Solar energy entrepreneurs are pioneering new models for democratizing power
Dan Rosen, the co-founder of Solar Mosaic, told us there was an ironic note to the devastation that Hurricane Sandy recently brought to New York City. The same power grid that helps create such fierce hurricanes through the burning of fossil fuels was unable to distribute power to thousands of homes, in mostly low-income neighborhoods, for weeks in the wake of storm.
Sandy brought to the forefront a huge energy challenge: how to move over to renewable energy fast enough to avoid catastrophic climate change and the killer storms in generates, build more efficient and reliable grids, and ensure that everyone can equitably participate in the new renewable energy economy. Bay Area energy entrepreneurs such as Rosen are working on innovative energy models that address those issues.
So far, the solar debate has mostly been between proponents of personal solar projects such as residential rooftop installations, also known as distributed generation, and those who back industrial-scale projects in far away plains and deserts.
But Rosen and other entrepreneurs are championing a middle route: They propose vastly increasing the prevalence of large solar power arrays and other renewable power plants close to where the energy is consumed, and opening up creative new ways for more people to buy into those projects.
This kind of approach to energy has the potential to democratize power production, avoid costly and environmentally unsound transmissions lines, and prevent utilities from monopolizing renewable energy.
CROWD FUNDING SOLAR
One of the barriers to the proliferation of solar is the relatively high upfront cost of purchasing and installing the panels. But with the rising costs of fossil fuel and the government incentives around renewable energy, investments in solar infrastructure can pay off big.
Bloomberg New Energy Finance crunched the numbers and according to a report that came out in June, large solar projects may soon pay a 5-9 percent return on investment. Big financial institutions and other corporate players have taken note of these figures and potential for profit they represent.
For example, Google has invested almost $1 billion in renewable energy that it plans to sell into the grid, including opening a $75 million fund for residential rooftop solar this past September. The problem is that big lenders are only looking for large-scale solar deals in order to cover their costs.
Enter Rosen and Solar Mosaic, who are coming up with a way to harness the power of crowds to fund the local and decentralized projects that big financial institutions tend to overlook. Solar Mosaic specializes in raising seed capital for solar projects by collecting many small investments into one pool.
That idea won Solar Mosaic a $2 million grant from the Department of Energy's SunShot Initiative, and attracted $3.5 million in venture capital.
"Our job — not just as Mosaic, but as society — is to make sure that the next energy economy has participation and ownership from millions of people and communities around the world," Rosen said. "Crowd funding is really the beginning of a broader movement to democratize and distribute capital — enabling people to invest in projects they otherwise wouldn't have had access to."
This vision proved itself initially with a successful Kickstarter-like crowd funding platform that facilitated the development of five solar projects with the participation of more than 400 small investors and over $350,000 raised. The money went to fund solar panel installations on the roofs of community organizations in California and Arizona, including People's Grocery in Oakland.