New York Times, March 6, 2013
If you wanted to get large numbers of people actively engaged in helping to solve global warming, how might you go about it? For years, the main approach in the environmental movement has been to sound the alarm bell and implore people to consume less, switch to green products, recycle, and speak up to companies and politicians. It hasn’t always been an easy sell. However, if the approach of a promising Oakland-based start-up takes hold, there may be another line of action that could become available to ordinary people: directly financing renewable energy.
In January, a company called Mosaic, made a splash in the renewable energy world when it introduced a crowd-funding platform that makes it possible for small, non-accredited investors to earn interest financing clean energy projects. When Mosaic posted its first four investments online – solar projects offering 4.5 percent returns to investors who could participate with loans as small as $25 — the company’s co-founder, Billy Parish, thought it would take a month to raise the $313,000 required. Within 24 hours, 435 people had invested and the projects were sold out. The company had spent just $1,000 on marketing. All told, Mosaic has raised $1.1 million for a dozen solar projects to date. Now it is connecting with other solar developers to identify new projects for financing. More than 10,000 people have already signed on and are standing by to invest.
From 1977 to 2013, the price per watt of crystalline silicon photovoltaic cells dropped from about $77 per watt to 74 cents per watt. Couple that with another innovation — the spread of companies that lease, rather than sell, solar power systems – add in some tax incentives — and decentralized solar has become a viable option for many homeowners and businesses. This is a far cry from the time when buying a solar system meant paying upfront for 25 or 30 years of power.
If it seems far-fetched to imagine millions of Americans becoming mini energy producers, just look at Germany, where 51 percent of the country’s clean energy production is owned by individuals or farmers, while major utilities control just 6.5 percent of it.
But peer-to-peer lenders like Prosper.com and Lending Club – once considered improbable businesses — have revealed new possibilities. Combined, they have brokered over $1.8 billion in loans, offering lower interest rates and higher returns than borrowers or lenders could get from banks. At the same time, crowdfunders like Kickstarter, RocketHub, Seedmatch and the aptly named Crowdfunder, have helped groups raise hundreds of millions of dollars for a multitude of projects and business ventures. Kiva has built a bridge that has allowed individuals to lend over $400 million to microfinance institutions. Now, we’re seeing the early application of this idea to clean energy, with Mosaic and others, including SunFunder and Milaap.