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Crowdfunding and Energy Efficiency Contracting: Exploring New Pathways for Private Investment in Building Renovations

Author

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  • Renan Magalhães

    (Kelso Professorship of Comparative Law, East European Business Law and European Legal Policy, Europa-University Viadrina, 15230 Frankfurt (Oder), Germany)

  • Federico Narracci

    (Kelso Institute Europe, 10965 Berlin, Germany)

  • Jens Lowitzsch

    (Kelso Professorship of Comparative Law, East European Business Law and European Legal Policy, Europa-University Viadrina, 15230 Frankfurt (Oder), Germany
    Kelso Institute Europe, 10965 Berlin, Germany)

Abstract

Energy Efficiency Contracting (EEC) enables structural improvements in buildings by financing upgrades through the savings generated, eliminating the need for upfront investment by property owners. Although the model supports the energy transition and the reduction in GHG emissions, its adoption in the private sector faces relevant barriers such as the lack of information from the Energy Service Companies (ESCOs), distrust from clients in benefits with no upfront costs, and legal and behavioral barriers. To overcome these challenges, the FinSESCo platform, funded by Era-Net 2020 joint call, aims to channel private investments into building renovations and renewable energy installations via a crowdfunding portal. The platform allows individuals and organizations to finance small-scale renewable energy installations and energy efficiency measures for homeowners, tenants, and apartment owners. The new platform is likely to change the way EE investments are made and reach out to new audiences. A survey of 2585 German households sought to understand the drivers of EE investments, factors affecting the decisions, and their relationships with several demographic variables. Using a stepwise backward regression model, the study found significant differences between traditional investors in EE and those who would use the FinSESCo platform. Low- and medium-income households were more likely to take up the platform, and previous renewable energy ownership, experience with EEC models, and knowledge of crowdfunding further raised willingness to participate. The results point to the potential of the FinSESCo platform to expand EEC to new audiences, underlining its role of democratization and diversification of investments in building energy efficiency.

Suggested Citation

  • Renan Magalhães & Federico Narracci & Jens Lowitzsch, 2025. "Crowdfunding and Energy Efficiency Contracting: Exploring New Pathways for Private Investment in Building Renovations," FinTech, MDPI, vol. 4(1), pages 1-21, February.
    • Handle: RePEc:gam:jfinte:v:4:y:2025:i:1:p:6-:d:1583015
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    References listed on IDEAS

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