DOE Grant Recipient Fleeces Taxpayers to Benefit Green Investors

Solar Mosaic, a solar microfinancing outfit that received a $2 million Department of Energy (DOE) grant last summer and exploits a 30 percent federal tax credit, officially launched its crowd-sourced investment platform last week.

Acknowledging that the microfinancing (financial services for small projects or businesses) model employed by Solar Mosaic would not exist except for the tax credit, proponents admitted that the concept would not work without further subsidies.

The Sierra Club praised Solar Mosaic’s model for its ability to tap into the federal tax credits:

Let’s look at the obstacles facing my dream community solar project. For starters, my neighbors and I would need some capital, but banks aren’t much interested in financing penny-ante solar arrays. Our numbers wouldn’t look very good anyway, because a still-essential ingredient in solar’s success is the 30 percent federal tax credit, and as a nonprofit, we wouldn’t be able to take advantage of it.

Colorado’s Clean Energy Collective founder Paul Spencer touts the “community solar” approach, but acknowledges that the federal tax credit is set to expire at the end of 2016 and that “[w]ithout the tax credit, these things do not work.”

Solar Mosaic, based in Berkeley, California, helps match small-scale investors with small-scale solar projects, initially located in California and Arizona. The company provides a rate of return for the green investors based on revenue generated by the solar panels and assists in finding crowd-sourced microfinancing for the organization seeking to install the solar panels. The organization will also receive the benefits of reduced energy costs.

So far, the website has drawn $1.1 million in investments from 400 individuals for 12 projects, according to Bloomberg. It also raised $3.4 million in investments from Spring Ventures Ltd. and Serious Change LP. Sunil Paul, founding partner of Spring Ventures, and Josh Mailman, managing director of Serious Change, have both given generously to Democratic re-election efforts, according to financial information provided by the Center for Responsive Politics.

The balance of the project’s solar panel installation costs is made up by taxpayers, with federal tax credits and local tax incentives dubbed “tax donations”:

It would also employ local solar panel installers at Prometheus Renewables and repay online donors over a span of seven to 10 years, said company spokeswoman Lisa Curtis.

“This is really an opportunity to match people who want to invest in solar but don’t have the roof to do it with community centers that have the room but not the money to do it,” Curtis said.

A school and a church are proposed next for Flagstaff.

Solar Mosaic, the company involved, pairs public loans with federal incentives (expected to cover about 30 percent of the cost in this scenario), and sometimes with big donors.

The company plans to raise $20,100 in donations from the public and match it with tax donations to raise about $50,000 in all for solar panels at the Murdoch Center.

About 84 percent of the Murdoch Center’s power would come from these solar panels, and they would also feed any occasional surpluses into the greater electric grid.

Solar Mosaic would receive as much as 5 percent of the group’s annual electric bill reduction. The Flagstaff project, as part of a pilot program, operated as a zero-interest loan and did not offer an investor yield. Future projects, however, are projected to offer 4 percent to 6 percent rates of return. The company awaits full approval from the Securities and Exchange Commission.