Crowdsourced Microfinance for Energy Efficiency in Underserved Communities
- BlocPower LLC, New York, NY (United States)
BlocPower’s mission is to provide access to energy efficiency financing for underserved communities across the United States. This project, “Crowdsourced Microfinance for Energy Efficiency in Underserved Communities,” is an extension of that goal and is grounded in the principles of providing engineering and financing services to those in need. The project is based on the creation of a BlocPower Marketplace as a central hub for connecting shovel-ready green buildings to institutional investors. This ‘connection’ entails using online crowdfunding to aggregate debt and equity capital from institutional investors to connect to customers (building owners) across various financial portfolios. BlocPower Marketplace is intended to bring social, environmental, and financial returns to investors while also decreasing investor risk by loaning out funds for energy installations in individual buildings. In detail, the intended benefits of crowdsourcing are two-sided. Firstly, for building owners, clean energy retrofit installations improve building operations, reduce utility costs, and reduce harmful impacts to their surrounding environment. Secondly, for institutional investors, they gain access to a new market of energy efficiency and are able to provide debt or equity capital with high financial returns. This gives investors the opportunity to create social and environmental impact in communities around the country as well. With this in mind, BlocPower designed the marketplace to specifically answer exploratory research questions with respect to the pricing of energy financing. Institutional investors typically charge high rates on project financing solutions in the energy space, particularly in low and middle-income communities, because of fears that required debt service will not be made. This makes access to energy capital exorbitantly difficult for those that need it the most. Through this project, BlocPower tested investor appetite to determine if crowdsourcing would lower prices and subsequently lower barriers to entry for underserved communities’ access to energy capital. BlocPower’s results in this project were extremely informative for the industry. The project demonstrates that the marketplace is a scalable tool to help overcome barriers to entry for small building owners in underserved communities to access energy efficiency financing, but that crowdfunding by itself does not necessarily lower interest rates and make energy efficiency projects feasible. For that, we need a repayment mechanism that lowers perceived risk. That mechanism is on bill repayment.
- Research Organization:
- BlocPower LLC, New York, NY (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE)
- DOE Contract Number:
- EE0006294
- OSTI ID:
- 1364680
- Report Number(s):
- EE-0006294
- Country of Publication:
- United States
- Language:
- English
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