Solar Mosaic’s Crowdfunding Beats Treasuries With 4.5% ReturnAndrew Herndon
Solar Mosaic Inc., which operates an online service that lets individuals fund solar projects, said investors can earn a 4.5 percent return on rooftop power plants, better than 10-year Treasuries that currently yield about 1.9 percent.
The company introduced its service today. In initial tests, the website has facilitated about $1.1 million in investments from 400 people to finance 12 rooftop solar plants in California, New Jersey and Arizona, Solar Mosaic said today in a statement.
The closely held company is developing a new model to finance renewable energy. Its so-called crowdfunding service relies on individuals instead of banks or institutional investors, and offers one of the first mechanisms for consumers to back solar power assets, according to Oakland, California-based Solar Mosaic’s President Billy Parish.
“Through our online marketplace, investors can take part in high quality clean energy projects for as little as $25, and earn a return that is better than most other investment products available to the general public,” Parish said today on a conference call.
The cost of solar power has dropped 80 percent in the last five years, making it comparable to power derived from fossil fuels, or cheaper, Parish said. Financing costs remain an impediment to wider use of solar panels.
“To rapidly deploy clean energy, the industry needs access to low cost capital and lots of it,” Parish said. “We are able to source capital from the crowd and lend that capital to clean-energy developers at lower interest rates than they would get from banks,” he said.
Solar Mosaic lists projects through its online marketplace. Investors provide capital that’s used to buy and install rooftop solar panels. When the systems are complete and selling electricity, typically to building owners or occupants, the backers are repaid with interest.
The company provides capital to developers at about 5.5 percent. It collects a 1 percent fee and pays investors about 4.5 percent.
The company’s first projects are on affordable housing facilities in California and are being offered to investors in New York and California, according to the statement. They can expect to be repaid in full within about nine years.
Solar Mosaic has raised $3.4 million from investors including Spring Ventures Ltd. and Serious Change LP. It also has received a $2 million grant from the U.S. Energy Department.
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