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Project Developers’ Perspective
RISKS
- Reward-based crowdfunding has not been applied in the geothermal industry yet.
- There is a risk that investors are not satisfied with the realized reward.
- There is also a reputation risk concerning the treatment of the crowdfunding investors.
- A potential second round of funding may not be filled if the reward offered is not as expected, e.g. the geothermal wells deliver less water and temperature than anticipated.
- If a geothermal project does not deliver as much energy as originally planned, the project developer might have to buy the energy elsewhere to provide the promised rewards to the community.
- It is difficult to raise high amounts of funding through this usually very local method.
MITIGATION MEASURES
- It is recommended to research upfront what the potential reward-based crowdfunding investors are interested in most.
- Communication is a key element for this form of usually very local crowdfunding.
Community Investors’ Perspective
RISKS
- For the community investors, there is a risk that the reward is less than expected. In case the project fails, it can even be worthless or nonexistent.
- In the case of project failure, the investment will not be repaid.
MITIGATION MEASURES
- It is recommended to only invest money that can be missed and is not needed for own expenses or on the short term.
Related Core Services
Interactive guide to integrated finance in geothermal energy Toolbox for risk-evaluation and mitigationRelated Deliverables
D3.3 – Alternative Finance Risks’ Mitigation Tools D3.4 – Draft Structure of a Play Type Independent Geothermal Exploration Risk Mitigation Scheme D4.3 – Synergy Between Alternative Finance and Risk MitigationRelated Factsheets
ALTERNATIVE FINANCE RISK MITIGATION