A new website has been launched with the aim of enabling people to invest from as little as £5 in green energy projects and enjoy an attractive return.
Abundance describes itself as a "community finance platform" allowing small investors to put money into UK renewable energy schemes and receive a regular cash return based on the energy produced.
It is looking to raise money from consumers tired of the old banking model who want their cash to be used to help fund green projects and facilitate change. And it says rates of return are expected to average 5%-9%, depending on the type of scheme in which the money is invested.
Abundance is currently aiming to raise £1.4m to build a wind turbine on the edge of the Forest of Dean in Gloucestershire, and has plans for further renewable energy schemes – solar and hydro – around the country.
The platform says it works in a similar way to "peer-to-peer" lending websites such as Zopa - as a middle man, getting investors together with community groups and companies that want to build environmental projects. It collects the money and organises the payouts to investors in return for a 1.9% fee paid by the body that builds and operates the project.
Individuals can invest as little as £5 in each project, or as much as £50,000. Abundance is marketing itself on the basis that some investors will put in enough to produce a return each year that will cover their annual electricity bill – typically £500 a year.
Bruce Davis, the site's co-founder, and one of the founders of Zopa, describes the website as democratic finance in action. "We are enabling small investors to produce a regular return from the generation and sale of 100% green electricity from wind, solar, hydro and other renewable energy sources," he says.
"Abundance is like a building society for the 21st century which enables our customers' money to go directly into projects generating growth and revenue in the real economy."
As with most such schemes, investors should go in with their eyes open. Abundance is authorised and regulated by the Financial Services Authority. However, in the (probably unlikely) event that the body operating it went bust, investors would become creditors and could lose some or all of their money.
Davis believes the overwhelming majority of people want a greater say in where their money goes and how it is invested. Those who put their money in will be buying debentures, which are like official IOUs issued by the individual energy projects. In return, the project commits to pay the individual a share of the profits it makes from generating green energy. Returns, paid twice a year, will be variable, and based on the amount of energy produced and the price it is sold for. The original investment is paid back over the lifetime of the debenture or as a lump sum at maturity.
Construction of the 500kW Forest of Dean wind turbine is getting under way. The company that will operate the turbine and pay out the returns, Resilient Energy, has planning permission, and the turbine is expected to be up and running in September. Investors have three months to decide whether to invest in that project. Once that is subscribed, it will move on to other projects that need funding.
Although the investments will typically run for 20 or 25 years, if you want to get your money out before the end date, Davis says there will be an eBay-style bulletin board on the website allowing investors to sell their debentures for a mutually agreeable price to a willing buyer. He claims that once buyers see the returns on offer, there should be no shortage of people willing to take over the investments.
"Those buying into the scheme will be able to log on and see how much electricity the turbine has produced and what their share of the payout will be," says Davis.
He acknowledges the growing number of community hydro schemes featured in Guardian Money in recent years, but says the main advantage his scheme has over some of those is the flexibility to invest small sums and the ability to get your money out. "We want this to be open to everyone, which is why we have set a minimum investment of just £5."
A solar energy scheme in Bristol this week launched a community share issue that aims to raise £87,000. The not-for-profit, community-owned Bristol Energy Cooperative plans to install almost 200 solar panels on community buildings in the city.
The newly formed co-operative hopes to attract hundreds of members investing as little as £50, and to deliver a return of up to 4% a year. It will initially concentrate on two sites: Hamilton House in Stokes Croft, a community arts facility, and Knowle West Media Centre, a media and arts charity.
Bristol Energy Cooperative has been supported by the Co-operative Enterprise Hub, which offers free advice, training and access to finance for new and existing co-ops.
The share offer closes on 18 May.
