The next billion dollars for climate may come from ordinary people

This is article 2 of 3 in the Energy Shift series. Here is article 1.

The first article in this series argued that the barrier separating citizens from the energy transition is one of design rather than appetite. The routes into clean energy investment were built for institutions, and they remain largely closed to the households that fund the system through their bills. If that diagnosis is correct, the relevant question becomes what a workable alternative would look like in practice.

Rethinking the source of climate capital

Conventional thinking in climate finance holds that scale must come from scale. Larger sovereign funds, deeper green bond markets and stronger corporate balance sheets are treated as the primary levers for mobilising the trillions of euros the transition requires. This view is not wrong, but it is incomplete. It overlooks a pool of capital that is already substantial, already recurring and already in motion: the money households spend on energy itself.

Across Europe, consumers collectively spend hundreds of billions of euros each year on electricity, gas and fuel. This expenditure is continuous and largely non discretionary. It flows regardless of how the transition is financed, and it is captured almost entirely by the existing supply chain. The question this raises is not how to find new money for clean energy, but whether a portion of the money already moving through household budgets can be redirected toward the assets that produce it.

Framed this way, the proposition becomes considerably more tractable. The next billion dollars for climate may come not from Wall Street, but from ordinary people.

Citizen participation is already operating at small scale

This is not a theoretical construct. Citizens across Europe are already financing renewable energy directly, through models that demonstrate what participation can look like when the access barrier is removed.

In Bulgaria, residents of Gabrovo crowdfunded a solar installation sited on a local landfill, with roughly a hundred small investors contributing alongside the municipality under a capped individual commitment. In Croatia, a comparable campaign in Križevci financed a solar plant on the town's market square, and has since progressed toward a substantially larger installation. In Germany and Denmark, citizen owned wind cooperatives have financed a meaningful share of onshore capacity over several decades, with local residents holding direct equity in the turbines within their own communities. Pan European platforms now exist to allow individual investors to assemble diversified portfolios of such projects rather than depending on a single local scheme.

The European Commission has articulated an ambition consistent with this direction, suggesting that by 2050 half of Europe's citizens could be producing up to half of the European Union's renewable energy. Whether that specific threshold is reached matters less than what it signals about how policymakers now conceive of the citizen's role in the capital structure of the transition.

What these models share is a mechanism that converts a household's existing relationship with energy, as a payer of bills, into a position of ownership. Their limitation is equally clear. Each requires the household to commit capital and wait for a financial return, and for most people the calculation never becomes compelling enough to act on.

This is the constraint that a newer group of energy businesses is attempting to design around, by changing the denomination of the return itself. Rather than paying investors in cash, these models pay them in energy. A household commits a modest sum, and receives in exchange a recurring entitlement to electricity, delivered as credits that reduce its own bills. Energy Shift, a European venture built on precisely this structure, describes the instrument as an energy voucher. The distinction matters more than it first appears. A financial return must be evaluated against every other use of the same money, whereas a return paid in kilowatt hours is measured against a cost the household was going to incur regardless. The investment is assessed not as a speculative allocation, but against the electricity bill sitting on the kitchen table.

The approach remains early and its scalability is unproven. But the underlying logic is worth examining, because it targets the one population that cooperatives and crowdfunding platforms have consistently failed to reach: the household that will never buy a share in a solar farm, but would think differently about an instrument that pays it back in the commodity it is already buying.

The case for energy denominated returns

Cooperative membership and direct share ownership function well for households prepared to research a project, commit capital over a multi year horizon and accept equity-like variability in returns. This constituency is real, but it is not representative of the broader population.

Instruments that pay their return in energy address a considerably larger group. The household that would never compare yield curves is nonetheless acutely aware of what it pays for electricity, because that figure arrives every month and has risen sharply in recent years. An instrument denominated in kilowatt hours is legible to that household in a way that a bond coupon is not. It is evaluated against a familiar and unavoidable cost rather than against an unfamiliar and optional one.

There is a second effect, which is a degree of insulation from price volatility. A return fixed in energy rather than currency retains its value to the household even when tariffs rise, because the entitlement is to the commodity itself. For households that experienced the price shocks of recent years, this characteristic may prove more persuasive than any headline rate of return.

From the perspective of the company raising it, capital of this kind behaves differently from bank debt or a bond issuance. It is raised from the same population that will subsequently consume the output, which means it carries information about future demand alongside the finance itself. It also creates an obligation denominated in energy rather than in cash, which aligns the company's liabilities with the assets it is building. That alignment is genuine, though it introduces its own exposures, and the model should be examined on those terms rather than accepted uncritically.

This does not displace the institutional capital currently financing renewables, nor should it attempt to. It opens a parallel channel, designed for the far larger population that the existing channel excludes.

Extending the model to SMEs

Small and medium sized enterprises encounter a version of the same exclusion. A business absorbing a substantial monthly energy cost has no more access to the upside of the transition than the household next to it, despite frequently holding a stronger commercial interest in stable and predictable energy pricing. A return denominated in energy is arguably more compelling still for an SME, because energy is an input cost that sits directly on the profit and loss account. Extending these instruments to businesses widens the addressable pool considerably, and introduces participants whose planning horizons are measured in years rather than billing cycles.

Considered individually, these mechanisms are modest. A hundred euro commitment, a capped crowdfunding stake or a share in a community wind turbine does not materially alter the financing position of a multi trillion euro transition. Considered in aggregate, across hundreds of millions of households and several million enterprises, they constitute a pool of capital that no single institution can replicate, precisely because its strength derives from distribution rather than concentration.

Climate finance does not require only larger commitments from a small number of institutions. It requires a second channel constructed for a far greater number of participants making far smaller contributions, one that treats the monthly energy bill as the beginning of a stake rather than the end of a transaction.

This shift carries direct implications for the institutions positioned on the other side of that relationship. The final article in this series examines what customer capital means for utilities, and how their business models may need to evolve in response.

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