Crowdfunding renewable energy investments: Investor perceptions and decision-making factors in an emerging market

Crowdfunding has emerged as a viable tool in the alternative finance industry to complement financing for projects where government and bank investments have been unable to cover including in renewable energy. Nevertheless, the crowdfunding literature on developing countries, especially in Africa, remains scanty and little is known about its potential to susbtantially contribute to financing renewable energy provision from a lending (crowdlending) or investment perspective rather than as donation or philanthropy. In this paper, we close the loop around the mechanics and dynamics of crowdfunding by investigating crowd perceptions in a developing country context using Ghana in West Africa as a case study. We employ an integrative literature review anchored on collective action, social proof, persuasion, network and signalling theory, and complemented with critical focus groups interviews of household retail investors in Ghana to distil the key issues and concerns relating to crowdfunding for renewables. We then propose a conceptual framework based on the findings. Our findings demonstrate that an unfair playing field exists on financial returns between renewable energy and investment alternatives available to the crowd. Hence, the crowdfunding landscape will require deliberate design to improve attractiveness around non-financial attributes such as developer/fundraiser reputation and project viability to further strengthen project economics. Additionally, perceptions around security and ease of use of crowdfunding platforms are highlighted with the former being situated in the challenges of the broader banking or financial system. Overall, the paper underscores the need for social proof and quality signalling to attract household investors. Further research around motivations for collective action in such developing markets is recommended.