The Fastest Way to Grow a Clean Energy Economy: Allow More People to Participate
A conversation with clean-energy funding entrepreneur Billy Parish
For those who don’t know Billy Parish, here’s a little background: In 2004 at age 22, Parish won a Brower Youth Award honoring his nonprofit leadership and college campus activism at the Energy Action Coalition. For the next few years, he collected a stream of accolades such as the title ‘Climate Hero’ from Rolling Stone magazine. In 2010, he co-founded Solar Mosaic, a crowd-sourced financing platform for solar energy projects, that Forbes magazine predicts could be “the Facebook of the energy industry.” The company has since changed its name to Mosaic. Last year, Parish released the book Making Good: Finding Meaning, Money and Community in a Changing World. And in January, Mosaic offered its first round of investments to the public. Parish spoke with me last week about his vision for “a new kind of bank for the clean energy economy,” the $3.7 trillion socially responsible investment market in the US, and the “brokenness in the world” that he is trying to fix.
Matthew Hirsch: Retracing the steps from your time as a Yale student in 2004 to the work you’re doing now, how did you decide to put your energy in the solar industry and particularly in solar finance?
Billy Parish: The thread that’s connected all my work has been creating ways for people to engage in solving the climate crisis. That started with campus sustainability activism in making schools the models of the sustainable future we wanted to see. Then I went into green jobs. How do we create job opportunities for people to put solar up, to retrofit our homes and businesses, to build out the green infrastructure we needed? I led the campaign to create a Clean Energy Corps, which became part of the Stimulus Act.
Mosaic represents a major new pathway to action for people to tap into their enlightened self-interest, to actually be able to make money investing in the solutions to climate change. I saw that the two biggest barriers we face to scaling clean energy are the lack of the right policies and the lack of financing. By enabling individuals to finance these projects, we can bring a major new source of capital to bear, bring down the overall cost of capital for the industry, and build the political constituency we need to get the policies in place to grow and accelerate the transition to clean energy.
For years, the question on a lot of people’s minds has been: When are we going to see the Dell computer of the solar industry, where you can go online and very easily buy solar equipment? You’re attacking the problem from the investor side but I think trying to make it very simple. I see on your conference wall, it says ‘keep calm and keep it simple.’
We need to make it so easy for people to participate. We’re working to create a whole new investment experience for people. This is an investment people can actually go visit, keep an eye on, feel good about. Some of the keys for us are simplicity: Make it simple, beautiful and transparent. If people want to dig in, they can download the prospectus for every investment that’s available on the platform.
How did you wind up co-founding this company?
We actually have four co-founders. But it first started with me and Dan [Rosen] who had both been working with Native American tribes in the southwest to figure out how to transition from the old energy paradigm — Peabody Coal Co. paying pennies on the dollar for the coal they’ve been digging out of Black Mesa for 40 years, providing power to Phoenix and Los Angeles and Las Vegas, even though over half the families there still don’t have running water or electricity — to a new energy paradigm where the communities are part of the process, they’re owners, they have an equity stake in a new clean energy infrastructure. At a certain point, Dan and I said to ourselves: All of us should be able to participate in this new energy paradigm. And that the fastest way to build the clean energy economy was to allow more people to participate in it. It was summer of 2010 that we had that crystallization of this new vision and have been full time on it ever since.
Last year at the Solar Power International trade show, your chief investment officer gave a presentation about opening new markets for the solar industry. Solar Power International is a really big venue for a still relatively small company. Does Mosaic have the growth potential to install as much solar as many of the established players, like SolarCity?
We’re not developers. So our goal is to be a new source of funding for solar developers to get their projects built. The model is extremely scalable. We’re in conversations with most of the top-tier developers in the country. We just recently announced a $25 million financing partnership with Pristine Sun. They have a pipeline of 50 megawatts of projects. So, absolutely. There is an enormous amount of money out there looking for competitive yields. And the socially responsible investment market is $3.7 trillion in the US. There’s a lot of money out there that’s just looking for great yield. There’s a lot of money out there that’s also looking to align with values. If we can tap even a small portion of that and flow that into clean energy, it’ll change the industry.
In other industries, are there comparables to what Mosaic is doing in solar?
Yeah, I just heard about one recently that’s doing it in the farm space. [After the interview, Mosaic named the British venture Abundance and Germany’s Sunnycrowd as cohorts in crowd-funding. Ed.] To me, this is where finance is going: allowing people to directly invest in things in their community. Our approach is to focus on a market that we can understand very well. We have the expertise to do a really good job vetting the projects before they’re listed. So we’re taking a very high-road approach to this idea of crowd-funding. I think a big question for the space is: How are the projects going to be vetted? I’m concerned that a number of crowd-funding platforms are taking the approach that the market will sort itself out. People will do their research and invest in the right projects. I just don’t think that’s realistic. I’m really proud of our underwriting and due diligence process. Our highest priority is to return capital with interest to our investors, so we only put projects up that we think are great investments.
Fortune magazine called you “a kickstarter for green energy.” You were also mentioned in a Forbes article that said solar in general, and it mentioned Mosaic could be “the Facebook of the energy industry.” Are these useful terms?
We’re just getting started. There’s a lot of excitement around what we’re doing. People get it very quickly. And there’s a huge pent-up demand to participate in solar. We’re happy that people are excited, but feel like we have a long way to go.
What’s in a name? You used Solar Mosaic before. Now you’ve dropped the word solar from the company name. What was behind the change? Are you thinking beyond solar?
Yeah, and that’s the reason. This year we’re focused entirely on solar. But we think that we might want to put up some energy efficiency projects, wind projects or electric vehicle infrastructure in the next few years. The assets look similar to solar. Our vision is abundant clean energy for and by the people, and we need all these things to get there. We’re creating a new kind of bank for the clean energy economy that people can participate in and don’t want to limit ourselves just to solar.
There’s a lot in the name. I think most foundationally, it’s recognizing that there is brokenness in the world. So many of us are trying to piece it back together. It takes lots of different, small pieces together to make something beautiful. And that’s what we’re doing with Mosaic. Enable people to be part of something that can change the world and heal the planet. Mosaic was also the name of the original web browser that democratized the Internet. Very big shoes to walk in, but we’re trying to do the same thing for energy and finance, to enable people to participate, to be the bank to fund clean energy themselves
The launch in January got a lot of publicity for the company. I went this morning to sign up for a Mosaic account and noticed there are no projects right now to invest in. For someone who reads this, when should they expect projects to become available? And more broadly, how do you sustain the momentum from the launch?
Next projects are coming online very soon. This announcement that we made very recently with Pristine Sun about this $25 million financing program is, I think, a big part of how we get there. Every developer out there needs financing for projects. It’s our job to find the best developers and build a program with them to take the projects they need and move them through our process as quickly as we can and list them for people to invest in. That’s what we’re working on every day.
When you say very soon, are we talking about April? Or May?
Probably first week of April.
Would you describe your target customer? Do these customers, or investors, include people who already own solar photovoltaic (PV) systems or want to buy residential PV systems?
A number of our investors are people who are concerned about climate and are investing as a new way to contribute to the solution. But increasingly, as we’ve started offering the returns, which on our platform so far have been 4.5 percent to 6.38 percent, we’re finding a whole new class of investors coming on who are just doing it as an investment. They just look at what other bonds and treasuries and CDs are at right now, and the returns stand for themselves. That’s been really interesting, and that’s going to be important to scaling the platform. The most important thing for us is to create a really good investment product. We’re very focused on that. The fact that it is also a climate solution will be important for many people, but foundationally it needs to be a good investment. We have investors ranging from 18 years old to 95 years old. Our average investor is 40 years old. The demographic is changing.
Do you think environmentalists are ready to profit from the clean energy revolution – the key word there being profit?
I think most are. We all need money to live. Many of us have kids and want to save for our kids’ future. Many of us want retirement accounts and want there to be money for us to live in our later years. It’s sort of taboo to talk about making money in the environmental space, but it’s part of life. If I can make 4.5 percent lending money to finance a clean energy project, I don’t see anything wrong with that. And I don’t think most environmentalists would either.
Outside of Mosaic, what are the most exciting developments you’re following in the solar industry?
We really built Mosaic for the next generation of clean energy technologies. So there are a lot of solar, electric vehicle, battery storage, efficiency hardware technologies that I’m very excited about, I track. I’ve invested in a few. I think in the next couple years we will see a real step change in the efficiency of the batteries and the solar cells, the efficiency of new motor technologies. I think the combination of cheaper, more efficient technologies and the power to spread and collaborate the Internet has given us can help us get to 100 percent clean energy a lot faster than anyone thinks is possible.