After years of lagging demand, along with political attacks from Republicans in the wake of the collapse of Fremont solar-panel manufacturer Solyndra, many solar companies are finally succeeding. Homeowners, small businesses, large corporations, and utilities, it turns out, have a serious appetite for photovoltaic and thermal-solar-energy systems — even as natural gas, coal, and other dirty energy sources remain cheap. The solar energy industry had a record year in 2012, experiencing a 76 percent jump in megawatts installed on rooftops. And perhaps the biggest single game-changer has been the solar lease model, which doesn’t require energy users who want solar panels on their property to supply any upfront money.
Under the lease model, a solar development company raises all the necessary funds and then installs the system. The energy user simply makes a monthly lease payment, thereby financing the manufacture, installation, and maintenance of solar panels with money that would have gone to a utility supplying hydrocarbon or nuclear-juiced electricity.
Andreas Karelas, founder of RE-volv.
And now a small San Francisco nonprofit, RE-volv, is hoping to tweak this winning model further so as to intensify the amount of capital being invested in solar, and to keep that money permanently under the sun. “Under the existing solar lease model, the money that goes into a project is borrowed from banks and financial institutions, and the lease money coming out goes to pay back the banks that lent the money,” explained Andreas Karelas, the founder of RE-volv. “What we’re doing is different on both ends. We get our money from crowdfunding, as a grant, and since our money was donated to us we’re able to pay it forward to the next project, instead of paying back a bank.”
In the late 2000s, Karelas was working for environmental and energy nonprofits, developing renewable-energy-credit markets in which fossil-fuel polluters could purchase green credits from cleaner industries. After seeing green energy development subordinated by the prerogative of maximum profit, along with shell games like renewable credit trading, Karelas felt much more could be done. He also sensed a desire among many to fund solar not as an investment for financial gain, but as a philanthropic, not-for-profit endeavor. In 2011, he founded RE-volv, basing the organization on the simple idea that a self-contained seed fund administered by a nonprofit could build out solar projects in a more sustainable way than for-profit companies.
In December 2012, RE-volv finished its first campaign of crowdfunding, raising $15,000 from individuals as far away as Australia. RE-volv’s first solar project will go up on the Shawl-Anderson Dance Center in Berkeley this year with the help of Sunwork Renewable Energy Projects, a nonprofit solar installer. And if Karela’s model takes off, this first system will grow four more, and those four will grow sixteen, and so on.
“When money from this project is invested in the revolving fund, it will result in three more projects over the next twenty years. Then those three systems will be able to fund an additional three systems,” said Karelas about the expansionary potential of his organization’s funding model. RE-volv takes its name from the financing logic at work: a pool of ever-expanding grant money and lease payments that’s only used to reinvest in new solar projects and which could grow solar systems at an exponential rate.
Although the fund today is very small by the standards of the for-profit-business world, where market capitalization is measured in the hundreds of millions of dollars (SolarCity, which employs the solar lease model, now boasts a $1.2 billion market value), RE-volv’s capital has the potential to grow faster and faster with each new system installed. And with more crowdsourced campaigns to raise more seed money, the number of solar projects funded by RE-volv could explode within the next several years.
This all differs from the for-profit model in that money granted to RE-volv perpetually works toward solar development, and never finds its way back to the fossil-fuel-dominated world of energy finance. For example, Oakland-based Sungevity, one of the biggest for-profit solar developers, draws capital from the private equity firm Energy Capital Partners. Energy Capital Partners’ $50 million loan to Sungevity is just one of the firm’s investments. Most of Energy Capital Partners’ funds are invested in oil and gas extraction, storage, and burning, meaning that some of Sungevity’s earnings will likely be plowed into fossil-fuel projects through its creditor. Similar relationships exist across the for-profit renewable energy industry, in which major fossil-fuel financiers like Bank of America and Morgan Stanley fund companies like SolarCity. RE-volv escapes this loop by collecting money as donations to the seed fund (donations that are tax-deductible), and by keeping its capital in perpetual rotation only among solar projects.
Also unique to RE-volv is its focus on helping other nonprofits and cooperatives achieve energy independence. “We’re only installing on nonprofits and cooperatives,” said Karelas. “There’s a niche of small- to medium-sized NGO buildings that tend to fall outside the range of expertise that the for-profit solar developers have. Plus, we want these demonstration projects to reach the community, so that people see and learn about solar energy with their own eyes.” Karelas said RE-volv has put in proposals with churches, schools, and other nonprofit institutions, both in the Bay Area and Southern California, and that he expects his group to move on several more projects within the year.
