Will CrowdSun Change the Way We Invest in Solar Energy?

Slowly but surely, the ways that we get our energy are changing. The drivers of these changes aren't always straightforward, however, and the future of energy may come from some unexpected places.

Jun 3, 2014 at 10:04AM

The ways that we get our energy are constantly changing. With increasing pressure from environmental groups, coal prices have been dropping and localities around the world are considering restrictions or outright bans on hydraulic fracturing (aka "fracking") for oil and natural gas. Wind and solar power are commonly looked at as up-and-coming alternatives to traditional fossil fuels, though both have a way to go before they will be able to fully replace our dependence on oil and coal.

To get a different take on what might drive the future of alternative energies, I talked with Jennifer Reinert of CrowdSun.com. According to Reinert, CrowdSun is a new platform that "matches investors with commercial solar projects. Investors include banks, hedge funds, insurance companies and other accredited investors seeking excellent returns in alternative energy." Similar to crowdfunding websites like Kickstarter, CrowdSun has already helped to raise $300,000 in direct funding for solar energy projects.

Innovation vs. cost
A number of companies are competing to come up with innovative new products for producing "green" energy from renewable resources such as solar and wind. Companies such as First Solar (NASDAQ:FSLR) are riding the wave of the green energy boom, but technological advances alone may not be enough to spur the mass acceptance of alternative energies.

According to Reinert, "Increased efficiencies in solar technology have usually taken years to be adopted by the marketplace. On the other hand, cost decreases, driven down by economies of scale, have happened at a rapid pace, leading to increasing adoption by the marketplace. Since we believe that electricity is a commodity, consumers respond more to affordability."

This doesn't mean that technological advances are meaningless, of course; First Solar and other companies are working to make their products more efficient, as with First Solar's Series 4 modules that boast an 8% increase in energy output over conventional modules with the same power rating. Over time, advances such as these will bring down the cost of solar units and speed adoption both by utilities and residential consumers.

This trend can already be seen as the cost of solar units declines; the Solar Energy Industries Association indicates that residential solar prices fell by 7% between the first quarter of 2013 and the first quarter of 2014, as compared to a 5.7% drop in non-residential prices; over that same period, residential installations exceeded non-residential installations for the first time since 2002.

Looking beyond the sector
It's not just players within the solar sector that can influence the growth of alternative energy technology, either. One company that could have a major impact on alternative energies going forward is Tesla Motors (NASDAQ:TSLA). As Reinert put it, "The trend toward storage technology, in which Tesla is taking a lead role for their automobiles, will eventually help spur further adoption of solar so that the power that it generates can be used during non-production hours."

Tesla is in the process of setting up a massive battery production facility (its "gigafactory") and has made it clear that its battery innovations could change more than just the automotive world. At last week's Joint Venture Silicon Valley energy storage symposium, Tesla CTO J.B. Straubel stated that "[Tesla is] an energy innovation company as much as a car company," when asked why Tesla was involved in stationary energy storage development. He further explained that residential batteries such as those used to store solar-generated energy have the "same architecture" as mobile batteries such as the lithium-ion batteries used in Tesla's vehicles.

More importantly, Tesla's "gigafactory" will serve to not only improve the efficiency of such energy storage solutions but will also help to drive prices down as well. Advances may come quickly, as Straubel believes that energy capacities for stationary storage will scale faster than those of vehicle batteries.

The future of energy
While traveling recently, I drove past the University of Tennessee's West Tennessee Solar Farm. Having grown up less than an hour from its location, I was honestly quite surprised to find that one of the largest solar facilities in the southeast United States was located in my proverbial backyard. While I wouldn't have guessed that Tennessee had a large solar presence outside of perhaps metropolitan areas such as Nashville, there are actually over 200 solar-related businesses in the state. This number will likely grow in the future, and similar growth will likely be seen in other unexpected places as well.

Reinert said that there are "many more opportunities in the small to mid-sized solar arrays that either provide power for a specific use (factories, businesses, etc.) or that are established to sell power back to a utility, which of course can be any size" than massive arrays, which makes sense. It's easier for an individual company or homeowner to convert to solar or other alternative energies than for a municipality, and it's these small-to-mid-sized projects that will drive adoption. As prices continue to fall, this adoption rate will likely continue increasing as well; in time, it could even change the energy industry as a whole.

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John Casteele owns shares of First Solar and has no business or personal relationship with CrowdSun.com. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. 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.

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