 569 equity crowdfunding offers that together raised a total of £773 million. By 2024, this had fallen to 297 deals worth £324 million (about US$414 million in 2024 dollars).
Investment markets of all kinds bubbled in 2021 as hundreds of thousands of individual investors – bored and at home during COVID lockdowns – experimented with new ways to make (and lose) money. Along with meme stocks and crypto ownership, equity crowdfunding soared in 2021 and 2022, buoyed by low interest rates, rising global investment markets and established crowdfunding platforms like Crowdcube and Seedrs (later taken over by U.S.-based Republic).
Since then, rising interest rates, growing international conflicts and the chaos of the Trump administration have made investors more cautious. Inevitable losses from fledgling start-ups and long capital lockup periods also dampened some investor enthusiasm for equity crowdfunding.
The ‘hybrid model’ for green growth
In contrast, investment-type crowdfunding in environmental, socially responsible and ethical offerings has grown steadily, although incrementally. Social enterprise bonds and share offerings have carried less risk than equity shares in start-up and growth companies. It’s customary for renewable-energy projects, for example, to come with reliable income streams or civic infrastructure projects to be backed by municipal borrowing guarantees. Ethex, Abundance and Triodos UK ethical crowdfunding are among the online platforms specializing in this market and are poised to benefit from the £1 billion Local Power strategy.
As well, crowdfunding platforms focusing on the energy transition are expected to benefit from an expected annual growth rate of U.K. climate tech of 21% between now and 2030, although this growth won’t happen directly from the Local Power program. Globally, a 2024 report by RMI (formerly Colorado-based Rocky Mountain Institute) states that US$2 trillion will be needed globally to finance the industrial, transportation and infrastructural changes needed to shift the global energy system from fossil fuels to electricity.
The RMI report says this opens new opportunities for crowdfunding, which are already appearing in the United Kingdom, where climate tech is attracting attention from individuals as well as venture and private equity investors. British climate-tech transportation company Sunswap raised £17.3 million in 2024 (US$21.8 million in 2024 dollars), partly from crowdfund investors and partly from venture capitalists. The company has developed a groundbreaking refrigeration unit for trucks powered by a separate battery and solar unit to reduce fuel costs and carbon dioxide emissions from transport trucks. The Republic crowdfund platform hosted the offer along with support from institutional investors such as Shell Ventures, an arm of the Shell oil and gas giant.
Antoine Beine, co-founder of the France-based climate tech crowdfunding network Keenest, says this so-called hybrid model (including both crowdfund and institutional investors) is becoming the norm in the United Kingdom and Europe. “This is where a democratic dimension of investment may emerge within the private sector, not simply for capital access, but in embedding transparency and public scrutiny around issues such as sovereignty, climate transition, privacy, and ethical practices,” he says in an email.
Ethex’s Ashford says that one of the exciting opportunities offered by the Local Power Plan is the prospect to pool government funding with crowdfunding capital. “If implemented effectively, the Local Power Plan could mark a step change in community power investment by combining public support with people-powered finance to accelerate a more democratic energy transition.”
The government’s aim in the Local Power Plan is to build 1,000 community energy projects. In the process, it could also help to deliver a jolt of popular democracy into the United Kingdom’s capital markets.
Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).
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