You have a project. You are looking for money.
Before you go looking for money, you need to build a budget. A budget should tally estimated expenses and costs so someone can see where the money is going.
Step #1: Build a Budget
Your budget should include the various costs:
- Site
- Design and Engineering, including:
- wind turbine/solar panels + inverters + tracking systems
- electrical connections
- structural designs (new roofs? racking for the panels?)
- battery back-up?
- safety/security (e.g. security screws for the panels)
- Permits and Approvals
- any environmental permits
- grid/interconnection agreements
- Inspections and Maintenance
- monitoring performance
- will the system be insured against theft/damage
- system up-keep (typically minimal for solar panels).
As you look at the budget, look at what your needs are and consider what isn’t necessary or can be donated. For example, some communities have lowered labor costs substantially by doing the manual installation of the solar panels themselves.
Step #2: Research how other similar projects have funded themselves
In the toolkit we offer stories of how different groups have found money. For example:
In Uganda access to solar funding is very low. So Power for All’s Utilities 2.0 came up with a plan that brings together a coalition of the large-scale utility company and the smaller, more nimble renewable energy programs. Their first concrete step was running a pilot project to support new small businesses with a solar micro grid. The revenues of the “new businesses created rose by 68 percent during the pilot period.” This made it easier to pitch businesses to help put money into the grid — which then benefited regular citizens unable to otherwise afford the upfront costs. (“Those benefiting including students at the local school, which now uses an electric pump to save pupils from long journeys to collect water. The village also has streetlights for the first time, and a community-based milling and drying machine to support its many local farmers.”)
In Australia, they’ve set-up a funding structure called Citizens Own Renewable Energy Network Australia. In this, funds are donated by NGOs, businesses and local citizens, and all the money is given as interest-free loans to the large upfront costs of renewable energy. After a renewable energy source is set-up, part of its energy “profits” go back into the revolving fund.
We strongly advise you start by connecting with other projects in your area to get some options for how they have funded themselves.
Many projects have gotten very creative about the different wants to fund money — and you may have to use several streams to fund the project.
The major streams are:
From within the community
Revolving funds. The project may still start but is designed to be expanded (such as with one wind turbine at a time; or a few solar panels with an oversized inverter). The project starts small with initially people who can afford to pay in. Once the infrastructure is up and running, those people pay a small percentage into a fund. That fund supports the project to be expanded.
Using money from local businesses who benefit from the energy. Particularly in places with unreliable electricity, the vision of a stable grid is very attractive. Solar+wind with a battery backup provides a very reliable system. Therefore, businesses often have incentive to invest in a solar grid. They can sometimes be persuaded to share a higher burden of the initial costs (stable costs that won’t increase, unlike unstable back-up generators + oil/gas).
Sliding scale. In this model everyone who will benefit puts something into the project. People who have more money put in more. For communities with a range of wealth, this may help make up some of the initial upfront costs.
Sliding scale. In this model everyone who will benefit puts something into the project. People who have more money put in more. For communities with a range of wealth, this may help make up some of the initial upfront costs.
From fossil fuel companies
Polluter pays. In this model, a campaign is waged to force the fossil fuel industry to pay. This requires either a forward-thinking government or a very powerful community. Examples of this: cities requiring closed down power plants to pay for their clean-up, remediation, and site prep costs to host solar fields or upon the closing of a coal plant, the city takes ownership of the land to give to a community fund.
From government
Grants and subsidies. This should likely be the first place to research. Your federal and local governments may have a variety of tax incidents or credits. Each government varies widely on this. Some governments offer direct money or reduced taxes for installing renewable energy. Some offer rebates on the panels themselves. Some offer direct funding.
Net metering means that a home or business has installed a renewable energy source like solar panels that are connected to their public utilities’ power grid. These solar panels or wind turbines, etc. may create surplus or extra energy that is above and beyond what the home or community uses. When this happens, the amount of energy that is extra is transferred back to the power grid and is credited to the customer’s bill, which creates a “net” or a profit for the people who own the solar panels.
Utility company breaks. This is another key area of research you will want to pursue if your system will be connected to the existing electrical grid. Your energy service companies may be private/public. Either way, it is very possible that they may also provide cost savings. The primary way is through a process called “net metering.” When solar panels produce power, some of that power is immediately used by the house/community. If more is produced than used, where does it go? It could go into batteries. If there are no batteries (or they’re full), and it’s not connected to the grid, then it gets wasted. But if that excess energy does go onto the grid, then it can be used wherever the grid is connected. Net metering is (essentially) when the grid has to pay the solar producers for that power. The rates may vary (wholesale or retail rates, etc). But these and other incentives can change the effectiveness of solar panels. You can learn more about net metering here (or read more detailed case studies here).
Public/Private partnerships. Governments are under pressure to show that they are “part of the solution.” Even if they have no money, they are motivated to show they are part of solving the climate crisis. Therefore, they may be willing to do some of the legwork to find money via joining with private partnerships. If you go this route, you will want to become very knowledgeable about the kinds of terms the partnership offers or you might end up in a very bad deal.
From external actors
From here the list starts to grow wide. We advise groups to look at the previous first, to see what’s possible. Even if you aren’t able to raise all (or much) of the funds this way, you’ll have much greater credibility with external actors if you have already exhausted or your more local options.
Then you’ll want to extend your research further.
External actors may include:
Banks / development banks for loan finance. These may be the first places you look — but they are not typically the bet for you. Depending on your context, these may be very high fees. We have been advocating for public banks for more soft loans, which have more generous terms than current private high-street bank market loans. These soft loans have below-market interest rates and/or grace periods in which the loan recipient is not required to make debt payments for several years. But typically, banks are very conservative and may be harder, especially for those of us in Global South locations.
External grants. Typically these are given by a fund or bilaterally by governments. In general, the most equitable instrument you might be offered. Researching these is highly recommended.
Venture capital. This is riskier, especially if these are outside of your local community/known circles. Their interests may not be aligned at all with the community.
Green bonds / Grants / Foundations. These are project and company based, often government subsidized. Fixed-income financial instruments specifically issued to fund renewable energy projects or environmentally friendly initiatives. Investors receive regular interest payments and the principal amount at maturity.
Crowdfunding. If your project has some interesting storylines or angles, don’t count out the possibility of using crowdfunding to obtain some of the money. With a smart campaign launch and connections to places/communities with money, you may be able to fundraise a small portion of your needs.
Step #3: Be ready to fight against unjust funding
In 2022, Total and ExxonMobil made USD 56bn excess profits – this alone could pay for solar energy to power all households in Kenya, Uganda, Tanzania. There is the money available to save the planet from the worst of the climate crisis.
Globally, we need to reach yearly deployment of 1.5 terawatts of power Renewable Energy from 2030 onwards. This will demand 4-5 trillion USD yearly. In 2022, clean energy investment reached 1.7 trillion USD globally.
In high-income countries, 81 % of green investment is funded by the private sector. In emerging and developing countries, the private share is a mere 14%.
There are fundamental and historical injustices pertaining the global financial system, including debt, the history of colonialism, extractivism.
If you want to borrow money (which you usually do to invest in a renewable project), you pay an interest rate of 3-4% in the Global North, 10-15% in emerging and developing countries. Grants and low cost project debt finance only accounted for 1% of renewable finance. Development Finance Institutions spent less than 3% in renewable energy investment in 2020.
All this is wrong and unfair. And so as you look at your own project’s individual challenges, it’s important you get connected with other communities to talk
Your campaign may end up needing to join with groups (like 350) fighting on national and international scenes to lobby national governments and public banks to increase funds to renewable energy and agree to switch subsidies from fossil fuels to renewable energy. about how the larger systems need to change, too.
Step #4: Begin fundraising through these various channels
Begin by making a plan. We advise by starting by first understanding what your rebates/incentives your country offers. To start, contact local renewable energy installers and they will be knowledgeable about some of the options. You will want to do additional research to make sure you’ve exhausted all your possibilities for understanding programs already operating your government.
Then make sure you understand net metering and any other possible incentives that could come from your utility company.
Next go to the community with ideas about ways to start fundraising. This won’t close your gap — but this will be important to show any other external actors that you have community buy-in and that people are serious about the project.
Then you have a frustrating phase: your community is excited but you may still be a while away from the project being a “go.” You’ll need to research external grants and pursue the other ways to raise funds. This will be an awkward time and it’s important you keep the community informed so they don’t lose faith/momentum.
Review the list above and pick routes that you think are more likely, based on conversations from other projects in your area and based on what relationships you have in your circle.
Good luck!