Solar Crowdfunding

While the general concept has been around for years, the term “crowdfunding” has frequently appeared in recent news headlines. We’ve seen a number of articles related to solar technologies that are usually placed on roof systems, so we thought we’d explore the topic for those that may be interested in learning more.

First, according to Oxford Dictionary, Crowdfunding is:

The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

One of the pioneers and visionaries of sustainable energy, Dan Rosen with Mosaic, estimated that is will cost trillions of dollars to power the infrastructure of the world with 100 percent renewable energy. He envisioned a way for investors to fund various solar power projects, like affordable housing projects, federal, state and local government buildings, public works buildings and more. Investors in these crowdfunded projects make back their investment over 8 – 10 years at between 5 and 10%.

The beauty of solar crowdfunding is that you can often invest as little or as much as you want, making it accessible to everyone. An investment of $25 dollars may not make you much over 10 years, but if lots of people do it, it can make a huge difference to sustainable energy projects all over the world, especially for public buildings in our communities.

In January 2013, Oakland-based Mosaic company created several crowdfunding campaigns. They raised enough money ($313,000) to fund four clean energy projects in California. Since its initial launch the company has raised more the $7 million in investments through crowdfunding. Other companies have since followed suit and solar crowdfunding projects are springing up all over.

The idea has even expanded to include homeowners in the crowdfunding concept. A homeowner can have solar installed at minimal cost and pay off the “loan” over the next 20 years. The investors will get their money back in regular payments with interest, and homeowners will own the equipment outright once it is paid for, unlike solar leasing programs.

While federal and state governments offer tax credits and rebates (which run out in 2016) to those who invest in solar power, and the cost of solar systems has dropped by as much as 80% since 2008, the cost of installing solar panels is still prohibitive to many people, especially to local and state governments who seem to be chronically strapped for cash. However, according to various sources, almost one-third of the newly installed electricity generating capacity in the U.S. since 2013 was solar power.

Unfortunately, crowdfunding laws are ambiguous and murky. SEC regulations often prevent companies in many states from allowing non-accredited investors to invest in these types of projects or the companies are prevented from offering a return on investments. The JOBS Act of 2012 made some headway, but the rulemaking is still up to the SEC on what is legal and what isn’t. It will be interesting to see what changes come in the next several years.