New Trends: Investors Make Returns from Solar Power

From John Shannon who writes about green energy,sustainable development and economics. Email him at john[AT]borderstan.com. Content from Katie Fehrenbacher/GigaOM — and thanks due to Ernie Sander, Executive Editor, GigaOM

One of the signs that a new kind of business is maturing — is when investors are banging on the door demanding to invest in that product or service.

The latest trend in the energy marketplace is solar power investment whereby investors are offered a rate of return for a specified number of years (in this case, 4.5% over 9 years) and that investment is used to fund solar installations.

Get ready to start hearing a lot more about this as solar panels have fallen in price over the past 26 months so dramatically that solar financing programs are springing up everywhere. Solar panel prices are still falling due to massive orders and production. Investment returns for solar power investors look set to rise.

Here is one such example:

Solar Mosaic Turns “The Kickstarter of Solar” into a way to Make Money

By Katie Fehrenbacher

Who wants to make money off of solar roofs? Startup Solar Mosaic is making that possible starting Monday morning, when California and New York residents can put money into solar projects and, the company says, earn a 4.5 percent annual return. Kind of like a mutual fund.

Updated: At 9AM (PST) on Monday, the Kickstarter of solar, Solar Mosaic, will officially open its site to residents of California and New York, as well as accredited investors, looking to make money by investing in solar panel roof projects. For months (at least since last summer), Solar Mosaic has been enabling a small amount of investors to experiment with investing in, and earning money from, the returns from solar roofs, but this is the company’s big public launch.

The company was founded back in October 2010, and I wrote one of the first profiles of Solar Mosaic in October 2011. It took the startup a little over two years to test out its beta Kickstarter-style platform and become registered to share securities with the public. Last year, it got a vote of confidence from the crowd funding bill. The company is backed by Spring Ventures.

For potential investors, solar roofs can provide a low-risk return — anywhere between 4 and 12 percent on an investment — kind of like investing in a mutual fund. Building owners lease solar panel systems and enter into a contract for a fixed, low electricity rate, commonly over about two decades. Solar Mosaic organizes the crowd-funding to get the solar rooftop installed, and works with a solar lease provider like Sungevity. Once the project gets crowd-funded, the rooftop solar panel installation process starts.

Solar loans are backed by a revenue-producing asset (electricity) and the building owners pay for the solar electricity monthly in the same way they have been paying their monthly utility bill. The buildings owners aren’t all that likely to default on their electricity payments, and the costs, timelines and returns for solar panels are pretty transparent as the technology has become increasingly commoditized. Another company that has created a site for crowd-funded solar is SunFunder.

Solar Mosaic says its first investments will offer a 4.5 percent annual return, including servicing fees, with a nine-year term. The company says it is offering “a better expected yield than most investment products available to the general public.”