What is Solar Crowdsourcing?
There is no doubt in the fact that renewable energy resources will govern the power generation sector in a few years. Solar and Wind Power are a superior technology compared to coal and gas based power generation in terms of reliability, sustainability & long term affordability. Yet, we see the growth of the solar market sluggish & uncommon among the masses. The reason for this slow growth is the initial cost of solar systems. Solar crowdsourcing aims to tackle this problem & accelerate the solar market.
Solar Crowdsourcing aims to break down the initial cost of solar systems by encouraging investors to pool in a small sum of money towards a centralised solar system for their community. Such individual investments potentially add up to a much larger total, making solar power generation a sustainable, viable and affordable solution for all.
Benefits of Solar Crowdsourcing
Solar crowdsourcing has solved the age-old limitation of the solar industry- high initial costs. As grid power is still inexpensive and easily available, there is a lack of interest among the masses to install individual solar power generation units on their rooftop which have a slow payback owing to the steep initial cost. Solar crowdsourcing distributes power equally to each and every contributing member of the crowdsourcing fund who provided for the establishment of the centralized solar power generation unit. It is a fact that by aggregating demand into a single project, the total cost can be reduced by around 30 %!
The investors of a solar crowdsourcing fund can benefit in 2 ways:
- They can receive uninterrupted solar power at their household for a period of 20 years at a fixed rate. Hence they are saved from the rising cost of the current grid which suffers from unreliability.
- The investors can act as shareholders for the solar project & benefit from the return on investment by selling the solar power to the National Grid utility or the customers directly.
In Denmark, a wind farm of 64 MW was installed in the year 2000 for $64 million. Nearly 9,000 share holders participated in this investment & received a 14-15% annual return on their share value within the first 10 years of investment. Thus a 100% return of capital & a residual 7% income on their remaining investment at almost no risk .
The solar crowdsourcing principle is scalable and sustainable. Once the investors are paid back their investments with the profit, they have the option to reinvest in new solar projects either in the same community or a new community. This would not only ensure a better investment return for them but also help provide reliable & clean power to more people.
Solar Power Generation requires rooftop space or an area which receives clear sunshine. Not every household is blessed with adequate rooftop spaces to install a solar system. By the help of Solar Crowdsourcing, a centralized solar power station is setup in a community shared space (parks, community centres, grocery stores, schools) with adequate rooftop area & power is distributed to the community from this location.
The solar space has ever since been a waiting game, dependant on Government subsidy programs & energy policies aiming to make solar power affordable. Solar crowdsourcing provides a solution to end the waiting game as well as build independency among community members who wish to switch from fuel dependant grid electricity to a cleaner form of energy in the name of solar.
Limitations of Solar Crowdsourcing
Solar crowdsourcing has immense potential to grow in both off-grid & on grid areas around the globe. The limitation this scheme faces are the awareness levels among investors & lack of independent entrepreneur’s committed to work in this space. The common misconception of people regarding the solar technology is regarding the high cost & slow payback. Crowdsourcing is a relatively new concept which is still unknown to many individuals but quickly gaining popularity.
Another limitation is requirement of large spaces to put solar panels. This problem though can be easily solved with community awareness programs and presenting long term view.
Baby steps towards better future
New ideas of solar crowdsourcing are rising quickly around the globe promoting the use of Solar energy. A U.S based company named SunShare is sponsoring solar projects & selling participation to residents for an initial investment which pays for a certain number of panels. Based on the power output of these panels, the utility credits the customers on their regular bills. Investors can make upto 8.9% of an annual return on their investment & expect a payback in 10-12 years.
A company named Solar Mosaic is raising capital from the community in the form of $100 shares & offering it on zero interest loans for local solar PV projects. The systems are leased to commercial buildings that enter a 20 year power purchasing agreement to buy the generated power at a fixed rate.
The U.S Government recognized the full potential of solar crowdsourcing and passed a bill which permits social networking sites & crowdsourcing sites to raise money sufficient to fund commercial solar projects in the range of 250-500 kW range.
In developing countries like India, an enterprise by the name Milaap is crowdsourcing funds for the countries working poor to provide them small loans for solar lights. The loans are sourced from citizens interested to contribute money towards developing rural India. They get a chance to further reinvest the money to other families once it is repaid by the initial borrower.
Such initiatives will boost the market penetration of solar systems among the masses & provide credibility to Solar Crowdsourcing as a sustainable & profitable scheme. The idea is to make solar electricity affordable to every section of the society.