We are somewhat different in how we are structured — for one your counterparty on Renewables.org will be solar developers who are likely more credit-worthy than the individual borrowers you lend to on Kiva.
115 karma · joined July 28, 2014
Incidentally, there are great second order benefits to building solar like jobs created, a more reliable power grid, and more resilient economic development.
We barrow money from our investors on our site and lend it to regional solar developers who finance commercial solar. We return principal to our investors at a 0% rate of interest and charge the developer a reasonable rate of interest which is used to fund growth and product development.
Since we are a non-profit, we could not lend out money for free since that would be a private for-profit entity benefiting from our non-profit status.
Thanks for the question, happy to share more.
Renewables.org works with a network of Global South solar developers who have a large pipeline of unfunded solar projects. Using a Kiva like interface, you can join our site and help get these projects off the ground for as little as $25 dollars.
When you invest on Renewables.org, you start earning monthly repayments — which continue for five years. These repayments are paid out of the revenue earned by solar projects already in our portfolio as they generate and sell power to the grid.
As with Kiva.org — you don't make a financial return on Renewables, but you do create a carbon impact we believe is far greater than virtually any other investment or carbon offset product, dollar for dollar.
I would not say that is the problem we are solving. The problem as I see it is that most people have no idea what they actually own through their investment. We make it simple to know through great design and communication, that carries through from the financial structuring to the UI/UX, we are doing it all custom from the ground up.
We start with solar because its a pretty safe investment and people love it.
Often new solar facilities come with tax benefits (ITC and MACERS depreciation) that the power consumer is unable to monetize - this is particularly true of non-profits and other businesses with very low tax bills. So they sell their solar facility to a private investor who is better able to exploit the tax benefits (i.e. people and orgs who have a lot of highly taxable income).
Legends can come in either at the beginning of that life cycle by selling off the tax equity to private investors and the panels themselves and the revenue they generate (i.e. sponsor equity) to retail investors. We can also come in after the tax benefits have been exploited (5-7 years after commissioning) and purchase the solar facility from the tax motivated investor.
In the future, we plan to bring project finance in house and do some origination work, as well. We are still at the start of our journey.
I wonder if we could do that for individual panels, particularly given deployment of module level Enphase micro inverters.
We are 5 months old (though I was working on this solo for more than a year before that), and in that time I've built the team that will build this product.
We are going to structure the investment so that your returns will be post tax-equity and post-depreciation. We would be opening up a can of worms if each retail investor's return were dependent on their particular tax situation (although we are now working with accredited investors who are availing themselves of MACERS and ITC).
We could never guarantee any amount of generation since this is an equity investment, but to generate 1K worth of power on a facility that returned 7.25% would require about a 14K investment. Of course, if you really wanted to get technical, you would also incorporate the dirtiness of the grid you were selling to into your equation. I hope to one day build those types of tools, too.
For sure, if you can build rooftop solar or use some sort of community solar arrangement, you should do that first before considering Legends Solar - it will likely have a strong financial benefit. But you can only offset as much as you consume using those tools, so if you still have an appetite or would like to offset your non-utility consumption, you might still consider us.
For people who live in the city or who rent and don't have access to those tools, or people who like a good product and just want to understand what they actually own through their investment, you might consider us sooner.
Sorry I can't answer with more detail - I really love quantifying and contextualizing the carbon you'll offset and financial returns you can earn in detail, but I'll need to break out my spreadsheets to really get into it.
I think about it as the opposite of securitization. We are designing a produce to have as few layers of abstraction, complexity, and bureaucracy as possible so that it feels like owning a real product, not like an investment.
We are different from investing in a utility for two reasons. First, you'll own simple direct ownership in a panel, not in an entire organization and all its bureaucracies and stakeholders. I want it to be as close to a consumer product as possible, to feel personal, not like an investment. Second, you panel will slowly depreciate over time and eventually be liquidated where a utility is hypothetically perpetual.
Aside from that, utilities typically pay $.04 or so for power generated. We'll likely have a behind-the-meter arrangement with a commercial power purchaser (like a factory or hospital), which can boost the return but be somewhat more risky.
As with any investment, we can't make claims about financials until everything is finalized and vetted. That will have to wait until we have a pro forma ready to go. Soliciting 'indications of interest' is a fairly common practice across all industries.
To be clear, we are already financing larger $100K+ deals with friendly investors in our network as we design and engineer a product for a larger audience.
Ideally yes, you will own a real individual panel. But we may settle on a different structure if necessary from a regulatory or tax perspective (its a long story).
I am running things fairly conservatively, the marketing site is the tip of the iceberg. We need to prove retail demand to get off the ground but the other pieces are also coming together (project finance, deal flow, transactions, engineering, etc).
Per 'doers' - my point is that 'doing' is not taught in engineering school or consulting or Goldman Sachs any more than it is in product design. In that sense it is an ethic, not a credential or professional discipline. I think we are more or less simpatico here.
To be honest, in all odds the financial return is more likely to be dependent on factors like who the off-taker is, if the financing includes construction risk, if we are insuring the facility, etc than its physical location.
a) Will the investor take on construction risk b) Will the facility be insured c) Who is the power customer (off taker) how creditworthy are they, and what are the terms? d) Will the financing include tax equity incentives and how will they be distributed.
These questions are all a matter of design and pragmatism. I want the financial design to be as considered as, and will integrated to, the user experience design.
We've been building our beta with accredited investors under Reg D.