In a trend similar to fractional ownership in real estate or luxury assets, investors are now pooling their money to invest in an emerging asset class—renewable energy, specifically solar energy. Traditionally, rooftop solar projects were restricted to large investors due to their capital-intensive nature. However, this is changing as these projects are now being opened up to retail investors with a low investment threshold. Startups like Pyse, SustVest, and Incept Green are acting as intermediaries to make fractional solar energy investment accessible to a wider range of investors.
There are two types of solar projects: rooftop projects and ground-mounted solar plants, also known as solar farms. These projects generate electricity that can be sold to single or multiple buyers. Digital solar assets, or solar biscuits, are portions of solar projects that can be purchased by investors. Platform aggregators like Pyse, SustVest, and Incept Green act as intermediaries and carefully select projects for investors to fund. They also handle transactions, project maintenance, payouts, and more.
These platforms operate under different models. Some acquire already developed projects with established power purchase agreements, while others raise funds for projects that are yet to be developed. Certain platforms even install their own solar farms and directly sell shares to investors. Each model has its own advantages and risks.
Investors are drawn to fractional ownership in solar projects due to the low-entry tickets and the promise of annual returns ranging from 9% to 15%. By investing in solar projects, retail investors can earn monthly payouts and contribute to reducing carbon emissions. However, it is important for investors to be aware of potential risks and carefully evaluate the projects before investing.
Overall, fractional solar energy investment is still a relatively new concept and has a ways to go before becoming a mainstream asset class. However, with the increasing popularity of renewable energy and the demand for sustainable investment options, this form of investment is expected to gain traction in the future.
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