About Solar Energy
Solar power is the process of converting the sun’s rays into usable electricity. Older methods include simple thermal energy mechanisms such as running water through pipes on a rooftop to help heat up geysers or swimming pools. More modern solar systems make use of photovoltaic glass made from crystalline silicon that can also be coupled with solar inverters to retain the electricity generated by the sun to be used in the dark or during cloudy weather.
These technological advancements are making it increasingly more accessible for households and businesses to move over to renewable energy, which helps take strain off the power grid, paving a clear path towards a future that is not reliant on fossil fuels.
The next major hurdle we face, however, is our ability to build and scale these solutions - but that's where the opportunity lies.
Can You Make Money from Investing in Solar Panels?
Photovoltaic technology has been developing at a rapid rate in recent years, resulting in the power rating of a standard solar panel increasing from 250W to 400W, with the most powerful solar panels reaching power ratings of up to 700W.
From an investment point of view, depending on the type of solar panel and its location, it is possible to pay back the initial cost of installation in 1.5 years. Anything generated thereafter is profit. Renewable energy sources have become cheaper than fossil fuels in the last two years, meaning that a financial incentive attached to investing in solar energy is a fairly new concept thanks to the improved efficiency of solar panels, coupled with the rising prices of fossil fuels.
Despite this, installing solar panels still requires a hefty amount of upfront capital. A 5kW solar photovoltaic system is sufficient to power a household that spends approximately R1,400 on electricity every month. Installing this can cost anywhere from R55,000 all the way up to R250,000, depending on whether the household is looking to simply offset some of their electricity costs and avoid load shedding, or whether the household is looking to go completely off the grid. That being said, the sun’s energy is free, so once a solar system is set up, the owner can reap its benefits for over 20 years (the expected lifespan of the system).
Top Solar Investment Platforms
Putting forward in excess of R50k upfront is out of reach for many people, especially in South Africa, making investing in solar not financially viable for many people. This is where investing in solar panels via investment and crowdfunding platforms comes in, which provides individuals with the opportunity to invest in renewable energy easily at a fractional value.
One can invest in solar on a smaller scale by opting for more traditional investments with some of the world’s biggest solar manufacturers such as Canadian Solar (CSIQ), First Solar (FSLR), or SolarEdge Technologies (SEDG), all of which have publicly tradable stocks on NASDAQ.
However, companies like the Fedgroup and Momint are making it possible to crowdfund solar systems, making it more accessible to the masses. This is being done by giving ordinary people and businesses alike, the opportunity to purchase their share of solar cells that are a part of larger-scale solar installations; while distributing proceeds from the electricity that their cells generate. This means that an individual can buy into a solar system from as little as $4 (~R70), making it possible for just about anyone to contribute to the move towards renewable energy.
When groups of people who all care about a problem come together, the impact it can have is crazy!
Fedgroup
Fedgroup is a South African financial service provider that offers a host of investment, financing, and cover services. Part of Fedgroup’s investment offerings is their impact farming venture.
This allows Fedgroup investors to invest in income-producing assets that are managed by Fedgroup. These include lettuce stacks, beehives, macadamia trees, blueberry bushes, moringa trees, hemp plants, and, you guessed it, solar panels.
Fedgroup’s solar investments offer average annual returns of 10%-12% for a 20-year investment term for R7000 per solar panel. Their impact farming solar projects are done in conjunction with Emergent Energy, who were acquired by Fedgroup in 2017 to boost their capacity for rolling out large photovoltaic solar installations.
Momint
Momint’s mission is to help 1 billion people find digital assets worth owning, and a major part of their plan to achieve this is by turning solar cells into digital assets that are logged and transacted on the blockchain.
Momint has partnered with various solar providers in order to allow people to own pre-packaged solar cells that generate an income for their owners, and have a host of solar projects on offer on the marketplace.
What makes Momint’s solar products particularly attractive is that they are logged and transacted on the blockchain, meaning that investors are not locked-in to their solar cells. This is due to the fact that this model allows for the transferring of ownership to any willing buyer around the world, with no logistical or regulatory red tape.
How Digital Assets can Help You Invest in Solar Power
In modern terms, a digital asset is anything digital that can be used to generate or store value through tokenisation or on a blockchain. This means that a digital asset can be a cryptocurrency like Bitcoin or Ethereum, or it can be a Non-Fungible Token (NFT). NFTs are essentially just your certificates of ownership. Like a title deed for a house or a registration certificate on a car. meaning that a digital asset can be used to represent one (or more) solar cells in a real-world solar system. But because your certificate is on a secure blockchain, it's transparent and virtually impossible to hack.
This works by taking the real-world solar installation, dividing it into its individual solar cells and creating digital assets with one (or more) cells. These cells are then bound to their digital counterparts by virtue of the blockchain, and can even include a legally binding purchase agreement between the buyer and the power provider to indicate the transfer of ownership in a manner that can hold up in any court of law.
The fact that digital assets are logged and transacted on a blockchain opens up a host of benefits. Blockchains are decentralised, meaning that no single entity has the authority to control or manipulate information or transaction records, which upholds the integrity of the token. This also means that it is possible to buy and sell digital assets from anywhere in the world, making this form of trading very accessible due to the lack of regulatory hurdles that are commonly found when trying to transact across borders in conventional manners.
This is highly beneficial for solar investments in particular, as the efficiency of solar panels is very much dependent on geographic location. A country such as South Africa has better solar performance than the UK for example. So, a person residing in the UK looking for a lucrative and impactful investment can opt to purchase solar tokens in South Africa using blockchain technology with great ease.
Another benefit particular to digital assets are the smart contracts to which they are tied. A smart contract is a simple program that runs automatically when pre-determined conditions are met. With solar investments, this is how payouts to investors will be facilitated. When the solar installation generates revenue from the electricity it produces, the solar provider pays the funds into a smart contract wallet using cryptocurrency. The smart contract will then distribute these funds accordingly amongst all the token holders, thus fully automation automates the payout process. Moreover, should an investor sell their solar token to someone else, the new owner will automatically be included in the payout instead of the original investor, further enhancing the efficiency of the process.
This means that digital assets make solar investing incredibly liquid, since transferring ownership is a quick and easy process (as long as there is a willing buyer). As a result, should you choose to invest in solar in this manner, you won’t be tied into your investment, as it is possible to re-sell it should you choose to do so.
Conclusion
Technological advancements in the solar energy space are greatly increasing the efficiency of solar panels. Therefore, in addition to the environmental benefits attached to renewable energy, there is now also a financial incentive to make the move across from fossil fuels. Granted, not everyone can afford to purchase an entire solar system and solar inverters, but solar crowdfunding solutions and digital assets allow just about anyone to invest in solar while earning a passive income.
There has never been more incentive to invest in solar power and pave the way towards a green future dominated by renewable energy!
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