The SunShot Initiative has invested billions of U.S. taxpayer dollars into lowering the costs of solar. In fact, the Department of Energy program recently announced a new round of awards. The funding is aimed at reducing solar costs from just about every aspect—from manufacturing to financing to reducing soft costs of solar to supporting unique new business models. One such recipient of this funding is Mosaic, a company that won a $2 million grant from the SunShot Initiative in June 2012 to support its unique model of bringing solar investments to the public through crowdfunding and allowing people to invest in solar projects across the country for as little as $25.
At the time the grant was awarded, Mosaic had already raised $5.3 million in capital to begin launching crowdfunded projects. The company has since used the model (including some beta projects) to fund at least 25 PV offerings over 19 projects and has attracted investors from across the country, despite the fact that most projects have only been available to California residents.
“By crowdsourcing investments, we’ve gotten 2,500 individuals in 44 states across the nation to become solar investors,” said Katie Ullmann, a spokesperson for Mosaic. “Our investor base is growing quickly and we're also incorporating banks (such as CIT) and institutional investors on our platform.”
To date, the company has raised more than $3.8 million in investments and is making payments to investors for the arrays it has installed. The rates on investments have gone as high as 6.38 percent. This crowd sourcing approach is similar to creating a bond, so an investment carries a long-term, stable return on investment of up to about 12 years, depending on the project. It's important to note, however, that some carry shorter terms.
For the beneficiaries of the funding - the customers - the arrays are under a contract like a power-purchase agreement, where they pay for power produced by the array at a rate that’s less than what they would pay for on the grid, which ultimately saves them money.
“We’re filling the niche for commercial scale 100 kilowatt to 3 megawatt solar projects, which are very underbanked due to the transaction costs, and financing millions of dollars of these installations with top solar developers,” Ullmann added. While the company has raised nearly $5.3 million in crowd sourcing, it has financed close to $5.6 million in projects in 2013, with an impressive $1 million financed in August alone. The company also has a pipeline of $10 of millions for the remainder of 2013 and into early 2014.
In addition to the grant to support Mosaic as it expands its unique operating model, the company is a cofounder of the truSolar initiative, which consists of 16 organizations, including other solar companies and the Rocky Mountain Institute. The group came together in an attempt to create a standardized risk rating system for solar projects. By creating such a system, they can help financiers better understand the risks associated with project, while also reducing such risk, making it easier for investors, banks and other institutions to invest in the projects—and at lower rates of return.