A Business Model for Crowdfunding Solar Pv Projects in Monterrey, Mexico
Open Access
- Author:
- Fuentes, Fernando
- Area of Honors:
- Energy Engineering
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Dr. Jeffrey Brownson, Thesis Supervisor
Dr. Sarma V Pisupati, Thesis Honors Advisor - Keywords:
- crowdfunding
renewable energy
solar energy - Abstract:
- The main objective of this study was to assess the possibility of a business model to crowdfund solar PV projects in Monterrey, Mexico. Factors (drivers and challenges) and actors affecting the likelihood of success of this business model were identified and analyzed. These were analyzed qualitatively and quantitatively. A literature review served as the foundations for the research. These secondary sources of data included scholarly articles and extensive reports by research and advisory firms & governmental agencies. Twenty different runs were performed using the System Advisor Model (SAM) by NREL as part of a robust solar techno-economic simulation. Sensitivity analysis of varying independent variables one at a time produced quantitative data that supported qualitative findings in the literature review. On the quantitative side, a hypothetical commercial system in Monterrey underperformed an identical one in CA primarily due to higher insurance payments (∆= + 62%) and a less competitive cost of capital (∆= + 52%). This lead to a higher LCOE ((∆= + 27%) and a lower scaled-NPV (∆= - 20%). Electricity rates were confirmed as main drivers of industry development: at an 8.5% escalation rate, the scaled-NPV of the system in Monterrey was almost 50% higher than that of the system in California. Incentives were confirmed as another main driver for growth, discerning between different combinations of investment tax credits, production tax credits, and direct cash incentives to find the optimal instruments. For example, a standalone PTC at 0% escalation rate and a standalone 30% non-taxable cash grant both outperform the 30% ITC, the current de facto incentive. This finding supports the work of renowned economists in the subject. A holistic assessment of the simulation led to the recommendation for project developers in Monterrey to place strategic focus on reducing system costs on a “dollars-per-Watt-installed” basis and on lowering the overestimated risk perception of other actors. These actors include lending agencies, insurers, and customers. On the qualitative side, sociocultural factors present themselves as challenges to the business model proposed: the average Mexican does not actively invest, will rarely own a credit/debit card to engage in online transactions, is worried about cybersecurity, and underestimates the value of solar leases/PPAs in favor of direct ownership. All these are secondary reasons to why the business model presented is highly unlikely to be implemented at the time of this writing. The main reason is that the legal framework for equity crowdfunding is not in place. However, the quantitative study and other qualitative factors (like renewable energy education & environmental awareness in Monterrey) point at Monterrey as the ideal place to implement this business model once the equity crowdfunding industry has reached the right stage of development.