Solar panels: The new "safe" investment

Got a savings account for the kids’ education, a future luxury purchase, or just a nest egg? I don’t need to tell you that you’re not getting rich from this kind of investment: it’s really safe, but the cost of that safety is a really paltry rate of return. But, what are you going to do: investments that pay better involve higher levels of risk, and if we could afford to lose money, we wouldn’t be putting it in a savings account in the first place, right?

Start-up Solar Mosaic believes it has a “middle ground” between the low-return bank account, and the riskier forms of investment that can make (or lose) you a lot of money. The company plans to roll out a “crowdfunding” platform (think Kickstarter or indiegogo) for small-scale solar installations later this year. Small investors can put their money into a pool that buys solar systems which are then leased to home and business owners. The users get a fixed price on the electricity from the systems, and investors get a better rate of return: Solar Mosaic investor Nick Allen told GigaOm that he envisions something like six percent. Still not enough to make you rich, but likely much higher than what you’re getting with the savings account.

But the solar industry: isn’t that really risky? We’re not talking about Solyndra here: Solar Mosaic co-founder Daniel Rosen notes that crowdfunding for these kinds of systems not only allows for small investments, but also provides a pretty safe environment:  ”solar loans are backed by a revenue-producing asset, and counter-parties are paying for a service (electricity) they already pay for. This reduces the risk to investors because counter-parties are less likely to default since they save money from day one.” You’re buying into a tangible asset, rather than just a business concept.

Those of us in the green space have touted the product-service system model for years; Solar Mosaic’s offering a way to invest in the product end (rather than just buy the service). It’s an intriguing prospect for getting some “skin” in the renewable energy industry without being a big-money investor.

So, what do you think? Could you see yourself moving some of the savings account into something like this? I’ll be interested to see how many small investors buy into the notion of solar systems as the new place to put the college fund.


Image credit: ekai via photo pin cc