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Social Bankability, Solar Crowdfunders and Emerging Markets

By Climate Guest Contributor  

"Social Bankability, Solar Crowdfunders and Emerging Markets"

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– by Justin Guay, Sierra Club, via HuffPost

If we are going to avoid the worst impacts of climate change we need disruptive innovations that fundamentally alter the broken systems that continue to build out inequitable, fossil fueled societies. Solar and other renewable energy technologies can do that to energy markets. But it won’t happen without fixing another broken system – finance. Now it appears that the energy innovation axiom –small is big — also applies to financial innovation as solar crowdfunders prove that aggregating small investments from individuals can break down financial barriers to a clean energy revolution.

Crowdfunding is a potentially disruptive financial innovation that unlocks and aggregates small amounts of capital to ensure what society deems socially and environmentally important receives the capital it requires. The disruptive potential of this ‘social bankability’ was on full display last Monday when Solar Mosaic officially opened its doors to investors in California and New. In just 24 hours three solar projects (built on affordable housing projects) totaling $313,000 were fully-funded by average people contributing as little as $25. Including its beta testing Solar Mosaic has raised $1.1 million for distributed solar.

Seeing this happen in the U.S. is truly awesome given the painful obstruction to climate and clean energy solutions our politicians have put forward on a global stage. Combining crowdfunding with other financial innovations like opening Real Estate Investment Trusts (REIT’s) and Master Limited Partnerships (MLP’s) to renewable energy in the U.S. (something on the table in the form of the Coons Bill) offers a unique opportunity to further tear down financial barriers. Doing so will help unlock U.S. clean energy leadership and not a moment too soon.

But the real opportunity for crowdfunders lies with distributed solar in emerging markets where the world’s poor pay obscene amounts for dirty fuel based lighting. It’s the 1.3 billion people living in off grid communities for whom the economics of solar make the most sense and have the most impact.

That’s why the Sierra Club advocates for international financial institutions (IFIs) (like the World Bank) to fund distributed solar in emerging markets. But despite the high profile calls from entrepreneurs like Jigar Shah to capitalize on the opportunity IFI’s have simply not stepped up to the challenge. In fact, getting them to pony up even relatively small amounts of public money to make solar bankable — like the $313,000 Solar Mosaic raised in one day — is like pulling teeth (except, of course, for the renewable energy champion OPIC).

That’s because providing funding in these relatively small amounts to ‘new’ technologies is just not what these guys do. They don’t because their business and operations model is suited to a different age, one which helped produce the problem of climate change and inequality but is ill-equipped to solve it. That means that solving energy poverty and climate change is up to those capable of financing and deploying small scale distributed renewable energy — at least according to the the International Energy Agency.

So while Solar Mosaic’s first day is exciting, it’s their next steps that hold the truly disruptive potential. Solar Mosaic and other crowdfunders like SunFunder are already eagerly eyeing emerging markets like India where the coal sector is a mess, grid expansion isn’t happening and diesel prices are unbearably high. These conditions along with exciting new business model innovations like community power offer a potent alternative to the status quo. But the only reason they will happen is that a new age of entrepreneurs and financiers have deemed them socially bankable.

Already India is home to Milaap, a domestic Indian crowdfunder funding solar lanterns in West Bengal with ONergy, and improved cookstoves in Orissa. As Uttar Pradesh and Bihar continue to incubatedistributed solar revolutions the need for financing becomes more stark. While IFIs fund feasibility study after feasibility study watch for the crowdfunders to step in and catalyze the market.

It’s clear that in the United States at least, our current financial system is broken. Which is why rooting out entrenched financial power must happen alongside efforts to root out entrenched fossil fuels. Because climate change is not just about technology, it’s about systems that produce equitable outcomes for people and the environment. It’s clear our current financial and energy systems can’t, or simply won’t, do that. Let’s work to make sure the systems of the future, built on a foundation of social bankability by disruptive innovators like solar crowdfunders, do.

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11 Responses to Social Bankability, Solar Crowdfunders and Emerging Markets

  1. Willy Ens says:

    Cool! … Hello Folks,

    It’s about time! & thank God it’s here!

    In fact I was getting to worry that the technology which I was given to understand in 1981 was going to die with me, now however it might prove to have been worth my nearly 32 years of carrying it on my own
    .
    That; Irrespective of the put downs and ridicule I absorbed along the way in barbs and degrading comments from one time supporters and even family of my “Wasting your time on a PIPE DREAM” and “Huh? … What? Your PIE IN THE SKY IDEAS”

    My system is designed to be/provide stand-a-lone electrical generation and heating for (2) homes out of the same amount of fuel which it took to heat only (1) house originally, plus remove 100% of the “Acid Rain” producing GHGs in doing it.

    The site I explain this/my thinking/reasoning on as well as the general design is here; http://tinyurl.com/cwnlt26

    The timeline of 31+ years this innovation has taken to become of relevance is here; http://tinyurl.com/c6kdozw

    And the level of impact and massive savings in fuel/pollution/energy (Which Rob Arthurs/Christy Clark and the BC Liberals ‘shelved’ along with me and $2.25 million in SAVINGS for 2013 alone, and $11.25 million over the (inaugural 5 year term of my offer) is posted here; http://sdrv.ms/U53meM

    Plus this is a U Tube video of it showing the timing of the “Direct Water Injection” which is what makes all of this possible is here; http://www.youtube.com/watch?v=pKVNUCIT7RA

    Thanks for the opportunity to post this and help bring it the Global attention it rightfully deserves!

    With Kind Regards,

    Sincerely,
    Willy Ens.

  2. Roger Lambert says:

    Great. Another article crowing about a tiny incremental improvement in renewables deployment based on a market-based approach. Sigh.

    We need to virtually eliminate CO2 emissions world-wide within a decade to have any shot of a non +4C world. But instead of starting the conversation we really need to have – a Federally-funded renewable energy utility – you just skirted the issue because the politics is seemingly too difficult.

    Your market-based approach will not save humanity. Is that such a difficult pill to swallow?

    The conversation won’t change (which is exactly what the petroleum industry wants, btw, – congratulations!) until commentators like the author of this article start writing about it. Justin Guay, when are you going to help change the conversation??

    • Omega Centauri says:

      I wouldn’t be so sure. I think there are many people who would be willing to switch part of their retirements portfolios to 3rd party solar, that promises decent (not obscene) dividends. Once people get some confidence in the system, there could be large amounts of money available for such ventures. Sure it won’t eliminate all emissions in a decade, but it just might get a major seachange going.

    • Merrelyn Emery says:

      A market based approach? Perhaps you are unaware that before top down corporations decided they would take us all over, there was no such thing as a market based approach. We had market places where people fairly exchanged goods and services and institutions like banks cooperated in keeping society working, ME

      • gingerbaker says:

        Merrelyn,

        I am arguing for Federal monies to be used for large-scale Federal renewable energy projects to solve the AGW crisis quickly enough to prevent disaster – to address and solve the problem – as opposed to – tiny tweaks given to our tax incentives, etc which is all anyone – including the author of this article – seems to write about.

        These market tweaking-based initiatives, ie, ideas like carbon taxes, tax rebates for the solar installs of individual homeowners while well-meaning, have been a nearly complete failure in regards to making true progress. This is easily proven by the fact that our national emissions of CO2 have never been higher!

        I am asking that our national conversation about how to solve the global warming crisis include blogging about large-scale Federally-funded renewable energy projects, because only such an initiative(s) can deploy enough green energy in time to avoid a world more than 4C warmer than what we have now. That means saving civilization as we know it.

        But where is the blogging on this topic?!? Why is nobody writing about this?!?

        Many experts are saying we have one decade to reduce our CO2 emissions to near zero or it is game over. It is now, officially, time to fracking freak out – does no one else see that?

        Why do we not even know exactly how much it would cost to build a single solar installation that would provide 100% of America’s energy needs?!?

  3. Paul Klinkman says:

    I haven’t got the exact quote, but here goes. “Backyard solar experimenters had as much chance going up against well-funded corporations as I had going up against Muhammad Ali” — Denis Hayes.

    Do you want to succeed at driving down the cost of solar, so that fossil fuel dies a miserable death and lands in the museum next to the whale oil industry? The cynic in me hears the entire environmental movement rising up with one voice and whimpering “no, never, just let me crawl into a corner”. I suspect that the answer is better than that. So who leads?

  4. Merrelyn Emery says:

    Finally, some excellent news. Like micro-finance (Grameen bank), this shows the way to regaining community control. Don’t throw rocks at the big boys, just set up an alternative, equitable system that people trust. When you hear the screaming, put your fingers in your ears and just keep going, ME

  5. Leif says:

    Exactly ME Take the profits and subsidies out of the fossil industry and Green wins hands down.

  6. Minwoo Kim says:

    Obama’s energy policy is right. The world goes solar. Japan’s FiT in July is among the highest in the world. Japan’s FiT is shaking the solar market. Now, USA has the same options. New solutions will be showed in Japan. This is it!

    As you know, earthquake in Japan is happening frequently. Floating solar panels installation is one of the best solutions for power crisis in Japan. Every year Some typhoons arrive Japan. The typhoon has strong wind. Floating solar power generation system must have constructed to resist typhoons. So you have to reduce vibration to install floating solar power generation system. Because, it can make micro-cracks to floating solar panels and the durability problem of floating solar power generation system. The risk of power loss in PV modules due to micro cracks is increasing.

    Vibrations caused by wind, waves and external forces. New Floating Body Stabilizer for Floating solar panels installation has been created in South Korea. The Floating Body Stabilizers generate drag force immediately when Floating solar panels are being rolled, pitched and yawed on the water. Recently, these Floating Body Stabilizers have been used to reduce vibration of Floating Solar Panels in South Korea. You can watch New Floating Body Stabilizer videos on YouTube. http://youtu.be/O2oys_YHhCc, http://www.youtube.com/watch?v=nA_xFp5ktbU&feature=youtu.be.

  7. wili says:

    (Commenting function on the “Beltway Heating” article–above this one–seems to be blocked. Feel free to delete my post there, as it is based on a mis-reading. Thanks.)

  8. grosspool says:

    thats a commendable effort!