Family-owned financial services provider FedGroup has launched a project allowing members of the public to own one or more solar panels that form part of a larger facility located on the roofs of commercial and industrial buildings and to earn rent from these.
The panels can be purchased on FedGroup’s website and are then installed on suitable sites, with owners receiving a monthly rental income based on the power generated by the panels. FedGroup, which launched the project through its new financial technology business called GreenSheep, then collects and pays over the rental income to the panel owners.
The launch of the solar panels project forms part of a “direct ownership network” from FedGroup whose aim is to “disrupt traditional approaches to wealth creation”.
Unlike traditional wealth creation approaches, where money is invested, this model involves the ownership of a physical asset to generate income.
“The direct ownership network operates on a peer-to-peer model, where the landlords of sites, the providers and installers of the solar panels, and those wishing to own the panels are connected,” a FedGroup spokesman said at a launch event in Sandton on Tuesday.
“We are able to actively track the performance of the panels, which translates into money generated for the owner,” said FedGroup CEO Grant Field.
“Our pilot project indicates that panel owners can expect to receive an internal rate of return on the purchase price in excess of 11%/year over the 20-year lifespan of the project,” Field said. “Because it is a green project, they can also apply for tax benefits, to further boost their returns.”
At the end of the 20-year term, owners can take physical ownership of the panel, or sell it back at a guaranteed residual value of R1 000.
While the buyer owns the asset, FedGroup is tasked with the management, maintenance, insurance and optimisation of the panels.
Returns are secured through a contract with the building owner to pay a monthly fee, determined by the amount of electricity generated. The money collected from the building owner every month is then distributed to the owners.
Owners can track the performance of their panels online. FedGroup will soon introduce a secondary market to provide liquidity for anyone wishing to sell their solar asset.
FedGroup explained that the installation of solar panels has several advantages for building owners, particularly in the case of older buildings, many of which are energy inefficient, having been built at a time when electricity was cheap.
“Building owners now have an added incentive to retrofit their buildings with energy-efficient technology and turn the unused space on their roofs into profitable assets,” FedGroup said.
In addition to solar panels, FedGroup plans to launch other direct ownership opportunities.
“We chose solar generation as our first project because we recognised the trend towards environmental sustainability in consumers’ purchasing behaviour. In addition, consumers understand solar power generation, making it a suitable product for the introduction of the concept of direct ownership,” said Field.
“The direct ownership model can be applied to an almost limitless array of underlying assets… While the asset being sold will differ, the model of direct ownership for wealth creation will remain consistent.” — © 2016 NewsCentral Media
