Crowdfunding and Solar Loans Collide With RGS Energy Deal

A new crowdfunded loan offering from RGS Energy and Mosaic could open up solar to more consumers.

Mar 6, 2014 at 11:45AM

Now that the cost of building a solar system is competitive with the cost of electricity from the grid, one of the challenges is financing billions of dollars worth of solar projects. First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR) paved the way for debt financing when they sold bonds for utility-scale solar projects and, in recent years, SolarCity (NASDAQ:SCTY) has expanded lease financing by partnering with banks and other institutions to offer leases with $0 down.

Spwr Residential New Home Community

A solar community with panels from SunPower, which offers loan, lease, and cash sales for systems. Image courtesy of SunPower.

I think that the next phase of the financing evolution will be through solar loans. As the difference widens between the cost of electricity from the grid and power from solar systems, homeowners and commercial building owners will want to own the revenue-generating asset rather than hand the value over to a SolarCity or SunPower. But to do so, they need to have a way to finance the upfront costs in an economical way.

Enter RGS Energy and Mosaic
Wednesday, RGS Energy (NASDAQ:RGSE) and Mosaic announced a partnership that will bring loans to the residential solar market, as well as the opportunity for individual investors to provide financing. RGS Energy is one of the largest residential solar installers in the country, and offers leases, loans, and cash sales, while Mosaic is a financing company that allows investors to put as little as $25 into financing a solar project. It's crowdfunding for solar; for more on the company, you can see my write-up here.

Scty Installation Image

A solar home community with installations by SolarCity, which primarily uses leases to finance projects. Image courtesy of SolarCity.

The Mosaic Home Solar Loan will allow individuals to finance projects, and can even incorporate the solar tax credit into the payment process. Depending on the project, there may not even be a down payment for the solar project. The advantage over a lease is that the homeowner keeps any upside or profit from the project and owns the system, unlike a lease, where the third-party owner keeps the upside.

Initially, the financing, like Mosaic's other offerings, will begin in California, where the company has regulatory approval to offer financing and crowdfunding investments. But that will likely expand quickly around the country in coming years.

I'll also note that this is somewhat similar to the recent announcement from SolarCity that it will allow individual investors to fund solar projects, but this is a loan financing option, not financing lease payments the way SolarCity would structure a deal.

Different ways to look at solar
The differentiation between solar installers is starting to emerge, with RGS Energy and SunPower offering a range of options from cash to loans to leases for consumers. SolarCity has explicitly stated its goal to own the system through leases, and actually runs a negative margin on the projects it does sell.

I think the more diverse route is going to play better long term; I predict that loans will play a larger role than leases long term. It's going to be appealing to own a solar system that saves you money long term rather than giving that value to a third party.

At the very least, the offering from RGS Energy and Mosaic opens up new financing options, and that's good news for the future growth of solar.

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Travis Hoium manages an account that owns shares of SunPower and personally owns shares of Real Goods Solar, SunPower, and has the following options: long January 2015 $5 calls on SunPower, long January 2015 $7 calls on SunPower, long January 2015 $15 calls on SunPower, long January 2015 $25 calls on SunPower, and long January 2015 $40 calls on SunPower. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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