Mosaic, an online crowdfunding marketplace that enables everyone to invest in solar projects, sold out its first four projects in less than 24 hours.
More than 400 people invested between $25 and $30,000, for a total of $313,000 that will fund solar projects on affordable housing buildings in New York and California.
Investors get an annual return of 4.5% with terms of about nine years. Considering the historically low returns of 10 year Treasuries at 1.9% and CDs at 0.5% APY, the yields are competitive with most investments available on the market.
Bonds average 5.2% from 2003-2012 and S&P 500 stocks average 4.95% annualized returns from 2003-2012.
So far, Mosaic has raised $1.1 million from about 700 investors that will finance 12 rooftop solar systems in California, Arizona and New Jersey.
"A crucial step toward an authentic democracy is to put clean energy in the hands of the public," says one of the invetors, Roland Regos.
Though the SEC 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."
In June, Mosaic raised $2.5 million in venture capital. Its goal is to finance community solar projects without having to get financing from banks, while allowing everyone to profit from investing in solar energy.
Learn more about crowdfunding and how it can benefit renewable energy:
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Can anyone speak to the safety of these investments?
A couple of factors that would influence the safety of these investments are:
-The risk of default by the purchaser of electricity. If retail electricity falls below the price at which Solar Mosaic sells electricity to end-users, as stated in the prospectus of each offering, the end-user would have an incentive to default on relatively expensive payments to Solar Mosaic and opt for cheaper electricity from the grid. I view this as a highly unlikely scenario… the collective knowledge across energy markets suggests that electricity prices are going up from here. Seems to imply a very low risk of default from the end-users of Solar Mosaic’s electricity.
-Solar Mosaic’s ability to cover all of their expenses without extracting more cash than expected from the revenue provided by end-users of electricity. Solar Mosaic landed a $2.5 Million investment from Spring Ventures, which might have been difficult if they didn’t have a solid understanding of what their expenses and revenues would look like moving forward. Spring Ventures is going to do their best to maximize the value of their investment, and a default would destroy that value, so they would probably plow a bit more cash into Solar Mosaic before letting a default happen. Seems to be a pretty low default risk on this front as well.
On the other hand, you could invest in Treasuries and the Fed will just print the difference to keep Treasury out of default when the bill for 1.6+ Trillion of debt comes due. It will be a slow process instead of a discrete moment, but you’ll definitely get your money back when you invest in Treasuries…