SolarCity is hot on Wall Street these days, judging by the fact its stock is holding steady and the company has no problem issuing bonds for its various investments. In fact, not only was the company the first in the U.S. to sell bonds backed by rooftop solar panels, it raised over US$200 million during its third debt offering on the markets in three months. Now SolarCity is turning to crowdfunding, albeit a tightly managed program, in order to raise more funds.
The system is akin to Kickstarter or Indiegogo meeting Fidelity or Vanguard. According to SolarCity, the offer to invest in Solar Bonds is relatively simple. You open an account, deposit some money and those funds in turn offer a return from the payments from residential and commercial projects SolarCity has all over the country. Unlike the growing solar crowd-funding juggernaut Mosaic, these funds are not for specific projects; rather they are akin to a mutual fund for current and future SolarCity initiatives. So should investors jump in, or is this the Amanda Palmer crowdfunding campaign of the clean energy sector?
Perusing through the Solar Bonds site, the site is as much as about preaching the impact solar can have as much as it is about investing. SolarCity touts the potential amount of jobs the solar industry could create, as well as the fact it can have a leading role in reducing pollution and mitigating climate change. But before you think you can invest just $20 and get a keychain from Solar City, think again: the minimum investment is $1,000, which is still a fairly low barrier for entry into this market—and there are no fees. Depending on your patience and aversion to risk, you can invest in a series that matures in one year at two percent or four percent after seven years. The returns are not totally out of line with U.S. corporate bonds, though the yield is on the low side. They are still better overall than municipal bonds or U.S. Treasuries—for now.
And considering how low interest rates are for bank CDs (I forgot they were still offered, I thought they disappeared in the 1990s), they could possibly be a safe investment for someone who is skittish about the stock market but clearly does not want to leave all of his or her cash in the bank. While SolarCity paints a nice narrative about the safety of these bonds, remember no investment, ever, is entirely risk-free. These have been heady days for SolarCity, which claims it has installed one in three solar systems in the U.S. and has installations worth about US$5 billion. The solar industry overall is on the upswing, due to more corporate investments and growing awareness of solar’s financial benefits from consumers. But things change on a dime: After all, who would have guessed oil would be at $80 a barrel and give angst to shale gas producers despite the volatility in the Middle East and overstated fears of a virus? As with any investment, assess your appetite for risk versus returns, and read those prospectuses—they are published for a reason.
Image credit: Solar City
Leon Kaye, Executive Editor, has written for Triple Pundit since 2010. He is also the Director of Social Media and Engagement for 3BL Media, and the Editor in Chief of CR Magazine. His previous work can be found at The Guardian, Sustainable Brands and CleanTechnica. Kaye is based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas.