Solar project crowd funding pioneer Mosaic is expanding its activities into the residential solar sector. The company has partnered with Connecticut's Clean Energy Finance and Investment Authority (CEFIA) and Sungage Financial to package loans made to homeowners for building photovoltaic power systems into investment opportunities through its online platform.
CEFIA has provided an initial $5 million commitment to fund originations of the consumer loans. Participating solar installers serving the Connecticut market will be able to offer the loans to their customers. The loan product, developed by Sungage Financial, uses projected energy savings as the basis for the offering.
Investments in the loan pool will be offered to accredited investors through Mosaic's crowd-source investment website. The Hampshire Foundation Inc., which has committed $1 million of its own funds, will also offer investment opportunities to its clients as part of the program.
While the residential financing options are not yet built into the Mosaic online marketplace, the company says they will be very soon. Katie Ullmann, communications manager at Mosaic, says the development is a natural outgrowth from the individual commercial-scale projects that have been available.
‘This deal is part of our expanding access to solar as an asset class,’ Ullmann says. ‘If you look at our website, it can be hard to find available projects to invest in. We've been selling out projects in a week. The move to the home solar space expands opportunities for people to invest in solar.’
The company is still considering whether to enable investors to put their money into individual projects or into project bundles. In all likelihood, both options will be available, Ullmann says. Mosaic stresses that the investors can expect similar rates of return that they have seen from commercial projects.
For its part, CEFIA says it views the partnership as an opportunity to attract more investment into Connecticut, as a good in and of itself and as a means of promoting the development of solar power.
‘We are always looking for ways to make our limited dollars more effective,’ says CEFIA spokesman David Goldberg.
Bert Hunter, CEFIA's chief investment officer, says his agency's role in the partnership is to serve as a warehouse for the loans, funding transactions as they are qualified. At certain increments – say, $250,000 – the funding partners, Mosaic and Hampshire, take the loans over for packaging as investments.
‘This replenishes our coffers and enables us to support additional loans,’ Hunter says.
Mosaic says the residential solar marketplace is very different from the commercial project space the company has been serving. Performing due diligence on commercial projects is relatively straightforward, as there is generally a single site or multiple sites within a well-defined area. When a bundle of residential projects is offered as an investment opportunity, performing due diligence is much more challenging because it is generally not possible to make site visits for every single installation.
‘Certainly there are some differences between commercial and residential diligence,’ says Gregory Rosen, chief investment officer at Mosaic. ‘But performing due diligence on commercial projects is the same as residential diligence in many respects. Fundamentally our goal is to make sure that the projects' equipment and install specifications are consistent with prudent industry practices, and some visual confirmation that systems are built in accordance with the installation contracts.’
Rosen also points out that residential solar investment offerings will typically consist of multiple systems at multiple single-family home locations within a given state. This diversifies project risks in a beneficial way, he says, by distributing them geographically and pooling homeowner credit.
