Crowdfunding is considered by some experts to have the same effect on banks as Uber has on taxis. Green energy crowdfunding is no exception: the process is 100% digital and lets everybody become an investor or request funding for a sustainable project, without going throughthe banks.

This source of funding for renewables is in its infancy, the European largest platform Oneplanetcrowd was opened in 2012. “It is one of the fastest growing segments of crowdfunding. I would estimate around 100% growth per year in France,” said Alex Raguet, president of Lumo, a French energy crowdfunding platform.

Banks have been perceiving the disruptive character of digital technologies and startups. Annual survey of Efma and EdgeVerve Systems indicated that 47% of banks think that startups in financial area are highly threatening for their business.

But how disruptive is green crowdfunding in reality? Reinhold Mitterlehner, Austria’s federal minister of science, research and economy, said that crowdfunding is a “meaningful complement to traditional credit financing”, after the approval of a new law that regulates alternative forms of financing for start-ups.

First of all, not all kinds of renewable energy crowdfunding are competing with financial institutions. Donation-based crowdfunding is used for non-profit, social projects. An example is the projects of the platform RE-volv, partner of Leonardo DiCaprio Foundation. Only lending-based and equity-based crowdfunding is, to a certain extent, stepping on the territory of banks.

Lending-based crowdfunding is attractive for known industry players, which occasionally have a gap between spending and income periods. Thanks to the crowdfunding mechanism, they can quickly borrow the necessary sum. Equity-based crowdfunding is mostly used by startups that need money to start their business.

Alternative finance can help small-to medium enterprises, which are often turned away by large banks, by working  on different  terms than the banks. In this way, crowdfunding platforms have occupied the niche not covered by big investors, and don’t compete directly with them.

“Green energy crowdfunding will not disrupt banks as they can provide our customers with financial services that we can't provide. For example, 80% of a project’s cost via a 20-year loan at less than 2%”, explained Raguet.

Banks themselves haven’t been standing back from the changes brought about by digital development. The above-mentioned annual survey showed that 32% of banks are investing in startups, and 27% are running accelerators or incubators.

Moreover, some banks in Europe are supporting sustainable crowdfunding platforms or even running their own. The banks refer to these platforms those clients who don’t fit their credit requirements or have non-standard needs. Another possible objective is a contribution to the bank’s public image.

“Renewable energy crowdfunding is changing the game for banks as they need to learn to work with us,” said Raguet.

As an illustration, Oneplanetcrowd is partnering with Rabobank and ASN Bank. Rabobank sends to the platform the sustainable energy entrepreneurs who don’t need standard bank loans. ASN Bank is collaborating with Oneplanetcrowd in running a joint crowdfunding platform Voor de wereld van morgen.

Another example is the public investment bank BPI France that opened an aggregator platform for crowdfunding TousNosProjets.fr in 2014. It has already gathered more than 1500 projects from 38 sustainable crowdfunding platforms, including Lumo. The bank describes its objective as helping crowdfunding initiatives without any particular monetary intention.

From the bank’s perspective, the aggregator platform proves its “commitment (…) to help develop the social economy and the non-profit sector, whose activities are based on the principle of social solidarity and utility,” explained Benjamin Richard, head of the project BPI France.

Representatives of Lumo, which was one of the first entrants of the aggregator, said that their intention was “to reach out to more investors and stay closely connected to BPI France”. According to TousNosProjets.fr, this objective has been reached, and their platform has become one of the major sources of Lumo site visitors.

Still, many banks follow a “wait and see” the strategy. This is often reinforced by the regulatory obstacles which crowdfunding still encounters in European countries.

But, with the European Union climate change commitments, sustainable crowdfunding has good potential for boosting green energy, bringing benefits for both public and banks.

“I do think we will both keep our own roles, and continue to do what we do best, but working together more and more,” opined Raguet.