17 Apr 2013: Interview

Harnessing Citizen Power to
Fund a U.S. Solar Revolution

Environmental activist Billy Parish believes the best way to fight climate change is to fund the renewable energy projects that will supplant fossil fuels. In an interview with Yale Environment 360, he discusses how “crowdfunding” can help lead to the widespread adoption of solar power.

by todd woody

Billy Parish is the president and co-founder of Mosaic, a two-year-old Internet “crowdfunding” service that lets individual investors put their money into commercial solar projects and earn a rate of return that currently beats anything offered by a bank. Based in Oakland, California, Mosaic is at the forefront of a movement to democratize finance and combat climate change by using the Internet to connect investors to local solar energy projects.

Billy Parish Solar Mosaic
Billy Parish
The company’s first three for-profit projects sold out within 24 hours in January and raised $300,000 from more than 500 investors who will earn a 4.5 percent return. This month, California regulators authorized Mosaic to offer up to $100 million in loans for commercial solar projects. Its first project under that authorization, a $157,750 loan to install a 114-kilowatt array on the Ronald McDonald House in San Diego, was funded within six hours by 171 investors.

Parish, 31, dropped out of Yale University a decade ago to co-found the Energy Action Coalition, a nationwide student network devoted to fighting climate change. But after the 2009 climate talks in Copenhagen, he decided that the most effective way to drive a clean energy transition was to dive into the renewable energy business. In an interview with Yale Environment 360 contributor Todd Woody, Parish talked about why his generation has pursued environmental goals through entrepreneurship, how crowdfunding can fuel the solar revolution, and how he discovered “that sweet spot where making money and doing good overlap.”

Yale Environment 360: You had made your name as a climate activist. At what point did you decide to go into business and why?

Billy Parish: It was after Copenhagen and I felt like we weren’t doing enough and what we needed was to accelerate the solution side to build public support, to prove to political leaders and corporate leaders that 100 percent clean energy was possible, and in fact inevitable. I felt like business was what was going to deliver that.

e360: What led you to that conclusion about business?

Parish: It was partially discovering clean tech. Around the same time I met an entrepreneur who was developing a new thin-film solar technology, another group that had a high-efficiency motor technology, another group that had an algae fuel technology. And it struck me that clean tech and disruptive new technologies were an X-factor in the climate equation. I dropped out of college and I didn’t have a technical background, but it struck me that there wasn’t an opportunity to leverage the online organizing and social movement work I was doing to effectively deploy clean technologies.

e360: Why do you think your generation has such an entrepreneurial bent and doesn’t necessarily see a conflict between doing well and doing good?

Parish: Let me try two answers. I think, one, that there’s a certain pragmatism in the millennial generation. I think they recognize it’s business that provides virtually all the goods and services that we all enjoy, but there are smarter and better ways to provide those things, and they
You don’t need to start with a cathedral. You start with the first couple of bricks.”
want to be part of doing things in a better way.

The other is we kind of grew up with corporate social responsibility. We saw companies changing and companies doing good things and saw the potential for a different kind of corporation. There’s been growing excitement about the B corporation, the benefit corporation. Businesses can be about something other than a single bottom line and young people are excited about that and believe that.

e360: In your book, Making Good, you write about the sweet spot where making money and doing good overlap. Has technology made it easier to find that sweet spot?

Parish: Yeah, just look at Mosaic. We couldn’t have done Mosaic even three or four years ago. Partly that’s the price curve of solar. Solar has come down 80 percent over the past four years. But it’s equally about the rise of cloud computing and software as a service. We don’t have big data centers and servers in our office — everything is in the cloud. To do what we have done from a platform and technology perspective would have cost millions of dollars a couple of years ago.

It’s a lot easier to hack together a solution now. You have access to all the information in the world through the Internet and services that have developed to support that. There’s been this movement toward a lean startup approach. You don’t need to start with a cathedral. You start with the first couple of bricks.

e360: You and your co-founders chose to go into renewable energy finance, a business dominated by big banks and corporations. You had little or no background in finance. Why did you think Mosaic could even hope to compete?

Parish: One of our cofounders actually does have a background in finance. Steve Richmond, our chief financial officer, started a couple of different software companies. One was sold to Oracle. He really came at this from a
Distributed finance may be a better match for financing clean energy than traditional banks.”
financial services innovation perspective.

Dan [Rosen], Arthur [Coulston] and I more came at it from a perspective of accelerating clean energy and leveraging the Internet to disrupt these markets. When we started we didn’t see ourselves as going up against the big banks. I think as the company has developed we see more clearly how our financial system is broken and how distributed finance may be a better match for financing distributed clean energy than traditional big banks.

e360: Why is that?

Parish: I think it’s partly about the project sizes that a distributed clean energy future includes and about the dispersed geography of those projects. I think the Internet represents an opportunity to allow individuals to not only identify the sites that are best for clean energy but then to work together in their local communality to fund those projects. That’s not something a bank could ever do.

e360: Why do we need companies like Mosaic?

Parish: [Stanford University researcher] Mark Jacobson reports on what it will take to get to 100 percent clean energy. He uses a rough number of $100 trillion to build out the generating capacity for 100 percent clean energy globally. Globally in 2011 and 2012, about $250 billion was spent on investments in clean energy capacity. So if you hold that line steady, it would take 400 years to switch to 100 percent clean energy. I think that’s at least one way to see that our current financial system is not deploying capital at sufficient rates to transition to clean energy in the time frame we need to avoid catastrophic climate change.

You can talk to any solar developer and they’ll say that at least one of the top issues for them is access to capital and because there are so few sources of capital, the providers are able to charge interest rates that are greater than the risks of the asset class justify. It’s a pretty well understood asset class at this point and there’s just a huge premium in the capital markets because there are so few players.

e360: Mosaic has been successful in funding its first projects. How do you keep up that momentum?

Parish: I think Mosaic will evolve over time into a platform that more people see as an important part of a diversified investment portfolio. I think a lot of institutional investors, financial advisors, and individuals will put more capital to work in this space, and I think we’re well positioned to be the platform to facilitate that.

e360: Right now crowdlending is new and remains a niche play. Can it scale and become a mainstream alternative?

Parish: Lending Club is doing $150 million a month in peer-to-peer consumer lending. That’s a real number. Everything is moving in this
The Internet allows individuals to work in their local community to fund solar projects.”
direction, all the macro trends are moving in this direction and it’s only accelerating. There are huge amounts of capital that are in CDs, [U.S.] Treasury bills, and other financial instruments that I think will flow into new, more direct investment opportunities, and I think that will happen faster than anyone is predicting.

e360: Do you foresee the day when Mosaic is available for the 401(k) investor and the institutional investor?

Parish: Absolutely. It’s the perfect match for retirement accounts.

e360: Who is the typical Mosaic investor?

Parish: We have about 1,200 investors now in 44 states. The average investment is $1,000. They range from 18 years old to 95 years old and the mean investor age is 40, but the most common investor is 28 years old, probably lives in the [San Francisco] Bay Area. It’s not quite 60-40 male/female, and while the profile started out with more philanthropic motivation, increasingly people are coming on because they like the investment on a pure returns basis.

e360: What lessons have you learned from starting Mosaic?

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Parish: I think we made a very smart choice to not build our business around the [2012] JOBS Act [which authorized crowdfunding] or community solar legislation. We built a business that can scale without legislation having to be approved, which in hindsight seems to have been a smart call. I think we pursued a true lean startup approach. We deployed the zero-interest model and built a beta crowdfunding platform, proved the concept, learned the business, and found the right people to help us grow to the next level, both investors and employees.

e360: What lessons and skills from your student activist days proved relevant for starting a business?

Parish: I think we have built a really strong community of investors. Virtually all of the new investors are coming from word of mouth, from social media, from people who have talked to someone about it and search for us. We’ve spent very little to bring in new investors. We have a movement team, not a marketing team.

e360: In your book, you advise young people to develop a personal mission when pursuing a job or career. What’s your personal mission these days?

Parish: To build the movement to get the world to 100 percent clean energy.

POSTED ON 17 Apr 2013 IN Business & Innovation Business & Innovation Climate Energy Sustainability Africa North America 

COMMENTS


Great work. Mosaic appears to be focused on project finance through lending, which escapes the SEC jurisdiction that is currently holding up crowdfunding for startups. Wefunder has been flying a holding pattern for around a year, with that target. Will Mosaic participate in that startup crowdfunding mission once the SEC rules are clear?

Ditto on the mission thing...it is so important to define a specific piece of the puzzle to focus on. Mine is DC power transmission: I have been working on the supergrid HVDC end of that problem for many years (as an inventor/entrepreneur since 2008 before that as a political advocate). My invention there is the elpipe: a power line designed like a long train that can go underground easily that has been impossible so far to move forward with investors or DOE. Lately, my HVDC circuit breaker invention Ballistic Breakers is having success because it is also applicable to medium voltage DC microgrids. But the idea

I burn to move the elpipe forward is without it (or another high capacity underground transmission option, like superconducting lines or sulfur hexafluoride gas insulated lines (GIL), a supergrid is politically impossible in Europe or the US because it would entail >20 new overhead HVDC lines or more than 200 land based cables. An elpipe-based supergrid enables the least costly way in aggregate to get electricity production off of fossil fuels. It really accomplishes this by creating a continental-scale electricity market (I hope there will be something posted on the supergrid soon on Environment360). This is perhaps most clearly shown in the Ph.D. dissertation of Gregor Czisch (Kassels University, 2005) which lead to the formation of Desertec Consortium and Friends of the Supergrid.

Posted by Roger Faulkner on 20 Apr 2013


Excellent interview. I think such a system will work well in India. Can also Wind Turbines/wind farms be erected like this? You have Wind Farm Co-operatives in Denmark. In fact I have been suggesting to our Government to create a WIND FUND so that people who pay Income tax get relief by investing the amount in it under Section 80C(Under this section taxable amount of Rs 100,000(about US $ 2000) will be exempted for investments in National Savings Bank Certificates,Life Insurance Corporation of India etc). This way there will be large funds available for Renewable Projects. Hitherto Depreciation was given to large Industries for their investment in Renewable Projects like Wind. Wind Farm Co-operatives will pave the way for participation of large number of people in clean energy Projects.

Dr. A. Jagadeesh Nellore (AP), India


Posted by Dr.A.Jagadeesh on 26 Apr 2013


Great interview and enterprising, committed guy. However, I'd like to see someone of his position questioning the externalities of cheap solar panel production and whether cheap, "clean" energy is going to do anything to halt our consumption.

See David Owen's "The Conundrum" or any explanation of the Jevons Paradox for reasons why improving efficiency (in this case producing electricity with far less fossil fuel input) doesn't result in overall carbon emission reductions.

Posted by Josh Brown on 30 Apr 2013


Great article on Eco Power Project. Thanks for sharing!
Posted by JamesRich on 16 Jan 2014


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ABOUT THE AUTHOR
Todd Woody, who conducted this interview for Yale Environment 360, is an environmental and technology journalist based in California who writes for The New York Times, the Los Angeles Times, Grist and other publications. He previously was a senior editor at Fortune magazine, and the business editor of the San Jose Mercury News. In an earlier article for Yale Environment 360, he wrote about the battle unfolding in California over plans to build dozens of multi billion-dollar solar power plants in the Mojave Desert.
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