Solar Energy System of the Month: Wildwoods Convention Center PV project

by Solar Server International Correspondent Christian Roselund

Image SK5893, Wikipedia
Image SK5893, Wikipedia

In late July 2012, workers connected to the grid a 487 kW solar photovoltaic (PV) plant on the roof of the Wildwoods Convention Center in Wildwoods, New Jersey, on the Jersey Shore of reality TV fame.

This is a large PV plant, but by no means the largest in New Jersey, and the mixture of Suntech and Eoplly multicrystalline silicon PV modules and Power-One inverters is fairly mainstream as well. What makes this PV plant different is its investors. A total of 823 individuals from 42 US states invested more than USD 1 million in the plant, though crowd-funding platform Mosaic.

This was Mosaic's first project of this size, and on account of its innovative funding model we have chosen the Wildwoods Convention Center PV plant as Solar Server's July 2013 Solar Energy System of the Month.

 

What is crowdfunding?

The internet has made many things possible. One of these is the creation of models whereby people from diverse geographies can pool their money to support projects. Crowdfunding is an outgrowth of the crowdsourcing concept, whereby many individuals in diverse locations contribute work or assets to a project.

Crowdfunding applies this concept to financial support, and crowdfunding platforms including IndieGoGo and Kickstarter have been used to support projects including films, journalism, and the creation of 3-D printers. Thousands of participants dedicate varying amounts of funds to make these endeavors possible.

Mosaic brings crowd-funding to solar

Mosaic brought the crowdfunding concept to PV plants (Image Mosaic)
Mosaic brought the crowdfunding concept to PV plants (Image Mosaic)

Mosaic was founded in Oakland, California in 2010 to bring this concept to PV projects. In Spring 2012, the company solicited 350,000 from 400 investors to build five PV plants, totaling 73 kW. Unlike Kickstarter or IndieGoGo, participants get more than a t-shirt and a good feeling for a donation. These first five projects will return the investments of participants, through a zero-interest model.

Mosaic CEO Billy Parish stresses that his model is not too terribly different from conventional funding, except that it allows a broader range of participants. “Basically, Mosaic substitutes people for the bank,” explains Parish. “Mainly it's been banks that have been financing energy projects and getting the revenue from those projects, and we just allow people to do the same thing.”

Like other solar projects, developers sell both the electricity generated through power purchase agreements, as well as the solar renewable energy credits to other off-takers. These serve as a source of revenue, which is used to pay subscribers.

Typically developers will begin a project with equity or a construction loan, and Mosaic serves as a provider of term-debt, the long-term financing of the project.

In September 2012, the company financed its first PV plant which will not only return the principal, but pay interest to investors. The 47 kW PV plant for the Youth Empowerment Partnership in Oakland, California pays 6.38% annual return over a 5 year loan period.

In January 2013, Mosaic launched its online platform, which allows individuals to invest USD 25 or more in solar projects, with a 4.5% return over a nine-year period. Mosaic sold out its first four projects in less than 24 hours, with over 400 individuals investing between USD 25 and USD 30,000.

 

Going east and going big

Following on these successes, Mosaic decided it was ready for something bigger in the Spring of 2013. The largest PV plant that the company had funded was a 114 kW PV project on the roof of the Ronald McDonald House in San Diego, California.

The Wildwoods is also Mosaic's first project on the East Coast. The company had funded PV plants on grocery cooperatives, non-profits, community centers in Arizona and California, and even a PV system for the home of a Native American artist and activist in the Navajo Nation. But it had yet to leave the West.

Tioga Energy and EPC contractor Pro-Tech Energy Solutions had developed and built the Wildwoods PV plant, which provides an estimated 24% of the electricity at the 100 hectare convention center.

Mosaic got involved with the project in March 2013. CEO Billy Parish says that the process for the Wildwoods Convention Center was not fundamentally different from the funding of other PV projects, but there were some different details.

(Image Mosaic)
(Image Mosaic)

First, the company broke the USD 1.3 million loan into three separate subscriptions. The project also includes a wider range of investors. Participation is still limited to accredited investors and all residents of California and New York. However, in this case, Mosaic attracted 823 investors in 42 states, a new record. These 823 persons are aged 18 to 86, and invested from $25 to $50,000 each in the project, with an average investment of slightly more than USD 1,000.

These are repaid by the sale of the estimated 550 Gigawatt-hours that the plant generates annually to the New Jersey Sports and Exposition Authority and the Greater Wildwoods Tourism Development Authority, as well as revenues from the sale of the solar renewable energy credits (SRECs) to Atlantic City Electric.

The notes purchased by subscribers will mature in 114 months from the date of the offering after earning 4.5% annually, which Mosaic notes is highly competitive with other investments.

 

Scaling the model

“People should think about this as another source of capital to finance projects, a source that is cost-competitive, and that has real branding and PR benefits” says Parish.

 Parish also notes that Mosaic has a different cost structure than banks, and that without the infrastructure, regulatory burden or reserve requirements, crowdfunding can be a more efficient provider or capital.

How big can this go? Parish doesn't know. Mosaic currently has 25,000 individuals signed up on its site right now, roughly 2,000 of which have invested in one or more projects. He expects this number to grow rapidly in coming months, and as that number grows, the company is able to take on larger projects.

He also notes that crowdfunding can be one more means of capital for large projects. “Are we going to be able to crowdfund an Ivanpah project entirely? In the near term? Probably no,” notes Parish. “Could Mosaic be part of a syndicate that does a project like Ivanpah? Absolutely.”

And as workers put the finishing touches on the Wildwoods PV project, Mosaic has already moved on to a larger project, a 657 kW PV project on a charter school, its first project in Colorado, as well as a 251 kW PV plant on a University in Florida.

“We have received an enormous amount of interest from developers, and will be announcing those and others in coming weeks and months,” says Parish. “I think this is a big part of the future of financing solar.”

Image right: Mosaic CEO says developers should look at crowdfunding as a cost-competitive source of capital for financing projects (Image Mosaic)