Make solar happen on your house, your block, and around the world

The solution to eliminating pollution, to reducing cost and risk in business and personal finance, and to strengthening our communities lies in our relationship with energy.  We have built so much of our lifestyle around nearly limitless energy.  Over the last decade. We have experienced a shock to our economy that reveals how dangerously precarious our quality of life is.  I speak not just of the economic collapse called the Great Recession, but of the rapid increase in energy prices that preceded it.  In 2008, energy prices stood at three to four times the current rate for electricity and natural gas, and ten to twenty-five percent higher for fuel.  We have the opportunity to remove the risk associated with this price volatility, and the mechanism to make this happen lies in our communities.

There's a classic scene in Frank Capra's It's a Wonderful Life where a run on the bank prompts a run on building and loan run by protagonist George Bailey.  During the run, people who have their money in the B&L are trying to get it out, and George pleads with them to limit their ask to only what they need.  He tells them that all the money is not in the safe, but rather in the homes of their neighbors.  Their money built a community, and getting it back is not as easy as cashing a check.

This same "building and loan model" can revitalize our communities through the energy systems that we now depend upon to deliver our quality of life.  Traditionally, homeowners needing upgrades for energy efficiency or to add a renewable energy system to their home would go to the bank to borrow against the value of their home.  Another way to approach this, since energy projects have a definitive economic benefit, is to allow individual investors to pool resources and use the combined capital to fund residential-scale energy projects.  When banks finance an addition or renovation of a house, it's because it should increase the home's value, and the owner has likely increased salary since getting their mortgage, so they should be able to handle the additional payment.  Energy efficiency works differently.  Instead of paying X for their mortgage and Y for their energy bills, a homeowner can pay a lower Y and an equally increased X without needing to change income.  This has lower risk (as long as the right renovation ideas are used), but less familiarity, so it falls outside the comfort zone of most banks.

Diane Cardwell has an interesting piece in the New York Times today about one way to make this building and loan model work.  A company called Mosaic, founded by Billy Parish, allows investors to make contributions of any size to a solar project, and those contributing as little as $25 get paid back with interest.  Mosaic takes a commission off the top, and the project gets done.

There are many ways to approach this type of funding opportunity.  Hopefully as companies like Mosaic show the limits of risk, and banks - especially smaller ones - get an appetite for higher returns, the market will open up to this type of project.  Until then, I hope that more and more people find opportunities to fund projects using community resources, even if it has to be outside the banking structure.  The only thing better than improving a community's relationship with energy is having the community also benefit financially.