Solar power in the U.S. had a kick-ass year last year, and crowdfunding had pretty much nothing to do with that. But increasingly startups and large companies alike are eyeing the potential of crowdfunding as a means to add fuel to the fire of the ongoing solar boom and give customers new financing options.
This week Oakland-based startup Solar Mosaic launched a new way to use its crowd-funding platform to fund home solar systems. The new option, called the “Mosaic Home Solar Loan,” takes its model of enabling its community of investors to fund solar panel systems on commercial and government buildings, and offers that option for solar panel systems on regular homes. It’s only available right now in California.
In the case of platforms like Solar Mosaic, investors can make back returns on their investment over time, from around five to nine percent for a nine to 10 year term. Traditionally big banks, or even companies like Google (s GOOG), have put up hundreds of millions of dollars to fund solar panel installations (through third-party solar financiers like SolarCity), and those banks or companies make those returns on their capital. Crowd-funding can bring that money-making opportunity to individuals.
The opportunity is interesting enough that even the bigger solar companies are experimenting with it. Earlier this year the quickly growing solar panel installer and financier SolarCity acquired a startup called Common Assets, which has developed software that enables individuals and small companies to invest in its solar panel projects. SolarCity’s platform will be different than other crowd funding sites because it will be using debt investments, instead of aggregating investments to provide loans for projects.
SolarCity says it’s responsible for almost a third of all new solar panel projects being built on home rooftops in the U.S. these days, so the fact that it’s interested in a sort of crowd-funding option is important validation. SolarCity went public in December 2012, and was backed by investors Elon Musk, Draper Fisher Jurvetson and DBL Investors. Musk’s cousin Lyndon Rive is the SolarCity’s CEO, while Musk is chairman.
Beyond an investment vehicle, I think crowdfunding is uniquely suited to backing clean power projects like solar. There’s the do-gooder aspect of contributing to carbon emissions-free power, as well as the early-adopter excitement of backing a next-generation energy technology.
There are startups like SunFunder that have been funding solar panel projects in developing countries more in the way Kickstarter supports projects, without returns, but as a crowdfunded contribution. Though, SunFunder repays your loan as the solar systems generate money, and encourages you to reinvest the money back into other projects.
This type of return-free contribution could actually be a substantial source of funding for the less financially attractive markets. Kickstarter this year surpassed the $1 billion pledge milestone, and according to the company, more than half of that money was raised in just the last 12 months.
All this being said, crowd funding makes up a tiny fraction of the funding for solar panel systems. Solar Mosaic has seen a little over $5 million in funds go through its platform to back solar panel projects. According to a report released this week, the market value of all solar panel installations completed in 2013 was $13.7 billion.