Owners of Solar Certificates may find themselves reaping rewards sooner than expected through a buyout. Instead of waiting for the projects to generate returns over an extended period, a buyout allows investors to receive an early payout. This can be particularly advantageous for those looking for access to their initial investment or wanting to spend their money on new opportunities.
A buyout can be a strategic move for investors to mitigate potential risks associated with the projects. It provides a way to capitalize on the success achieved so far, securing profits early.
For investors looking to diversify their portfolios or explore new ventures, a buyout of Solar Certificates opens the door to fresh opportunities. The funds from the buyout can be reinvested into more projects, accelerating the rollout of more solar projects supporting more renewable energy, or cashed out to spend on whatever you need.
How can a buyout happen?
1. The site takes it over
This is the most usual case. The business who is buying electricity from your solar, always has the option to buy it out early.
There is a buyout price that is agreed upon at the beginning of the project. For example, Haga Haga Hotel, has agreed to buy power for the next 20 years, from a solar system that is collectively owned by you, the SunCash Certificate holders.
Originally this made sense, because they couldn't afford the upfront costs themselves. That's where the community came in. But their circumstances might change over the years, and they may want to take ownership of this site themselves.
It’s almost like getting out of a lease early, by buying the house.
This situation is legally catered for at the beginning of the project (in what is known as the Power Purchase Agreement or ‘PPA’); Allowing the business to take ownership of the system early, while ensuring that Certificate holders still make a decent return on their investment.
This price decreases over time as you would expect from a depreciating asset. Here is a real-world example from our Haga Haga project:
So you as a certificate holder, who powered the business with renewable energy, got an early return on your money, and the Hotel now has a solar setup that they already know does the job they need it to!
(Note: To be clear, this is hypothetical. Haga Haga has is not in the process of buying out their site)
2. A private investor buys the whole project
Occasionally a private investor may come along, on a mission to own the full solar site. It could be that they have emissions targets to meet, are involved with the site or another reason entirely.
Regardless, they are offering to buy all of the solar certificates that exist for a site. In this case, we would propose an asking price (with a premium of course) to all existing Certificate holders. A majority of holders would then need to vote on whether or not they are happy to accept this ‘bulk sale’
There may be unique cases where the private investor buys or already owns a majority of the certificates, therefore they have majority voting power already. In any case, there will always be a premium to reward early supporters of the project and fairness enforced by the partnership agreements.
Why do we support buyouts?
We live in an ever changing world, and everyone's needs change. These could be your needs, as a Solar Certificate holder, wanting to get your cash early. Or the needs of the site, who wants to own their project - or anything in between.
At Momint, when we made the SunCash product, we wanted to make sure that these potential events don’t catch anyone off guard and ensure that we have plans and contingencies in place that continually create win-win scenarios for all involved.
Our primary mission is to accelerate renewable energy adoption and end rolling blackouts for everyone. Buyouts only help this mission - solar sites keep generating clean power, while more money is injected into the ecosystem, to hopefully be reallocated to yet another solar site.
A buyout is more than a change in ownership; it's an opportunity for investors to unlock the value they've contributed to these pioneering initiatives. A buyout empowers investors to shape their financial strategies and continue supporting the sustainable energy transition!
If you are interested in getting involved in one of these projects, you can find a host of them here.
Seize the Momint!
