By Jesse Morris
From Forbes to Fortune, Bloomberg to the Wall Street Journal, a young company named Mosaic has been getting a lot of attention of late. Why? Because Mosaic is bringing crowd-sourced funding to the world of solar photovoltaic (PV).
Crowdfunding is nothing new. Companies such as Kickstarter have allowed individuals to fund everything from their next indie film to extensive out of pocket medical bills with pooled donations from family, friends and other supporters. But thanks to last year’s JOBS Act, debt-based crowdfunding is now an option as well, in which investors come together to fund startups and small businesses in return for repayment plus interest from a company like Mosaic.
It’s inclusive, meaning that investors of all shapes and sizes can get into the game. And it currently makes for a good, low-risk investment. Mosaic—with more than $1.1 million invested in solar projects to date—boasts 4.5–6.5 percent risk-adjusted annual returns, besting the latest interest rates on 30-year Treasury bonds.
But much of the crowdfunding solar coverage under-emphasizes a key point: funds raised from the crowd—in addition to providing attractive returns for investors and enabling more solar installation period—also have the potential to lower the cost of electricity from solar PV systems in the here and now.
Solar finance: credit card vs. mortgage rates
Imagine for a moment that a credit card company issues a card with a $200,000 limit. Next, lets imagine a homeowner taking that card and buying a new home for $200,000 with a thirty-year term, just like most home mortgages. This lucky homeowner just bought a new home for $0 down!
There’s a problem, though. Financing a home purchase with this hypothetical credit card is a seriously bad deal for the homeowner since the annual interest rate would be 13–15 percent, according to Bankrate.com, which translates into extremely high monthly payments. Instead, most homeowners finance homes on thirty-year terms with more reasonable interest rates in the 3–5 percent range. Such inexpensive single-digit bank debt is a key to making the financing work, since the cost of the debt is a huge factor in the overall cost of the purchase over the term of the deal.
Just as financing solutions like credit cards and home mortgages help families buy new appliances and homes, several different finance solutions are helping solar energy systems be deployed on homes and businesses throughout the U.S. today. In fact, about 75 percent of residential solar photovoltaic projects and 40 percent of commercial ones are financed with different “third-party ownership” models where electricity users install a solar system with little to no money down and start saving money from day one.
But the capital used to deploy these third-party-owned solar projects has an effective interest rate that looks more like that of a credit card than a mortgage. This translates into high monthly payments for electricity from solar systems—just like a homeowner making steep payments on a credit card in the home purchase example. Although it’s not the only factor at play, high interest rates (closely related to “costs of capital”) are one of the big reasons we only see lots of solar in places like Hawaii (where residents pay the highest electricity rates in the nation), but not Kentucky: Solar developers can only produce savings for customers in areas with a combination of high electricity rates, good sunlight, and attractive local incentives—think California and Arizona, two leading states nationwide for total installed solar capacity.
For folks interested in deploying as much solar in the U.S. as quickly as possible, this is a problem. Right now, the capital structure behind most solar projects in the U.S. is prohibitively expensive for the economics of solar to pencil out in most of the country. So, we’ve got to help make capital for solar projects look more like home mortgage loans than credit card debt.
There are a number of ways to do this, but many of the most popular solutions, such as master limited partnerships and solar-specific real estate investment trusts, require regulatory and/or federal legislative changes and aren’t likely to become large-scale solutions in the near term. However, there’s one solution that’s already upon us—crowdfunding.
Crowdfunding lowers costs
As shown above, the “credit card-like” capital that’s currently used for solar projects is composed of expensive equity from two sources: tax equity investors (companies able to absorb the tax benefits associated with solar projects) and solar developers. This equity is expensive and, in simple terms, has an effective interest rate of more than 15 percent. This translates into high a high cost of electricity from solar systems.
But this is where groups such as Mosaic step in. Expensive tax equity is still used to pay for about half of a project, but instead of using equity from the solar developer, crowdfunding providers can step in with funds from the crowd. Capital raised from the crowd has a much lower interest rate (~6.5 percent) than equity put in from a solar developer (~15 percent), so the combined interest rate for the solar project goes down, along with the cost of electricity from the solar system.
Finally, at some point in the future we could imagine crowdfunding companies providing all of the capital for a solar project. This would mean a very low interest rate on the entire project and a very low cost of electricity from the solar system.
There are a number of different solutions in development that will help lower interest rates associated with solar PV financing. But crowdfunding excites me for one main reason: it’s here now. And if we’re to get on pace to realize Rocky Mountain Institute’s vision of a secure, low-carbon, and affordable U.S. electricity system by 2050 as outlined in Reinventing Fire, we need solutions that drive deployment of existing technology as soon as possible.
This blog post originally appeared on Greenbiz.
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By Tony Carnie
South Africa is home to around 1,300 of the world's roughly 7,100 remaining cheetahs. It's also the only country in the world with significant cheetah population growth, thanks largely to a nongovernmental conservation project that depends on careful and intensive human management of small, fenced-in cheetah populations. Because most of the reserves are privately funded and properly fenced, the animals benefit from higher levels of security than in the increasingly thinly funded state reserves.
Vincent van der Merwe at a cheetah translocation. Endangered Wildlife Trust
Under Pressure<p>Cheetah populations elsewhere in Southern Africa have not prospered over the past 50 years. In Zimbabwe, cheetah numbers have crashed from 1,500 in 1975, to just 170 today. Botswana's cheetah population has held steady at around 1,500 over the same period, but illegal capture for captive breeding and conflicts with farmers and the growing human population are increasing. In Namibia, there were an estimated 3,000 cheetah in in 1975; roughly 1,400 remain today.</p><p>In contrast, South Africa's cheetah numbers have grown from about 500 in 1975 to nearly 1,300 today. Van der Merwe, who is also a Ph.D. student at the University of Cape Town's Institute for Communities and Wildlife in Africa (iCWild), says he's confident that South Africa will soon overtake Namibia and Botswana, largely because the majority of South African cheetahs are protected and managed behind fences, whereas most of the animals in the neighboring countries remain more vulnerable on mainly unfenced lands.</p><p>Wildlife researchers Florian Weise and colleagues have reported that private stock owners in Namibia still trap cheetahs mainly for translocation, but there are few public or private reserves large enough to contain them. Weise says that conservation efforts need to focus on improving tolerance toward cheetahs in commercial livestock and game farming areas to reduce indiscriminate trapping.</p><p>Van der Merwe says fences can be both a blessing and a curse. While these barriers prevent cheetahs and other wild animals from migrating naturally to breed and feed, they also protect cheetahs from the growing tide of threats from humanity and agriculture.</p><p>To simulate natural dispersion patterns that guard against inbreeding, the trust helps landowners swap their animals with other cheetah reserves elsewhere in the country. The South African metapopulation project has been so successful in boosting numbers that the trust is having to look beyond national boundaries to secure new translocation areas in Malawi, Zambia and Mozambique.</p><p>Cheetah translocations have been going on in South Africa since the mid-1960s, when the first unsuccessful attempts were made to move scores of these animals from Namibia. These relocations were mostly unsuccessful.</p>
Charli de Vos uses a VHF antenna to locate cheetahs in Phinda Game Reserve. Tony Carnie for Mongabay
Swinging for the Fences<p>But other wildlife conservation leaders have a different perspective on cheetah conservation strategy.</p><p>Gus Mills, a senior carnivore researcher retired in 2006 from SANParks, the agency that manages South Africa's national parks, after a career of more than 30 years in Kalahari and Kruger national parks. He says the focus should be on quality of living spaces rather than the quantity of cheetahs.</p><p>Mills, who was the founder of the Endangered Wildlife Trust's Carnivore Conservation Group in 1995, and who also spent six years after retirement studying cheetahs in the Kalahari, says it's more important to properly protect and, where possible, expand the size of existing protected areas.</p><p>He also advocates a triage approach to cheetah conservation, in which scarce funds and resources are focused on protecting cheetahs in formally protected areas, rather than diluting scarce resources in an attempt to try and save every single remaining cheetah population.</p><p>"People have an obsession with numbers. But I believe that it is more important to protect large landscape and habitats properly," Mills said.</p><p>He suggests that cheetahs enclosed within small reserves live in artificial conditions: "It's almost like glorified farming."</p><p>"In the long run we have to focus on consolidating formally protected areas," he added. "Africa's human population will double by 2050, so cheetah populations in unfenced areas will become unsustainable if they are eating people's livestock."</p>
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<div id="e639b" class="rm-shortcode" data-rm-shortcode-id="d8d112e123588b9bf3c3eadcc89627e8"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1310602217825726465" data-partner="rebelmouse"><div style="margin:1em 0">Thank you to @MichaelEMann for patiently and clearly explaining to non scientists why increased ocean stabilizati… https://t.co/yW2BmQhKGp</div> — Dr Naomi Wolf (@Dr Naomi Wolf)<a href="https://twitter.com/naomirwolf/statuses/1310602217825726465">1601306893.0</a></blockquote></div>
<div id="85eca" class="rm-shortcode" data-rm-shortcode-id="43780424fc8b04e23a525e1bad1086eb"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1310608647651811336" data-partner="rebelmouse"><div style="margin:1em 0">Canada has oceans on 3 sides-we can't ignore the climate news that The Oceans Appear to Be Stabilizing. Here's Why… https://t.co/SfWJWWRHr7</div> — Friends Of Halifax Common (@Friends Of Halifax Common)<a href="https://twitter.com/FriendsHalifax/statuses/1310608647651811336">1601308426.0</a></blockquote></div>
<div id="3e52e" class="rm-shortcode" data-rm-shortcode-id="f210e186b6e1481a64770e0c8722a438"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1310638669477236738" data-partner="rebelmouse"><div style="margin:1em 0">"Das bedeutet, dass das CO2-Budget, das zur Vermeidung kritischer Erhitzung (z.B. 1,5°C) übrig bleibt, möglicherwei… https://t.co/675YBTSybJ</div> — Parents For Future #SystemChangeNotClimateChange (@Parents For Future #SystemChangeNotClimateChange)<a href="https://twitter.com/parents4future/statuses/1310638669477236738">1601315583.0</a></blockquote></div><p>Ending his piece on a similar note, Mann wrote that "in short, it's unwise to be complacent given the accumulating scientific evidence that climate change and its impacts may well be in the upper end of the range that climate scientists currently project. There is ever-greater urgency when it comes to acting on climate. But there is agency as well. Our actions <a href="https://www.newsweek.com/dangerous-new-form-climate-denialism-making-rounds-opinion-1455736" target="_blank">make a difference</a>—something to keep in mind as we head into a presidential election <a href="https://www.newsweek.com/greta-thunberg-donald-trump-true-leadership-climate-change-free-world-1461147" target="_blank">whose climate implications</a> are monumental."</p><p>Mann is on the mounting list of climate experts and advocates <a href="https://www.axios.com/2020-presidential-election-joe-biden-endorsed-climate-scientists-24013990-0300-4c2c-ad95-57571b397196.html?fbclid=IwAR3vTCBmK5BwvoafwGefadTsnIMnKo9FS6ssc9PCdFLEeXr6p4KHlnrFWKU" target="_blank">supporting </a>Democratic presidential nominee Joe Biden in his effort to oust President Donald Trump—who has, at various points, ignored and exacerbated the climate emergency. Earlier this month, the <a href="https://www.commondreams.org/news/2020/09/15/matter-life-and-death-after-175-years-scientific-american-backs-biden-magazines" target="_blank" rel="noopener noreferrer">editors</a> of<em> Scientific American</em> as well as the political action arms of both 350 and Friends of the Earth also <a href="https://www.commondreams.org/news/2020/09/24/clarion-call-all-progressive-environmentalists-defeat-trumps-planetary-destruction" target="_blank" rel="noopener noreferrer">endorsed</a> the former vice president.</p><p>"The stakes are clear and present," Tamara Toles O'Laughlin from 350 Action said of the general election, for which early voting is already underway in some states. "The planet cannot withstand four more years of Trump."</p>
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