Crowdfunding Renewable Energy (Solar) Projects

11 Feb

Donating Money to Support Distributed
Energy Rooftop Solar Power Installations

By Robert HoskinsFront Page PR

Many people here is Austin want to install solar power on their rooftop.  And while their enthusiasm for solar is tremendous they also have an equal amount of love for trees.   The problem is that trees that cause shade on rooftops and solar power installations do not work well together.

Two new trends that are emerging in solar energy industry are Community Solar projects and Crowdfunding financing.  In neighborhoods where there are standing groves of towering oak trees, many home owner associations and the renewable energy entrepreneurs are building out micro solar farms within their neighborhood common areas where there are no trees in order to provide clean electricity for their homeowners.

The installation price for solar has dropped dramatically.  Solar installations can usually be installed at around $3.25 per watt, which will produce solar electricity for around $0.067 cents per kiloWatt hour (kWh) for the next 25 to 30 years.

Austin receives around 1,400 sun hours per year. Thus, a 6,000-watt or 6-kW solar power installation will produce around 8,064 kWhs per year of solar electricity or 201,600 kWhs over its guaranteed 25-year lifetime.

Depending on where the Community Solar Power farm is located determines how much the solar electricity produced is worth.  Austin Energy pays 12.9 cents per kWh for all solar electricity generated.  PEC and Bluebonnet Power Cooperatives charge homeowners around 12 cents per kWh for residential electricity. So for argument sake, lets say that any solar electricity produced has a value in 2013 of 12 cents per kWh.

Doing the math, solar power installations can produce electricity at $0.067 cents per kWh and solar can be sold at $0.12 per kWh or for a gross margin of $0.052 cents kWh through a Power Purchase Agreement (PPA).  PPAs are complicated agreements so we will pass for now on discussing how to make money by selling solar electricity.

Another attribute of solar power installations is the fact that they generate something known as a Solar Renewable Energy Credit  (SREC).  For every 1,000,000 watts of power generated, the solar power array earns one SREC.  A 6-kW system should generate 8.064 SRECs per year in Austin.   In Texas, SRECs are not worth much, but in other states SRECs can be sold for as much $100 – $400 each.  Selling SRECs is also a complicated business so we will skip that discussion too.

At $3.25 per watt,  a 6-kW system would cost $19,500 to install.   If the system produces 8.064 SRECs per year, it would produce 201.6 SRECs over its 25-year lifetime, which would give the SRECs a value of $96.73 each.

A typical household uses about 12,000 kWh hours per years of electricity.  In order to offset the home’s total carbon footprint, they would need to buy 12 SRECs per year from a community solar farm.  Most people could not afford to purchase 12 SRECs for 25 years.

Instead, why not allow people without sufficient rooftop space to Crowdfund solar installations on other people’s homes how so that they can say with some validity that they were making a small difference in the world’s global warming problem.   At $1,000 each, 19.5 people could fund a residential solar power installation, which will give them 10.33 SRECs each.

Right now SRECs are worth nothing, but in the future if a community solar farm was able to sell the SRECs for $200 each, this would provide an 100% return on their investment on $96.73 per SREC.

In another scenario, it might be possible to receive a payback by allowing investors to buy solar electricity directly from the community solar farm at $0.067 cents per kWh for the next 25 years.  In 2013, this would allows a electricity savings of $0.52 per kWh.  As electricity rates goes up to 20 cents per kWh in 5 years time, suddenly an investment in solar power looks like a very good investment.  Known as PPAs, this is legal in many states right now, but not in Austin.

In the future, when Equity Crowdfunding becomes legal the value of investing in a solar via Crowdfunding may been seen as the best way to finance a solar project.  Instead of depending on solar rebates and solar tax credits, people can pool their money to build Community Solar farms, then reap the rewards of selling their SRECS for a profit as well as buying electricity at today’s prices for the next 25 years.

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