Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Crowdfunding and Solar Loans Collide With RGS Energy Deal

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.

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.

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.

Find the next great growth stock
Are you in the market for great growth stock picks? David Gardner has proved the ability to pick them, time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 06, 2014, at 11:01 PM, wiserinvestor wrote:

    Thank you Travis! I've posted hundreds of comments about the advantages of $0 down solar loans versus leasing for the past 2 years. It's good to see someone with your credibility in the financial community finally agreeing with our position. Our company, Solar Home, Inc. based in California will be contacting Mosaic as well. We are one of Admirals Bank's largest referrers for their $0 down FHA Title 1 solar loan product and it would be great to add Mosaic to our offerings for our nationwide clientele.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2864844, ~/Articles/ArticleHandler.aspx, 8/27/2015 3:22:38 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

Today's Market

updated Moments ago Sponsored by:
DOW 16,354.42 68.91 0.42%
S&P 500 1,955.33 14.82 0.76%
NASD 4,729.51 31.97 0.68%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:07 PM
FSLR $46.52 Up +0.43 +0.92%
First Solar CAPS Rating: ***
RGSE $1.03 Up +0.22 +27.16%
Real Goods Solar CAPS Rating: *
SCTY $45.41 Up +2.36 +5.48%
SolarCity CAPS Rating: ****
SPWR $23.36 Up +1.02 +4.57%
SunPower Corporati… CAPS Rating: ****