Crowdfunding with the use of blockchain technology in renewable energy investments

Abstract

Energy and sustainability have become two of the critical issues of our modern world and countries aim to meet their energy demands with sustainable ways, especially with renewable energy resources. Countries endeavor the private sector to be more appetent to invest in renewable energy by feed-in tariff mechanisms to achieve their goals. In recent years, as a result of countries' works, the investment amount for renewable energy projects took the biggest portion of all power generation investments. The future estimation is that the energy demand and the share of the renewable energy portion in energy generation will continue to increase. The project finance method and corporate finance method are two mainly used methods for the realization of renewable energy projects and, recently, the most preferred one is the project finance method. Moreover, the project finance method is expected to be preferred by almost half of the clean energy investments in the near future. Even though the project finance method is the most preferred one, there are challenges that both financier and entrepreneur sides of the method meet and need to overcome. On the other hand, there are some other funding mechanisms that are used in several business areas. Crowdfunding is one of these mechanisms which is generally used for new enterprises. It is believed to overcome challenges of the project finance method via a financing method that uses blockchain technology for crowdfunding of renewable energy investments. The thesis aims to propose a model that uses blockchain technology, which is also one of the hot topics nowadays, for crowdfunding of renewable energy projects. The reason to use this technology in the proposed model is to take advantage of its features of being transparent, reaching all the individuals and renewable energy investment projects around the world, and increasing traceability. Firstly, the literature review about blockchain technology, crowdfunding mechanism, and project finance method is performed to search their histories, their backgrounds, and recent academic studies on them. Then, qualitative research interviews as fieldwork with 20 experts from the project finance sector are performed. The aim of the qualitative research interviews is to investigate the view of experts about the traditional project finance method, analyze the traditional project financing method's financial resources and project financing pricing relation, project follow-up, and reporting issues. For this aim, the open-ended questions were selected and a SWOT table, which is constituted by the author of the thesis by using the information gathered from the literature and his own experience, is prepared to be scaled by the participants. The results of the interviews are shared in the fieldwork part. Feedback from the interviewees is studied and a model, which uses blockchain technology for crowdfunding of renewable energy projects, is proposed after the qualitative research interviews. The proposed model is introduced to the experts from the project finance sector and from the blockchain ecosystem and validation interviews are performed. The objective of the validation interviews is to validate the mechanism of the proposed model, evaluate the model's workability, and get feedback from the participants regarding the model. In addition, a SWOT table which is prepared by the author is shared with the participant to scale. The feedback from the validation interviews is shared in the model proposition part. Lastly, feedback from the participants in the validation interviews is analyzed, and the needs of the proposed model are determined according to the participants' views. In addition, based on opinions of the experts, the strength, weakness, opportunity, and threat factors of the proposed model are shared. One last word, this study can be used for future studies regarding the integration of blockchain technology into renewable energy investments and the construction sector to improve the traditional processes.