Suddenly his money was gone.

Christian Herz had invested several thousand euros in wind turbines.

"Actually, I wanted to finance part of my pension in this way," he says.

But then the project developer Prokon went bankrupt.

The case is considered a prime example of how risky direct investments in wind turbines, solar panels and biogas plants can be.

It's been almost ten years since the bankruptcy.

Christian Herz is still bubbling.

He is angry about the lost money, about the operators.

It shouldn't be the last time that people lose a lot of money with such systems: Green City AG, the green power plant manufacturer, has been bankrupt since the end of January of this year, and insolvency proceedings began this week.

Small investors are therefore worried about around 250 million euros.

This is how crowd investing works

Nevertheless, the demand for direct investments in energy projects is still high.

People want to help finance the energy transition.

They contribute a sum of money, usually between a few hundred and several thousand euros, to projects such as a wind farm.

This works, for example, via “crowd investing”.

Platforms such as Ecozins or Econeers bring together the operators of the wind turbines and investors.

It only takes a few clicks, and the investors have already concluded the contract and invested their money.

A total of almost 57 million euros are currently invested in German energy projects, according to the Crowdinvest database.

More and more people want to invest their money sustainably and want to know exactly where it is invested, says Lars Hornuf.

He is a professor at the University of Bremen and researches what motivates people to invest in crowds.

"They think it's good that they can directly select the projects themselves."

65 percent of crowdinvesting investors are even willing to give up a little return if their investment has a major positive impact on the environment.

This is shown by a study by Lars Hornuf and Christoph Siemroth.

Of course, every investment that is intended to yield a return also carries a risk.

But with these investments, the relationship between return, risk and effort is so distorted that investors should think twice about whether they should really invest their savings in wind turbines and the like.

These are the risks of crowd investing

Because most of the offers are subordinated loans.

This means that if the company goes bankrupt, the creditors will take a back seat.

If the project fails, the investors usually bear the entire loss.

Conversely, however, their gain is limited.

The interest rate is precisely defined in advance.

Depending on the project, there should be a return of around four to eight percent per year if everything goes well.

Investors commit themselves to the project for a longer period of time, often between five and ten years.

They usually cannot sell early.

It is all the more important that investors can obtain precise information about the project.

But when it comes to the offers, it is often not clear which company is building the wind turbines.

And the financial regulator doesn't check anything here anyway, it's not their responsibility.

It is therefore up to the investor himself whether he trusts the offer.

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