Emerging Markets Law

Can Crowdfunding Provide Capital for Rooftop Solar?

Bloomberg has a piece on SolarCity's efforts to bring crowdfunding to rooftop solar.  The article quotes the Solar Energy Industries association saying that U.S. homeowners installed 792 MW of solar power in 2013, an increase of 60 percent from 2012.

Crowdfunding is an intriguing model for residential solar.  On the positive side, it gives hyper-local investors the opportunity to invest in resources that are close to them.  Having a personal connection to the investor is a key element of most successful crowdfunding projects.

On the other side, however, solar projects can become extraordinarily complicated because of tax credits and other financial incentives.  In addition, especially in California where most residential solar is being deployed, state and local zoning and permitting requirements impose a high level of execution risk for the developer.  A developer that fails to get their local permits or a necessary utility interconnection agreement can end up fouling an otherwise-meritorious project.  That level of complexity is often difficult to disclose fully and clearly to crowdfund investors.

Developers that want to pursue crowdfunding would be well advised to make certain their offering documents have been vetted by lawyers who know their way around crowdfunding and the unique aspects of solar.

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