What Makes Solar Energy a Good Investment?

This article is part of a Mosaic series on investments that create positive social, environmental, and financial returns. Read more about what makes a truly good investment.

Five years after the Great Recession, most Americans have yet to regain their faith in our country’s largest financial institutions. The Dow is up, but the latest Financial Trust Index shows that 58% of Americans expect the stock market to drop 30% or more this year. Meanwhile, a recent Harris Poll noted that only seven percent of the public trusts the leaders of Wall Street.

Strangely, the same poll which found that most Americans think stock prices will decline also found that 92% of Americans plan to hold or increase their investments in the stock market.

What’s going on here?

Why do we put our money in institutions that we don’t trust and investments that we think are going to decline in value?

The problem comes down to a lack of quality investment options. It’s hard to access a mix of investments that will provide reliable returns over the long run. Add in criteria about not investing in harmful or risky industries and the task of finding a good investment can start to look impossible.

Fortunately, solar energy is a good investment for Americans, particularly when paired with new kinds of investment marketplaces like Mosaic. Here is how we think about our investment product:

Financial Returns

Big banks are good at financing big projects. But for smaller projects, like commercial scale solar energy, big banks lend at exorbitant interest rates, if they lend at all. This fact makes it possible for Mosaic to make solar energy loans with interest rates that are lower than those charged by banks, but still high enough to provide competitive returns for investors.

To date, over 1,500 investors have used the Mosaic platform to provide more than $2.1 million in financing to projects in California, New Jersey, and Arizona. The expected annual returns on our most recent loans has been between 4.5% and 6.38%. With 10 year Treasuries at near historic lows (1.90%), CDs at 0.5% APY, bonds averaging 5.20% from 2003-2012 and stocks in the S&P 500 averaging 4.95% annualized returns from 2003-2012, Mosaic’s expected yields are competitive with the best investment products on the market.

Financial Risks

Like all investments, solar energy investments through Mosaic do not come without risks. Transparency is a core value, so we post the prospectus of each project on our website and encourage investors to read the prospectuses in order to understand the risks associated with our investments. Specifically, the broad categories of risk facing solar projects include credit risk (a borrower defaults), technology risk (solar panels fail), weather risk (a storm destroys solar panels), or operational risk (Mosaic goes out of business).

In the case of credit risk, Mosaic offers debt, rather than equity, financing for solar projects. if a project encounters a problem, our investors recoup their money first. We also employ rigorous underwriting procedures, which involve not only Mosaic’s project finance team, but also third party lawyers, engineers, and insurance experts to review every project. Finally, looking to the future, we recently helped found a solar industry consortium called truSolar, which aims to standardize the risk evaluation process for solar projects. Founding members of the group include 16 leading businesses and research groups, from DuPont and Standard and Poors to the Rocky Mountain Institute. By working with other thought leaders to establish best practices for risk evaluation, we aim to drive down financing costs across the solar industry.

In the case of technology risk, solar equipment is itself very reliable, to the point that manufacturers typically offer 25-year warranties for solar panels and solar inverters. Insurance for events like fires or hurricanes adds another layer of protection against weather risks.

Finally, in the event that Mosaic goes out business, we have entered into a backup servicing and successor agreement with Portfolio Financial Servicing Co. (www.pfsc.com) that would ensure the servicing of all issued loans. PFSC is one of the largest third party lease, loan and structured settlement servicers in the U.S., with $11 billion under management.

Where Does Distributed Solar Fit in a Balanced Portfolio?

For most investors, financial risk and return information doesn’t mean much outside the context of a broader portfolio. Most individuals and institutions invest in a portfolio of assets. We might invest in the stock market and in municipal bonds. Maybe we invest in ourselves, via payments for education, or in our homes, via expenditures on energy efficiency. So where do Mosaic’s investment products fit into this mix?

Our investment products function much like a bond. Debt generally lacks the significant upside potential of a stock (investors won’t earn more than the projected annual interest rate), but has less downside risk as well. Investors are repaid their loans, with interest, on a monthly basis. Investors could look at a Mosaic product to fulfill the same role in a portfolio as Treasuries or other kinds of fixed income investments.

More broadly, we see our products offering a hedge against two types of market risk.

First, because our investments are in tangible, localized assets, they are “uncorrelated” and offer a hedge against dramatic shifts in global markets. If you’re heavily invested in major corporations or commodities, investing in community-based assets could make good sense.

Second, our investments hedge against the increasingly systemic risks facing fossil fuels. Energy is the world’s largest industry, and so it should come as no surprise that energy investments make up a large chunk of the portfolios of institutional and individual investors alike. Global energy markets have experienced major swings for fossil fuel prices in recent years — oil, for instance, running up two historic price peaks with a crash in between, or gas plummeting in cost, and now rapidly rising — and it’s only going to get worse. In particular, we think it’s important for investors to understand that fossil fuel companies are betting against action on climate change. HSBC recently warned that the top 200 fossil fuel companies could see a 40-60% decline in their equity value if governments take action to curb climate change. Mosaic investments represent a way to start moving away from fossil fuels before the bubble bursts.

Compounded Good

If you invest in an index or mutual fund, or keep your savings in an account with a national bank, there’s a strong chance you are financing the operations of some of the world’s largest fossil fuel companies. As a father, I see this as illogical. What’s the point of making an investment that will pay for my childrens’ future if it also harms the world they inherit?

Mosaic investments run in the opposite direction. Our investors have so far financed enough solar energy to power 95 typical American homes every year. They’re creating societal gain, without compromising their personal gain.

But let’s break that down a bit further. The magic of investment is that it compounds. So what kind of compounded good could we create?

Well, our first fifteen hundred investors have put in $2.3 million. Assuming they all reinvested their money in new solar projects, and assuming they earn a rate of 4.5%, in ten years they would have a little over $3.6 million invested in solar energy. In twenty years, they’d be approaching $5.6 million invested, enough to power perhaps 600 American homes every year.

At Mosaic we believe the fastest way to create a 100% clean energy economy is to let everyone benefit from it. That’s why we work every day to create a rock solid, accessible clean energy investment.

MS Turanor PlanetSolar Embarks on Transatlantic Scientific Expedition

MS Turanor PlanetSolar, the world’s largest, solar-powered yacht ever constructed, will sets sail this month on a transatlantic, scientific expedition to study climate change. In only 22 days, the vessel broke its Guinness World Record for completing the fastest transatlantic crossing with a solar boat, solely operated without any fuel or CO2 emissions.

The sun-powered, 102-ft. catamaran will dock in 16 different cities along its journey and make its U.S. debut with a stopover in Miami at Sunset Harbour Yacht Club, South Florida’s only five-star, certified green marina. To celebrate its arrival, a private press conference luncheon and VIP tour of the vessel will take place starting at 11:30 a.m. on Monday, June 3rd, with local dignitaries and government officials in attendance.

The expedition kicks off the vessel’s second global tour and the launch of the 2013 “PlanetSolar Deep Water” expedition, where distinguished scientists from the University of Geneva (UNIGE) will collect data from air and water to study the key parameters of climate regulation, specifically atmospheric aerosols, phytoplankton and ocean eddies, whirlpools that carry large amounts of energy. In addition, the vessel will conduct environmental clean-up missions by collecting floating plastic waste and host educational events in port cities to raise public awareness of climate issues.

Locally, students from inner-city schools affiliated with Communities In Schools of Miami, Inc. the local chapter of the nation’s leading dropout prevention organization, and students attending Florida International University are scheduled to tour the vessel to learn more about climate regulation and environmental issues.

The MS Turanor PlanetSolar’s team will sail along the Gulf Stream’s ocean current, one of the most important regulators of European and North American climates, from May to August. The expedition will be led by Professor Martin Beniston, climatologist and director of the Institute of Environmental Sciences at University of Geneva.

One of the instruments installed onboard, the Biobox, which was developed by the applied physics group at UNIGE, is currently the only device capable of making a thorough analysis of aerosols using laser technology. It will be tested for the first time aboard the MS Tûranor PlanetSolar.

At the helm of MS Turanor PlanetSolar is Captain Gerard D’Aboville, the first man to row across two oceans solo: the Atlantic Ocean and the Pacific Ocean.

Solar panels as inexpensive as paint? It’s possible.

Most Americans want the U.S. to place more emphasis on developing solar power, recent polls suggest.

A major impediment, however, is the cost to manufacture, install and maintain solar panels. Simply put, most people and businesses cannot afford to place them on their rooftops.

Fortunately, that is changing because researchers such as Qiaoqiang Gan, University at Buffalo assistant professor of electrical engineering, are helping develop a new generation of photovoltaic cells that produce more power and cost less to manufacture than what’s available today.

One of the more promising efforts, which Gan is working on, involves the use of plasmonic-enhanced organic photovoltaic materials. These devices don’t match traditional solar cells in terms of energy production but they are less expensive and – because they are made (or processed) in liquid form – can be applied to a greater variety of surfaces.

Gan detailed the progress of plasmonic-enhanced organic photovoltaic materials in the May 7 edition of the journal Advanced Materials. Co-authors include Filbert J. Bartoli, professor of electrical and computer engineering at Lehigh University, and Zakya Kafafi of the National Science Foundation.

The paper, which included an image of a plasmonic-enhanced organic photovoltaic device on the journal’s front page, is available at: http://bit.ly/11gzlQm.

Currently, solar power is produced with either thick polycrystalline silicon wafers or thin-film solar cells made up of inorganic materials such as amorphous silicon or cadmium telluride. Both are expensive to manufacture, Gan said.

His research involves thin-film solar cells, too, but unlike what’s on the market he is using organic materials such as polymers and small molecules that are carbon-based and less expensive.

“Compared with their inorganic counterparts, organic photovoltaics can be fabricated over large areas on rigid or flexible substrates potentially becoming as inexpensive as paint,” Gan said.

The reference to paint does not include a price point but rather the idea that photovoltaic cells could one day be applied to surfaces as easily as paint is to walls, he said.

There are drawbacks to organic photovoltaic cells. They have to be thin due to their relatively poor electronic conductive properties. Because they are thin and, thus, without sufficient material to absorb light, it limits their optical absorption and leads to insufficient power conversion efficiency.

Their power conversion efficiency needs to be 10 percent or more to compete in the market, Gan said.

To achieve that benchmark, Gan and other researchers are incorporating metal nanoparticles and/or patterned plasmonic nanostructures into organic photovoltaic cells. Plasmons are electromagnetic waves and free electrons that can be used to oscillate back and forth across the interface of metals and semiconductors.

Recent material studies suggest they are succeeding, he said. Gan and the paper’s co-authors argue that, because of these breakthroughs, there should be a renewed focus on how nanomaterials and plasmonic strategies can create more efficient and affordable thin-film organic solar cells.

Gan is continuing his research by collaborating with several researchers at UB including: Alexander N. Cartwright, professor of electrical engineering and biomedical engineering and UB vice president for research and economic development; Mark T. Swihart, UB professor of chemical and biological engineering and director of the university’s Strategic Strength in Integrated Nanostructured Systems; and Hao Zeng, associate professor of physics.

Gan is a member of UB’s electrical engineering optics and photonics research group, which includes Cartwright, professors Edward Furlani and Pao-Lo Liu, and Natalia Litchinitser, associate professor.

The group carries out research in nanphotonics, biophotonics, hybrid inorganic/organic materials and devices, nonlinear and fiber optics, metamaterials, nanoplasmonics, optofluidics, microelectromechanical systems (MEMS), biomedical microelectromechanical systems (BioMEMs), biosensing and quantum information processing.

AMECO Announces Solar 101 Community Workshop

Materials scientists make solar energy chip 100 times more efficient

Scientists working at the Stanford Institute for Materials and Energy Sciences (SIMES) have improved an innovative solar-energy device to be about 100 times more efficient than its previous design in converting the sun’s light and heat into electricity.
Read complete article at phys.org

Top 100 Green Blogs to Follow in 2013

An infographic by the team at CouponAudit

We’re proud to be included at #47!

Toxic Land Generates Solar Energy in New Jersey

New Jersey is turning eyesores into solar farms. The U.S. state has become a leader in solar energy capacity. Energy from the sun now comes from contaminated land not suitable for development.