Today marks the beginning of an innovative, transparent and egalitarian way of financing rooftop solar energy—a method, in fact, that has the potential to disrupt two of the largest industries in the world: energy and finance.
Through crowdfunding, Oakland, California-based Mosaic, a startup website, is offering small investors the opportunity to put their money into rooftop solar power plants to receive a return based on the energy produced.
Mosaic, which describes itself as “an online marketplace that connects investors to high-quality solar projects,” has begun offering investments to residents of California and New York as well as to accredited investors nationwide in the United States. The company claims that, for the first time ever, the American public will be able to invest directly in clean energy projects and receive a solid 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, offering a 4.5 percent annual return, net of servicing fees with terms of approximately nine years. Expected yields are competitive with the best investment products on the market.
Both the U.S. government and private sector venture capitalists have seen the value in the new Mosaic model. In June, the U.S. Department of Energy granted $2 million to the company, as a promising “kickstarter” for solar projects.
“Financing is a major part of getting the cost of solar down,” said DOE Secretary Steven Chu at the solar energy summit where the grant was announced, noting that the department aims to make solar energy cost-competitive with other types of energy by the end of the decade. The DOE wants to slide the cost of solar energy down to less than $1 per watt by 2020.
Mosaic also recently raised a $2.7 million round of funding from VCs. Together with the $2 million grant, the startup’s cash on hand will be used to expand and scale their clean-energy-crowdfunding model. Expanding beyond the sunny southwest and the Bay Area, Mosaic wants to get millions of Americans to fund solar projects (and create new jobs) in areas around the U.S.
“Energy investing has traditionally been a bank-only game, but already, hundreds of people from across the United States have invested to finance solar projects through Mosaic. We expect millions more to follow,” explained Dan Rosen, Mosaic’s CEO.
Billy Parish, president of Mosaic, discusses his company’s project with Energy Secretary Steven Chu
“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,” added Mosaic’s President Billy Parish.
To date, $1.1 million has been invested through Mosaic by more than 400 investors to finance 12 rooftop solar power plants in California, New Jersey, Arizona and the Navajo Nation. Although the Securities & Exchange Commission 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.
As President Obama said after signing the JOBS Act in April 2012, "For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in."
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Edited by Allison Boccamazzo