Project financing is an ongoing challenge for solar. So maybe banks are hesitant, but there are still many independent investors willing to spend if perhaps paired with the right project.
This is evident through Mosaic, a new online marketplace. Mosaic has begun offering investments to residents of California and New York as well as accredited investors from around the country. The marketplace is open to the American public, providing a chance to invest directly into clean energy projects and receive a solid return.
“Our mission is to create abundant clean energy for and by the people,” said Billy Parish, Co-Founder and President of Mosaic in a recent press conference. “For too long, energy investing in America has been a bank only game. Today, hundreds of individuals from all walks of life will become clean energy investors. Some will invest only $25, others will invest thousands, but either way, they will become literally invested in building a clean energy future.”
Before starting Mosaic, Parish founded the Energy Action Coalition, the largest youth organization in the world focused on clean energy and climate change. Through this organization, Parish saw the difficulties of trying to pass federal climate legislation first hand.
“I knew I needed to try something different,” he says. “I felt that we needed to…really engage people, deepen and broaden our constituency, and accelerate clean energy deployment. With Mosaic, we are appealing to people’s enlightened self interest. Make money, do good, invest in your community, create jobs, create prosperity, make money. We can have all those things together.”
Parish notes that solar panel costs have dropped 80% in the past 5 years to the point where solar electricity is equal to or cheaper than fossil-fuel derived electricity in 20 states. But the transaction costs to finance solar project development are still too high. That’s where Mosaic comes in. The nimble online marketplace specializes in clean energy lending. It’s able to source capital from the crowd and lend it to developers at lower interest rates than banks. And investors still see an attractive return.
Mosaic’s first investment offerings for New York and California residents are in solar projects on affordable housing apartments for low-income residents in California and offer a 4.5% annual return, net of servicing fees, with terms of approximately nine years. With 10-year treasuries at near historic lows (1.90%), CDs at 0.5% APY, bonds averaging 5.20% from 2003-2012 and stocks in the S&P 500 averaging 4.95% annualized returns from 2003-2012, Mosaic says its expected yields are competitive with the best investment products on the market.
To date, $1.1 million has been invested through Mosaic by more than 400 investors to finance twelve rooftop solar power plants in California, New Jersey, Arizona and the Navajo Nation. Though the SEC has not yet adopted rules implementing the crowdfunding provisions of the JOBS Act, Mosaic is pursuing other avenues for crowdfunding clean energy ahead of the adoption of final rules.
Analysts estimate that it will take about $1 trillion to transition America to clean energy, Parish notes. Meanwhile the U.S. investment marketplace is $33 trillion, $3.7 trillion of which is already invested in socially responsible investments, enough to get the job done three times over.
“There’s more than enough money to do this, we just need to find ways to tap into those capital markets,” Parish says. “With the returns we are seeing given the generally low risks that clean energy assets represent, we think it’s inevitable. The transition to clean energy represents one of the greatest opportunities for wealth creation of our time. We created Mosaic to accelerate that transition by enabling more people to participate in it and to profit from it.”