This post by John at GreenCoast about investing in solar energy is an interesting read and is something to consider irrespective of your views on climate change and renewables. Tim
Considering Investing in Solar?
While our quest for a clean and green energy source is getting some positive vibes, the renewable energy industry is also open for investment. Just like any other investment, the renewable energy sector (Solar, Wind, Geo-Thermal) requires you to consider the investment horizon and risk tolerance. In fact, you should start with the least risky investments that offer a maximum time horizon.
The economic growth of renewable energy has been outstanding. As time is passing, more and more individuals are investing in this field to get their share. For instance, investing in the solar power sector is a great idea to multiply your money without any serious risk.
Moreover, companies involved in the production of green energy are getting relief from governments such as solar tax credit in the U.S. Also, the prices of solar panels have continually been decreasing and making solar a much more viable option compared to alternatives.
However, there is a significant issue that precludes investors from making their move. This relates to the fact that investors don’t have an idea of where to start. There are mixed opinions about how to invest in solar. Some prefer to invest in solar companies, while others want to invest in solar funds.
Apart from these, you can think about some other ways to invest in solar.
Seven Ways to Make Money from Solar Power
Discussed below are six ways to make money from solar farms.
Switch to Acadia Power
File this option under save money rather than make money, neither the less its a cool option.
Arcadia Power was created to give everyone a simple, free way to choose renewable energy. People in all 50 states are supporting wind farms, accessing solar power, saving money, and reducing their impact on one digital utility account at a time.
Turn your power bill into something useful. When you create your free Arcadia Power account, they connect you to clean energy and help you spend less on your power bill. Do right by the planet and your wallet.
You even receive $5 when you connect your utility account to Arcadia’s platform for free.
Join the Terra2 Platform Waitlist
If you are looking for an opportunity to invest with an enthusiastic team whose focus is on solving climate change first, while still providing a quality investment option, check out Terra2. (Currently in prelaunch)
I had an opportunity to speak with David Lim of Terra2 and was immediately impressed with his genuine concern to halt carbon emissions and stop climate change.
“Stable, long-term investments directly from solar farms! Earn dividends and track your emissions reductions by investing into solar farms through our website! -David Lim
The Terra2 platform lets everyday people (i.e., both accredited and unaccredited investors) invest directly into solar farms and directly participate in fighting climate change.
Through their mobile and web platforms, you will be able to invest, receive dividends, and view live updates/photos from your solar farms. You will also be able to track your real-time carbon emissions reductions. Our full solution is still under development, so do not forget to sign up and stay tuned.
Note: Terra2 is in prelaunch. Once the beta is launched, they open the platform to those who signed up for the waitlist. You will be able to view and invest in the different solar projects that we will have on our listing.
Invest with Wunder Capital
Wunder Capital is a reliable and safe way of investing in solar. It assists accredited investors while investing in solar projects. This type of investment not only helps to make money but also allows us to save our environment. A recent article published in Forbes has revealed that the solar industry offers more jobs in the energy sector as compared to the production of oil, gas, and coal. Hence, this industry appears to be more promising when it comes to investing.
Being a proper investment platform, Wunder Capital serves as a bridge between investors and solar energy projects. It creates solar investment funds by taking on board a few small-sized solar companies. Although Wunder Capital is a financial technology company, it manages almost every aspect of the investment process.
This helps the accredited investors to invest in solar projects and include these projects within their portfolios. The investment funds also offer good returns. The companies associated with Wunder Capital are supplying solar energy to the commercial entities and properties. According to the representatives of Wunder, this is the area, which is still lagging as compared to utility and residential segments.
Wunder Capital is a U.S based company, with over 100 commercial solar installers and developers as their partner. These solar power companies contact their customers in the commercial sector and make independent deals. What Wunder Capital does is providing financial help to these companies by providing them with sufficient capital through its investment funds.
Hence, if you are not willing to start your own solar company, you can still earn profits by investing in solar companies of others. Your investment goes to the Wunder, which uses this amount to fund mid-sized solar companies. The Wunder Capital usually runs three debt funds, and out of these, two funds are still available for new investments.
Wunder Capital 5 Fund which was launched in October 2017, offers the following perks.
- The projected annual return of this fund is 7.5 over five years of investment
- This fund has a 20-year amortization of principal, which makes it viable to invest in solar projects that are large and offer maximum profits
This type of investment is only available to accredited investors (A person who has earned an income of $200,000 during each of the last two years). If you fall under this criterion, you can go for investing in solar power companies through Wunder Capital.
Lease your Land to a Solar Farm
It is the most secure and straightforward way of investing in the solar sector. You are not putting your physical money into the business; instead, you are just leasing your land for making a solar farm. If a company is looking to invest in solar farms, you can offer your property for this purpose.
However, before contacting a company, you need to analyze whether your land fulfills the criteria for solar installations. For this purpose, you can take help for an independent site assessment company. This will also allow you to ascertain how much revenue you can generate by leasing your land to a solar power company.
If your land passes the assessment test and has been approved for solar panel installations, the next step is to look for a solar developer. Usually, these solar developers or financing companies provide all types of assistance when making a solar farm.
In fact, you are not making a solar farm but providing the land for solar installations. Hence, there is nothing much for you to lose when leasing your place to a solar company. Instead, this allows you to earn a lucrative amount of income monthly.
The solar company will build each structure with your approval. The operation and maintenance of such a solar farm will be the responsibility of the operating company. Furthermore, solar developers will obtain all the permits and meet the regulations for building a solar farm.
TerraForm is a company that owns solar, wind, and other clean energy assets. This company is a YieldCo. YieldCos utilize the cash flows through the assets of solar companies and use them to pay for the dividends.
Investors are more than interested in TerraForm, as the profit or yield is way more than the amount one can get through stock trading options. Apart from the investors, developers are also keen to work with TerraForm, as it offers capital at a much lower cost.
This company is a $2.3 billion worth assets that include solar and wind power installations. The company has undergone some positive transformations during the last couple of years. The financial outcomes of this venture show that it is offering a handsome dividend. The management is hoping to get a 5% to 8% annual dividend growth in the coming years.
By investing in solar companies like this one, you can yield considerable income in the shape of dividends. However, start with a small amount and see how things are working.
Create your Own Solar Farm
The industry associated with solar panel manufacturing and installation has seen a rapid boom. The advancement of this industry was slow in the past decade, but it is soaring at a great pace in the current era.
The primary reason for this surge relates to the large-scale installation of solar panels while building a solar farm. A wide range of individuals is planning to invest in solar farms due to the reliability and profitability of this option.
What is a Solar Farm
Before going deep into the discussion, it is essential to know about solar farms. In fact, a solar farm is a photovoltaic power station, which is a huge decentralized solar array that supplies electricity to the grid. Solar farms have long lifespans thanks to recent advancements in technology.
These farms are usually owned by the utilities or energy supply companies that use this renewable energy source to minimize the cost of the electricity. It also helps these utilities to improve their supply and enhance the coverage area.
These are the ground-mounted solar panels that require an open area for their installation. Due to the massive size of these solar arrays, it is possible to generate a sufficient amount of electricity to feed a large residential community.
Hence, these solar farms may either be commercial or community installations. The commercial solar farm produces electricity and cells it to various energy supply companies.
On the contrary, the community solar farm is specifically designed to meet the needs of the homes located in a particular area.
How much Investment is Necessary to Build a Solar Farm
The power generation capacity of a large-scale solar farm is at least 1 megawatt (MW). This capacity is equal to that of a power plant, which is capable of offering a constant supply of electricity to almost 200 households.
The cost of building a solar farm largely depends on different factors, including available space and sunlight hours. The cost of a utility-scale solar farm is something around $1/watt. Hence, you can easily calculate that to build a 1 MW solar farm, you have to invest approximately $1 million.
The cost of the residential or community solar farm is relatively higher, which stands at $3 to $4 per watt.
The reason for this difference is the fact that while building a large-scale solar farm, you buy solar panels and other equipment in bulk, which lowers their price to a great extent.
Buy Solar Company Stocks or Mutual Funds
Apart from the investment options, numerous other options are less popular. However, if these investment options are suitable for you, there is no harm in trying them for once. Here are some of the more effective ways to invest in the solar power sector.
Buying Stocks Offered by Solar Company
This is one of the most regular ways of investing in solar. This method allows you to purchase stocks of solar companies. The formula is quite simple, and if the company grows and earns a profit, you will get the share.
In prevailing circumstances, businesses and governments are planning to go solar within the next ten years. Hence, investing in these companies would be quite beneficial in the coming years. You can get some huge returns by making even small investments.
For instance, Illumina is one of the most prominent players in the field of solar energy. The stock price of this company has grown up to 1000%, which is a remarkable growth rate. Even though the prices of renewable energy stock are relatively lower than the previous year, the surge in solar panel demands will give a nice push.
Solar Income Funds
This is an investment, which requires the investors to put their money into government-run solar power schemes. To live the dream of switching to solar energy, the government needs capital.
To get the required amount for building solar farms and other installations, solar income funds will be the major source. It allows investors to make some profits while achieving the goal of going solar.
You will get a share of the profit earned through the production of electricity. Hence, you are not only earning a handsome income but also helping your government to make a sufficient amount of electricity through solar power.
Renewable Mutual Funds
If you are confused while opting for any of the available investment options, you can take the assistance of a financial advisor. They can provide you with essential information and guidance to identify only the best opportunities.
A renewable mutual fund is an investment program, which will infuse your money with other investors. The financial advisor will then spread this pooled money into different renewable energy investments.
Since these advisors have the experience, they can find the best opportunities. They also make the arrangements to get the best returns from energy stocks, bonds, or government funds. They are the professionals who understand the industry and market. Hence, they are also capable of managing the risk.
Conclusion on Investing in Solar
If you are thinking of investing in the solar energy sector, this is the right time. Although different investment options are available, you need to choose the one that is just right for you. For instance, if you can invest a large sum of money, building a solar farm is the most viable investment. You can save money with renewable energy
On the contrary, if you don’t want to invest but earn from the placement of others, you may think about leasing your land for building a solar farm. Apart from this, companies like TerraForm also offer a handsome dividend if you invest in their company.
So, the choices are not limited, but you need to do your homework before making any of these investments.
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Featured Image Credit: Unsplash.