Co-Founder and CEO of SolarCity Lyndon Rive speaks at the National Clean Energy Summit 7.0 at the Mandalay Bay Convention Center on September 4, 2014 in Las Vegas
In a move that’s one part marketing – no, make that two parts marketing – and one part financing, SolarCity today unveiled Solar Bonds, an online program that allows Jane and John Q. Public to plunk down as little as a thousand bucks and earn a return off the growing solar market.
The solar installer said it was initially making $200 million in bonds available in the public offering – a small part of the financing picture for a company that says it has created funds to finance the installation of $5 billion worth of solar. In a media call, the company’s leadership said the program could one day become a “significant part of our financing strategy,” but put greater emphasis on the outreach it makes to the wider public.
“The goal is the additional awareness,” CEO Lyndon Rive said, citing a solar penetration rate of less than 1 percent. SolarCity currently sells systems in 15 states, but Solar Bonds will be available to any U.S. investor, offering the little guy anywhere a chance to get in on solar and “create an ecosystem of transformation,” Rive said.
SolarCity is already the leading U.S. solar installer, with 36 percent of the residential PV market in the second quarter of 2014, according to GTM Research. Its closest competitor is Vivint Solar, at 15 percent market share. With Solar Bonds, SolarCity is positioning itself as not just a solar installer but as the leading agent for broad energy-market change. It’s a strategy that has worked well in the electric-vehicle market for Tesla Motors under CEO Elon Musk, who also happens to be Rive’s brother-in-law and the chairman of SolarCity.
The structure of Solar Bonds is simple. Investors transfer money to SolarCity through a website and then place an order in $1,000 increments for bonds of varying maturities that pay interest semi-annually. One-year bonds pay 2 percent, two-year bonds 2.5 percent, three-year bonds 3 percent and four-year bonds 4 percent. The rates, SolarCity said, were comparable to those earned by the large institutional investors that SolarCity has relied on to finance installations.
Interest on the unsecured bonds will be paid from SolarCity’s revenues generated from the payments on its whole portfolio of solar installations. In addition to its nationwide availability, that makes Solar Bonds distinct from other efforts that have tried to give retail investors a shot at the growing solar market, like Mosaic.
“In the case of Mosaic and similar companies, they have for the most part been limited to offering to accredited investors, or to investors in a specific state,” said Tim Newell, SolarCity’s vice president of financial products. The investments have also been tied to a single project, or perhaps a small group of homes, Newell said. “This is the first time investors have been given the opportunity to participate in an investment in a diversified pool of projects.”
This was SolarCity’s second big move on the solar financing front this month. Last week it unveiled MyPower, a loan program that allows homeowners to finance rooftop systems at rates as low as 4.5 percent. The loan payments are tied to the energy produced by the rooftop array, giving customers a chance to own systems with little money down rather than lease the solar panels, the model that has driven much of SolarCity’s growth.
