Financing Solar, 25 Bucks At A Time


When people think of crowd funding, or raising money via the Internet, they probably think of art projects or third-world countries. There's Kickstarter, a site launched in 2009 to help creative types ask people to pledge money for their art, and Kiva, which was founded in 2005 and enables people to offer microloans to small businesses overseas.

Building on this online marketplace idea, Mosaic was launched in January of this year to raise money for solar projects. The Oakland, Calif.-based organization has funded projects such as the 114 kW installation on the roof of the Ronald McDonald House in San Diego, a 9 kW array on a food cooperative in Oakland and systems on several affordable housing apartment buildings in California. People create a Mosaic account, view the projects and decide which to fund. The principal, plus interest, is repaid over a set term of several months or years.

The investor, who must offer at least $25, is participating in a loan. ‘It is similar to a fixed-income investment with steady returns,’ says Mosaic's president and founder, Billy Parish. ‘Investors are investing in solar project debt, not equity.’

In that respect, the website is similar to Prosper, a peer lending site, but instead of helping a stranger consolidate debt or make home improvements, the Mosaic participant helps a solar project get funded, or in some cases, refinanced.
Parish notes that there are risks, and Mosaic's investment committee examines all the risks associated with each solar project and seeks what it considers to be relatively low-risk and high-quality projects.

‘In general, the primary risks are credit risk, technology risk, operational risk and weather risk, and our job is to mitigate those risks,’ Parish says. ‘For example, to mitigate against the risk of a solar project being damaged by a storm, we require that there be sufficient property damage insurance to cover the cost of repairing the project.’

Mosaic's current project – a 487 kW system consisting of Suntech and Eoplly panels on Wildwoods Convention Center in Wildwood, N.J. – is seeking $698,775 of funding. The panels have been supplying power since July 2012, and this funding is the third loan for that project.

‘We are helping people invest in solar,’ Parish says. ‘We are helping developers free up their equity, which is what they need if they do more projects. We are bringing in a new source of lower-cost debt capital.’

The company charges a 1% fee. ‘We have a lending license,’ he notes. ‘We are a nonbank lender. It took us two years to get the regulatory approvals to offer investments to the public.’

Other companies that use crowd funding for solar projects include SunFunder, which strives to end ‘energy poverty’ by raising money to fund off-grid solar projects in third-world countries. San Francisco-based SunFunder does not pay interest on the loans but pays back principal plus Impact Points, which cannot be cashed but can be put toward the next solar project that the payer wants to fund.

So far, Mosaic's investments have been available only to California residents. Parish says the company is working on some new projects that will launch over the next few months.

‘We can't say what the projects are, but we are still staying in the commercial segment, schools and small businesses,’ he says.

In January, Mosaic and other solar companies launched the truSolar Working Group, a consortium of 16 solar companies dedicated to addressing project risks to help make project financing easier. The group plans to develop uniform standards for solar project screening, rating and underwriting, which will help increase the availability of funding for solar projects.

Nora Caley is a freelance writer based in Denver.

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