Halifax-based Lux Wind Turbines wants to revolutionize the wind energy industry. But its first big impact may be in the way equity crowdfunding is carried out in Canada.

The company has launched a campaign to raise between $500,000 and $800,000, which would fund the test project for its new form of wind turbine. The campaign is worth examining because it involves several different regulatory frameworks and could be a model for future campaigns.

What’s more, Lux Wind is the first company ever to raise money using a crowdfunding framework recently approved by the Ontario Securities Commission and other provincial regulators.

If the crowdfunding and trials are successful, Lux Wind believes its turbine can solve one of the problems bedeviling the wind energy industry – economic feasibility. These turbines can be constructed and installed at least 40 percent cheaper than conventional wind turbines, and that means that they could be used profitably without government subsidies.

“It’s a technology that has a lot of potential to really change the industry,” said CEO Terry Norman in an interview. “It’s a Canadian design, has Canadian entrepreneurs behind it and it’s a chance for us to show the world what we can do.”

Read About Lux's Technological Innovations.

Norman is a veteran of the Nova Scotian wind industry and says the reason traditional wind turbines are so expensive is so much of the machinery is high in the air, difficult to install and maintain. And the structure has to turn to face the wind.

Designed by Saskatoon-based engineer Glen Lux, the Lux two-megawatt turbine looks like an eggbeater with six blades that catch the wind and whir around a vertical axis, regardless of which way the wind is blowing.

Norman said the design – which won an award from a division of NASA two years ago – cuts the manufacturing and installation costs by at least 40 percent, and that means these turbines could generate electricity profitably in any jurisdiction.

Norman has decided to crowdfund the test product on the FrontFundr platform, and in doing so is entering uncharted waters in crowdfunding in the country. Equity crowdfunding – or the sale of investments to a broad range of people over the internet – is regulated in Canada by provincial security commissions, so there is a patchwork of regulation.

Ontario and a few other provinces (including Nova Scotia and New Brunswick) recently approved what’s known as “the crowdfunding exemption” to existing security rules. It allows any investor to invest as much as $2,500 in a campaign. Lux is the first Canadian company to launch a crowdfunding campaign using the crowdfunding exemption.

However, this exemption has only been approved by five provinces. Retail investors in British Columbia and Saskatchewan can invest in the campaign through the more restrictive “startup exemption.” They can invest up to $1,500.

Accredited investors – which is what regulators call rich people – from any province can invest as much as they like.

OSC Crowdfunding Rules Took Effect in January

And within Nova Scotia, Lux Wind is raising money through a Community Economic Development Investment Fund, or Cedif. Nova Scotia retail investors qualify for an equity tax credit under the scheme.

Prior to the crowdfunding campaign, Lux Wind  already raised about $90,000 from family and friends.

One of the interesting things about the crowdfunding campaign is that retail investors should end up with a majority stake, as the company is selling off as much as 78 percent of the equity. Norman said there will be more fundraising efforts in the future, which will undoubtedly dilute early investors, but for now he feels it best that the company have a diverse base of shareholders.

He also said there is a lot of interest in the crowdfunding community in Canada about the outcome of the Lux campaign. This sort of layered approach, in which the rules apply according to the province, may be a model other issuers in the country adopt. And the wind industry, of course, will be watching the development of the Lux turbines.

“The large turbine manufacturers won’t want to see the thing because they have a lot of money invested in the [current system],” he said. “But this is really going to change the industry.”