You might call it solar funding for the rest of us.
Or, perhaps, solar crowdfunding, with a lower-case c.
Recently, solar power installer
Consider it a type of sustainable crowdfunding--not as allowed by the JOBS Act, but with a lower case c. “With this offering we’re opening the door to allow all investors, including individual investors, to participate in financing solar through bonds that were available to large institutional investors before,” says Tim Newell, vice president of financial products. “It’s crowdfunding in the broadest possible sense.”
Investors--anyone age 18 or older who is a U.S. citizen or resident and has a U.S. bank account--register on the company’s site to set up an account and can choose from among four available bond series. (Floridians need to participate through a registered broker dealer). They differ according to maturity and interest rate, ranging from one year at 2% to seven years at up to 4%. Minimum investment is $1,000. The earnings on the solar bonds are to come from income received from monthly solar payments made by homeowners, schools, businesses, government organizations and other SolarCity customers.
According to Newell, the bonds are designed to be as uncomplicated as possible, with the aim of making it easy “to invest in this growing area,” he says. “It's like buying a CD.” Investors also can place orders any time of the day or night. There’s also no specific time-frame in which to do so.
The solar bonds shouldn’t be confused with Qualified Green Building and Sustainable Design Project Bonds, or climate bonds. (They’re also known as green bonds). They’re linked to climate change mitigation or adaptation-related projects or programs, specifically for the development of Brownfield sites, which are areas of land that are under-utilized or under-developed.
SolarCity customers pay for long-term contracts with no money down and the company, thus far, has funded the costs of equipment and installation through institutional financing. That’s not going to stop. “It will take a while for this to grow to a scale commensurate with our other financing,” says Newell.But it’s a way to diversify sources of capital and broaden the number of individuals able to invest in solar. “The more types of people who participate, the better it will be,” says Newell.
