Meet the Kickstarter of Solar Energy

Mosaic is trying to radically change solar — by bringing it to everyone.

People enjoy the view from a lifeguard structure as the sun sets at Seal Beach, south of Los Angeles, California on July 9, 2012.
National Journal
Clare Foran
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Clare Foran
Oct. 24, 2013, 1 a.m.

One hun­dred and ninety-six per­fectly pol­ished sol­ar pan­els line the roof of the Oak­land, Cal­if., Youth Em­ploy­ment Part­ner­ship, a non­profit job-train­ing pro­gram for at-risk youth. The sys­tem is pro­jec­ted to save the cen­ter close to $25,000 in elec­tri­city costs over 10 years. And it happened in part be­cause of a star­tup that’s try­ing to change the way sol­ar pro­jects are brought to life.

In the past few dec­ades, the price of sol­ar pan­els has plummeted. As the tech­no­logy be­comes more af­ford­able, a vari­ety of path­ways have opened up for res­id­en­tial and com­mer­cial de­vel­op­ment, ran­ging from leas­ing to bank-fin­anced loans. But des­pite an ar­ray of fin­an­cing op­tions, mid-sized pro­jects — such as the in­stall­a­tion of photo­vol­ta­ic pan­els on a com­munity cen­ter or a school — of­ten face prob­lems rais­ing money to get off the ground.

That’s where Mo­sa­ic comes in.

Mo­sa­ic is an on­line plat­form that uses crowd­fund­ing to fin­ance in­vest­ments in sol­ar pro­jects. It works sim­il­ar to Kick­starter, with in­di­vidu­als post­ing pro­ject ideas to a cent­ral, on­line hub and so­li­cit­ing in­cre­ment­al dona­tions to fund them.

“You can go onto the plat­form, lo­gin in a few minutes and browse pro­jects you want to fund,” Billy Par­ish, one of Mo­sa­ic’s founders, ex­plains. “It’s really a new ex­per­i­ence from an in­vest­ing per­spect­ive and what you’re do­ing is par­ti­cip­at­ing in a loan to fin­ance a sol­ar pro­ject.”

Un­like Kick­starter, however, Mo­sa­ic pays in­vestors back. Once a pro­ject starts gen­er­at­ing rev­en­ue, in­vestors earn what they put in with in­terest. The com­pany of­fers a fixed rate of re­turn to in­vestors of between 4 to 7 per­cent an­nu­ally and levies a 1 per­cent fee on all trans­ac­tions. And par­ti­cipants can in­vest as little as $25 to start. The plat­form’s 2,500-plus in­vestors saw re­turns of ap­prox­im­ately $60,000 in Oc­to­ber alone.

This is pav­ing the way for an in­crease in the num­ber and kinds of sol­ar pro­jects that get fun­ded in the United States.

Mo­sa­ic has fully fun­ded 19 pro­jects in six states — Ari­zona, Cali­for­nia, Col­or­ado, Flor­ida, New Jer­sey, and New Mex­ico — and raised more than $5 mil­lion in cap­it­al in­vest­ment for sol­ar power. The com­pany was foun­ded in April 2011 but only began of­fer­ing a re­turn on in­vest­ment to the pub­lic in Janu­ary of this year.

Pro­jects fun­ded through the plat­form in­clude the in­stall­a­tion of more than than 2,000 sol­ar pan­els on the roof of a charter school in Den­ver and 400 sol­ar pan­els to gen­er­ate elec­tri­city for an af­ford­able-hous­ing com­plex for seni­ors in San Bruno, Cal­if. In­vestors also fun­ded a sol­ar in­stall­a­tion at San Diego’s Ron­ald Mc­Don­ald House.

Right now, without Mo­sa­ic, the most com­mon way to buy a sol­ar sys­tem for a res­id­ence or busi­ness is through a bank-fin­anced loan. Banks have strin­gent lend­ing re­quire­ments, however, and people with low in­come or bad cred­it are of­ten shut out en­tirely. Banks are also more likely to fin­ance com­mer­cial-scale pro­jects like a sol­ar farm owned by a util­ity com­pany than they are to pick up the tab for a mid-sized in­stall­a­tion. Ac­cord­ing to data com­piled by truSol­ar, a work­ing group of sol­ar in­dustry par­ti­cipants formed to es­tab­lish a stand­ard risk rat­ing, sim­il­ar to a cred­it score, for sol­ar pro­jects, only 5 per­cent of banks fin­ance loans for sol­ar pro­jects. And, based on the find­ings of Mo­sa­ic’s pro­ject fin­ance team, most banks won’t lend to pro­jects worth less than $10 mil­lion be­cause the trans­ac­tion costs are too high re­l­at­ive to the re­turn on in­vest­ment. 

Mo­sa­ic is chan­ging this dy­nam­ic by sidestep­ping tra­di­tion­al lenders and help­ing cre­ate a new class of in­vestors.

“For a school or a small busi­ness, the cost for a bank to do the un­der­writ­ing on a loan is so high that it just doesn’t pen­cil out,” Par­ish says. “But Mo­sa­ic is a fun­da­ment­ally dif­fer­ent busi­ness mod­el. We’re all on­line so we don’t have the over­head and we can help fin­ance these smal­ler pro­jects at lower cost.”

The com­pany’s goal is am­bi­tious: Mo­sa­ic wants any­one to be able to in­vest in sol­ar na­tion­wide. Due to a com­plex tangle of state-level se­cur­it­ies reg­u­la­tions, it hasn’t achieved this yet. But it’s on its way. Res­id­ents of New York and Cali­for­nia can in­vest in sol­ar pro­jects through Mo­sa­ic ir­re­spect­ive of cred­it his­tory or in­come and ac­cred­ited in­vestors who meet cer­tain qual­i­fy­ing cri­ter­ia in oth­er states can also join in.

“They’re really help­ing to grow the mar­ket for sol­ar,” An­drea Luecke, ex­ec­ut­ive dir­ect­or of the Sol­ar Found­a­tion, said. “They’re help­ing meet a need, which is what if you don’t own a house or you’re a renter, for ex­ample, then how do you sup­port sol­ar? Mo­sa­ic is provid­ing a new av­en­ue for people who are in­ter­ested in sol­ar and who can now in­vest in it without hav­ing to buy their own sol­ar pan­els, which was really the only way to sup­port it be­fore.”

It’s not just about the bot­tom line. Mo­sa­ic’s founders want to drive a trans­ition to a re­new­able-en­ergy eco­nomy and be­lieve the private sec­tor has a ma­jor role to play in ex­pand­ing ac­cess to sol­ar and oth­er forms of re­new­able en­ergy in the United States.

“The gov­ern­ment’s not go­ing to fund the next wave of in­fra­struc­ture by it­self,” Par­ish said. “They’ve played a crit­ic­al role in sup­port­ing re­search and de­vel­op­ment and provid­ing in­cent­ives. But we need tril­lions of dol­lars of fin­an­cing to trans­ition to 100 per­cent clean en­ergy and that’s mainly go­ing to come from privately raised cap­it­al. That’s what Mo­sa­ic is do­ing. We want to make it pos­sible for every­one to par­ti­cip­ate in that trans­ition and be­ne­fit from it.”

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