As the nation’s number-one solar installer, SolarCity has been hot property on the capital markets of late. This summer it raised $201.5 million from a single debt offering, its third in eight months.
So, you might wonder why it would bother with crowdfunding. After all, isn’t it messy to deal with thousands of retail investors, when you can just go to a few big institutions (e.g. banks)?
CEO Lyndon Rive says the decision to launch Solar Bonds–a direct investment site that launched today–is born of two factors. One is money, to be sure. The other is more subtle: SolarCity wants to engage and educate the public about solar power.
“Every time we’ve gone out to the institutional investors, we’ve always been significantly over-subscribed. So it’s not at all related to access to capital,” he told reporters on a conference call.
“When you issue these cash-flows…you don’t get anything other than money. To me, it’s really important that we have consumers, homeowners, and the public in this transformation [from fossil fuels to renewables]. The best way to do that is for them to get a financial return.”
It’s a bit like celebrities who use Kickstarter or Indiegogo to launch projects. They don’t really need the money. It’s really about ginning up the viral buzz.
The bonds themselves come in four flavors–one year, two years, three years, and seven–with interest rates rising from 2% for one year to 4% for seven. They’re like CDs: fixed interest products that you can’t break mid-term.
There’s already plenty crowdfunding in the solar space, with successful sites like Mosaic. But Solar Bonds differ in that investors are not funding single projects somewhere. They’re being paid from the lease payments home owners make when they pay off their solar equipment. That probably makes them very un-risky (though of course nothing is risk free).
If you’ve spare cash, then investing in solar may be preferable to what you can get in a checking or savings account. With interest rates very low, those investments couldn’t look much worse at the moment.