A new solar financing start-up has emerged with a vision of becoming the Kickstarter of solar, as it allows small-scale investors, for as little as 25 Dollars, to invest in solar projects in need of capital. The company, Solar Mosaic, currently employs 14 people, and is a private, venture-backed start-up that was founded in 2011. In May 2012 it raised $2.5 million dollars in a first round of venture funding led by Spring Ventures of San Francisco. In June 2012, the department of Energy in the USA awarded Mosaic a 2 million dollar Grant through its SunShot initiative.
Like other third-party solar financing companies, Solar Mosaic allows individuals to install rooftop solar for little to no upfront cost and then either lease the panels or buy power on a long term contract with the financing company. Rather than raise capital from banks and large accredited investors like the larger established solar financing companies Solarcity, SunRun and Clean Power Finance, Solar Mosaic allows any individual to invest in solar projects in increments down to $25 USD.
These small investments are structured as loans with a minimum fixed annual return of 4.5%, often higher. In mid December, Solar Mosaic celebrated financing their sixth solar project. This specific project, involved an installation financed by 51 individual investors and an anonymous donor. Together they raised $40,325 to purchase and install a 47 kw solar system on the roof of the Youth Employment Partnership (YEP) facility in Oakland, California. With this project, the non-profit organization (YEP) is projected to save $160,000 in reduced electricity over the lifetime of the project. YEP will be leasing the solar system for monthly payments based on the electricity generated, Solar Mosaic expects an annual return of 6.38% over a 60 month term for investors in the project.
Solar Mosaic is a good example of the crowdfunding method making its way into financial models. Crowdfunding has often been used to raise funds for philanthropic efforts, cultural events and projects such as art or film and consumer products. With the rapid success of startups like Kickstarter, Indiegogo and many others, crowdfunding has fostered a new marketplace bringing together projects and entrepreneurs with funding disperse funding sources.
Solar Mosaic’s innovation is that for the first time average individuals are able to invest in solar in small increments for a stable, low risk return on investment. This gives people passionate about clean energy, a chance to put their money to work. On the other side Solar Mosaic provides a low cost financing option for facilities interested in going solar. It will be exciting to follow this new company and the recent trend that accelerates the deployment of renewable energy by connecting new financing sources to quality projects.