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You might think that the hardest part of a small commercial solar project (15-50 kW) is the actual installation - after all, installing solar does combine the two greatest occupational hazards to health: falls and electrocution. But you’d be wrong. You can guard against those.
No, the hardest part - after all the time and expense of finding your potential client and putting together a winning bid - is helping them figure out how to pay for it.
Small commercial projects are an odd-sized nut to crack when it comes to financing: at a cost of between one and two hundred thousand dollars they tend to be too pricey for an entity to just write a check, but they are too small to support more elaborate financing schemes which usually only apply for projects in excess of $250,000. So what to do?
We have written a lot about PACE, and while we are excited about it as a concept, it doesn’t seem to be getting a lot of traction.
For one thing, many non-profits (a niche of ours) don’t qualify since they don’t pay property taxes. For another, a big part of Southern California has failed to get on the PACE bandwagon at all. In particular, while Los Angeles County has a program in place, not every city has signed on (we’re talking about you, Irwindale!) and Orange County is a PACE black hole, with no activity there at all. What is up with that? (And please, don’t tell me this is a political thing - there is nothing more inherently conservative than putting your money into a near-zero-risk investment wth great returns.)
Similarly we find it odd that local banks aren’t reaching out to solar companies to work with them on financing these projects with conventional, low-interest loans. After all, installing solar helps to reduce a company’s operating costs in an area of greatest volatility. (You did hear that SCE is raising its rates on average by 17.2% over the next three years, right?) So financing such an improvement means that the local bank is creating a more stable company in their community - which means that they will be more likely to stay in business and remain a customer for longer - which is good for everyone, right?
And what of the national banks? Why aren’t they reaching out to local companies and not just the giant players? A year ago we participated in a small business contest sponsored by Chase bank. We easily collected the required number of online supporters to qualify (thank you!) and while we didn’t really expect to win, we certainly expected to hear from Chase about how they could work with us going forward. Well we were half right - we didn’t win. But as for follow-up from Chase? Zilch, zero, nada.
A Twitter friend reminded us of Mosaic, the crowd-funding service for financing solar projects so we went to their website to check them out. This is a curious thing. For one thing, the website disclaims their service from being crowd funding, saying:
Mosaic’s services do not constitute “crowd funding” as described in Title III of the Jumpstart Our Business Startups Act ("JOBS Act").
We aren’t sure what that means, but it is, at best, counter intuitive.
For another, we couldn’t find anyway on the website to submit information about a potential project that you wanted to get funded. The best that we could do was find a “support” email address which produced an auto-response but as of now, nothing else.
What is needed for small commercial projects is a simple and elegant tool like the one displayed at the start of this post. Minimal paperwork. Reasonable cost of capital given the exceptionally low risk. Quick approval times. Surely someone can help us crack this nut?
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