Online Platform Brings Solar to More People

Wed, 2013-04-17 08:42

When it comes to rooftop solar, the space, the sun, and the technology are readily available to deploy. But, when it comes to raising the capital to fund projects, progress often stalls. Projects that are too small to pursue traditional financing through a bank often cannot overcome the cost barrier, especially in an economic climate where financial institutions are more hesitant to lend.

The entrepreneurial spirit, a growing interest in the advancement of clean energy, and the Internet, have given rise to new sources of cost-effective capital. Crowdfunding is a method of funding a project by raising small amounts of capital from a large group of people, using the Internet as a platform for investment transactions.

Through crowdfunding and an innovative online platform, Oakland, CA-based Mosaic is proving that connecting motivated investors with high-quality solar projects can bring more solar benefits to more people.

How Does Crowdfunding Work for Solar?

solar-crowdfundingMosaic operates an online marketplace to allow people to evaluate and invest in solar projects that have been pre-screened for financial, technical, environmental, and operational risk factors. Before a project can be presented on Mosaic’s website, it must have a contract in place to sell the electricity generated to the building owner or a utility. Mosaic obtains regulatory approval for each project and prepares a prospectus in accordance with the Securities and Exchange Commission (SEC) guidelines.

With Mosaic’s model, any investment is a loan to the solar project that will be paid back with interest. The capital is provided to the solar project to buy and install rooftop solar panels. Once the project begins earning revenue from the building owner or utility benefiting from the solar power produced, the solar developer begins paying the loan back with interest. The timeframe for repayment of loans is specific to the project. But according to Mosaic’s website, repayment typically begins one month after the note is issued. The loans generally have a fixed term of about five years or more.

Mosaic has been raising capital from accredited investors. By working with state securities laws in New York and California, Mosaic has also released projects to residents in these states. Investors can earn a return of between 4.5 – 6.5% on their loan, which beats the rate on most savings accounts or CDs. Mosaic charges an annual fee of 1% for the use of the platform.

What About the JOBS Act?

In April 2012, President Obama signed the Jumpstart Our Business Start-ups (JOBS) Act into law to help entrepreneurs create jobs and grow the economy. The Act includes provisions to relax some restrictions on crowdfunding. President Obama gave the SEC a deadline to adopt rules to implement the crowdfunding provisions, but with deadline having come and passed, the SEC has yet to issue regulations. The delay explains why Mosaic has been limited to public offerings only in California and New York, where they have been able to operate within state securities laws. In other states, investors have to be accredited based on SEC guidelines.

If the JOBS Act regulations eventually issued by the SEC are favorable to “cloud funding portals,” Mosaic will be able to offer public investment opportunities nationwide, and new financing models and online marketplaces will likely follow.

A Catalyst for Change

Solar crowdfunding is empowering average citizens to affect change, support economic growth, take an active role in the deployment of clean energy, and quite possibly earn a profit. Mosaic co-founder Billy Parish has said, “We’re creating a new platform where people can profit from the clean energy revolution.” But, in fact, it seems Mosaic may have started a revolution of its own.

By Amy Malloy

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