PROVEN INNOVATIVE FINANCE SCHEMES

There are a number of non-traditional methods to raise capital for the development of a project, whose different mechanisms and approaches might make one (or more) fit in some scenarios, but might not be the most suitable for others. The careful evaluation and simulation of the numerous finance schemes will determine which would be the best option for the development of a – for example – geothermal project:

• Crowdfunding: Form of funding where funds are raised directly from the community. The community invests into a project or company directly, often through an online platform. This means the investment made also carries the risk of the project or company directly. So, if the project or company fails the investors will lose their money. It also means there can be direct contact between the project or company and its investors and potential benefits can also be given to the investors directly.
• Direct lending: Direct lending is when a loan product is provided by a financial institution that does not have a banking license. This can be provided in different forms.
• Social impact bonds: Social impact bonds are pay for success financing instruments for projects that will create better social outcomes whereby the payment to investors is flexible, based on the achieved savings.
• Green Bonds: Green bonds are fixed-income instrument that are specifically earmarked to raise money for climate and environmental projects. They can be funded by the crowd, through a direct lender or by a bank.
• Leasing: Operational lease: An institution provides the funding for a project to parties who are developing the project. The parties pay it back in periodic installments. At the end of the project, the facilities are owned by the institution. Financial Lease: A leasing company pays for assets and/or production of a project for parties who are developing the project. The parties pay it back in periodic installments. At the end of the project, the facilities can be bought often at a price agreed in advance.
• Match funding: Match funding is when there is funding from a crowd, bank or direct lender and a government source adds its own (matches) funding to increase the total amount.
• Reward based funding: Any form of financing (loan, equity, crowdfunding, grant) which raises funds in return for a non-monetary payment. In products, experience or discounts. Reward based funding has been mentioned under crowdfunding but is also possible when financed by other parties then the crowd.
• Donations: Funding, usually by a government or NGO where no repayment in any form is required.
• Revenue based financing: Any form of financing (loan, equity, crowdfunding) which raises funds in return for a payment of part of the revenue generated with the investment.