How does investing in solar energy with Circular Urban work? The no-fine-print guide

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Legal notice: This article is for educational and informational purposes only. It is not an investment offer, nor financial, legal or tax advice. Participation in Circular Urban projects happens through the private subscription of shares in a special purpose vehicle (SPV/SAS). Results depend on each project's actual performance and no figure should be read as a guaranteed return.

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When people ask us how investing in a Circular Urban solar project works, they often brace for a complicated answer. The reality is simpler than it looks — although the structure that makes it legal and safe does need explaining.

Here is the full guide, with no fine print.

What exactly are you acquiring?

You are not buying solar panels. You are not signing an energy contract. You are subscribing shares in a company (SPV/SAS) that owns a solar project.

The difference matters. When you are a shareholder in an SPV:

• Your capital funds a real asset: the solar system installed on a specific site.
• Your rights sit in the company's bylaws — a binding document, not a verbal promise.
• The company has its own legal personality: its assets are separate from those of Circular Urban S.A.S. and from those of any other project. This is called asset segregation and it is the core protection of the model.
• You receive regular information: generation reports (actual kWh), the SPV's financial statements and profit distributions when there are any.

The SAS (Simplified Stock Corporation) is the company type Circular Urban uses to structure each project. It is governed by Law 1258 of 2008, allows bylaws tailored to each project, and is the most flexible and secure vehicle in Colombian corporate law for structures like this one.

How does the project generate revenue?

It depends on each project's design. The main mechanisms are:

1. PPA (Power Purchase Agreement)
The SPV installs the system on a host user's site: a company, a residential complex, a commercial business. That user contractually commits to buying the energy generated at an agreed price — usually cheaper than the grid tariff. The SPV receives that revenue monthly for the life of the contract.

2. Selling surplus to the grid
Energy the host user does not consume in real time is injected into the local distribution grid. A bidirectional meter — installed and approved by the Network Operator (OR), usually EPM for projects in Antioquia — records exactly how much energy comes in and how much goes out. The retailer settles that surplus under the rules of CREG Resolution 174 of 2021, the same one governing small-scale self-generation (AGPE).

3. Tariff savings structured as a fee
In some projects the main revenue is the saving the system delivers to the host user, formalized as a recurring fee inside the PPA. The user pays less than they would pay the grid, and the SPV collects that fee.

The project's net revenue — after deducting OPEX: maintenance, insurance, running the SPV — is the basis for the profit the shareholders' meeting may approve for distribution.

The onboarding process, step by step

Step 1 — Sign up on the platform

You create your account at circularurban.co and submit your ID document (Colombian ID card or equivalent) and an up-to-date RUT.

Step 2 — KYC (know your customer)

You declare the origin of your funds and complete the investor profile form. Circular Urban screens your information against national and international control lists through the SARLAFT process, within a maximum of 5 business days. This process is required by law and protects both the investor and the company.

Step 3 — Clearance

You receive an email confirming you are cleared to take part in the projects available on the platform.

Step 4 — You review the project sheet

Every project has a technical sheet covering: the solar system's characteristics (installed kWp, capacity factor, location), the financial projection (estimated IRR under P50 and P90 scenarios), the SPV structure, the price per share, the minimum participation amount and a detailed description of the risks.

Step 5 — You sign the documents

Three documents are part of the onboarding process:

• Share subscription agreement: formalizes your acquisition of SPV shares and the rights that come with them.
• Risk disclosure: you confirm you have read and understood the project's risks. No result is guaranteed.
• Declaration of source of funds and of no public offering: you certify the funds come from lawful activities and that the offering is private and individual — not mass-market or public.

Step 6 — Transfer to the SPV

You send the capital directly to the bank account of the SPV for that project. Never to Circular Urban S.A.S. as the final recipient. That separation is part of the legal structure protecting your capital.

Step 7 — Subscription certificate and dashboard access

The SPV issues your subscription certificate confirming the number of shares acquired, the price paid and your percentage stake. Your name is entered in the SPV's Shareholders' Registry Book — the formal, legally valid evidence of your participation. From there you get access to your dashboard on the platform.

What happens once you are in?

Once the project starts operating — grid connection confirmed, bidirectional meter installed and approved by the OR, PPA in force — the system begins generating. As a shareholder you receive:

• Monthly generation reports with the kWh produced, the period's revenue and the OPEX breakdown.
• Profit distributions when the SPV's shareholders' meeting approves them, in proportion to your shareholding.
• Milestone notifications: connection, start of operations, major maintenance.
• Real-time visibility of the system's generation on your dashboard.

Projects run on a 20 to 25 year horizon. Over that period the panels pay back the CAPEX, the system keeps generating and shareholders receive their proportional share of net profits. At the end of the horizon, the shareholders' meeting decides whether to keep operating, sell the asset, or wind up the SPV and distribute the residual value.

What we don't promise you — and why that's a good thing

We do not promise you a fixed return. We do not guarantee you a result. Doing so would be illegal under Colombian law and, more importantly, it would be lying to you.

Solar projects carry real risks: generation risk (irradiation varies year to year), energy price risk (the market moves), regulatory risk (rules can change), counterparty risk (the host user may run into trouble). All of those are documented in each project's sheet and in the risk disclosure you sign before taking part.

What we do give you is structure: your capital in a separate legal vehicle, your name in the shareholders' book, your rights defined in bylaws, and the same data we have available on your dashboard.

That is what taking part in Circular Urban means.

The legal framework behind the model

Circular Urban's participation model rests on the rules below. They are not fine print — they are what makes it possible and safe:

Official sources

Glossary: the technical terms, in plain words

The highlighted terms throughout the article bring you here. Each one comes with a short explanation and a concrete example.

Share subscription

Buying newly issued shares from the company, so your money goes into the company's own equity. Example: the SAS issues 100,000 shares at COP $10,000 each; you subscribe 500 and contribute COP $5 million, which gives you 0.5% of the project.

SPV (special purpose vehicle)

A company created for a single purpose: owning one project. Example: "Solar Envigado SAS" exists only to own that solar system; it sells nothing else and runs no other business that could drag it down.

SAS

Simplified Stock Corporation, the most widely used company type in Colombia, governed by Law 1258 of 2008. Example: you do not own the panels — you own a percentage of the SAS that owns the panels.

Legal personality

The company exists legally in its own right: it has its own tax ID, signs contracts in its own name and answers with its own assets. Example: the energy contract is signed by the project's SAS, not by you or any individual shareholder.

Asset segregation

The project's money and assets belong to the project's own company, not to whoever manages it. Example: if Circular Urban S.A.S. faced a legal problem tomorrow, its creditors could not touch the solar system, because that asset belongs to the project's SAS and not to it.

kWh (kilowatt-hour)

The unit of energy you see on your power bill: how much electricity was consumed or generated over a period. Example: if a 5 kWp system generates 600 kWh in a month and the house uses 300, the other 300 kWh go to the grid.

PPA

Power Purchase Agreement: a long-term contract to buy and sell energy. Example: a factory commits to buying every kilowatt the project generates for 15 years at an agreed price, usually cheaper than the grid tariff.

Host user

The owner of the roof or site where the system is installed, and the one who consumes the energy generated. Example: a shopping center lends its rooftop and in exchange pays a lower energy rate than the grid charges.

Bidirectional meter

A meter that measures in both directions: what you draw from the grid and what you send back. Example: this month you drew 800 kWh and delivered 300; the retailer settles the difference instead of billing you the full 800.

Network Operator and retailer

The Network Operator (OR) owns the cables and transformers in your area and approves your connection; the retailer is the company that bills you. Example: in Antioquia both roles usually sit with EPM.

Surplus energy

The energy you generate but do not consume at the moment it is produced. Example: at midday your office is half empty while the panels run at full tilt; that surplus flows into the neighborhood grid and is credited on your bill.

CREG

Colombia's Energy and Gas Regulation Commission: the body that writes the technical and pricing rules of the electricity sector. Example: it defines how you get paid for the energy you send to the grid from your own rooftop.

Self-generation and AGPE

Self-generating means producing your own electricity instead of buying all of it. AGPE ("small-scale self-generator") is CREG's category for small systems, which can also hand their surplus to the grid. Example: your business installs panels, uses what it needs and injects the rest.

Fee (canon)

A fixed recurring payment agreed in a contract, just like rent on a shop. Example: instead of charging per kWh generated, the project charges COP $4 million a month for the service, rain or shine.

OPEX

What it costs to keep the project running each year: cleaning panels, maintenance, insurance, accounting and running the company. Example: out of COP $100 million of annual revenue, $15 million goes to OPEX and the remaining $85 million is the basis for distributable profit.

RUT

Colombia's Unique Tax Registry: the document issued by the tax authority (DIAN) stating who you are for tax purposes. Example: an up-to-date RUT is required so the company can issue the tax certificates for the profits you receive.

KYC

"Know Your Customer": the process of properly identifying whoever is going to take part. Example: you are asked for your ID, your tax registry and the origin of your funds before your onboarding is accepted. It is inconvenient, and it is exactly what keeps questionable money out of the project holding your capital.

SARLAFT

Colombia's system for preventing money laundering and terrorist financing. Example: your name is screened against national and international control lists before you are cleared. It is routine and applies to everyone — it is not a suspicion about you.

GW, MW and kWp

These measure the size of a system, not how much energy it delivers. 1 GW = 1,000 MW = 1,000,000 kW, and the "p" in kWp stands for "peak": the maximum output panels reach under ideal conditions. Example: a home rooftop is around 5 kWp; a 1 MW project is roughly 200 of those homes put together.

Capacity factor

What share of its maximum capacity a system actually produces over a year. Example: a solar system in Colombia sits around 18%, which is like running flat out for four and a half hours a day: at night it produces nothing and under clouds it produces less.

IRR

Internal Rate of Return: the average annual return your money would earn if the project performs as modelled. Example: an estimated 14% IRR means that, if everything goes according to the model, your capital would grow at roughly 14% a year — an estimate, not a promise.

P50 and P90 scenarios

Two ways of reading the same projection: P50 is the outcome met about half the time, and P90 is the conservative one, met in 9 out of 10 scenarios. Example: if P50 says 1,500 MWh a year and P90 says 1,350, the second is the number to base your decision on.

Private offering

An invitation addressed to specific people, one at a time, rather than to the public at large. Example: Circular Urban presents a project to you after getting to know and verifying you; it does not run an ad inviting anyone to send money, because that would be a public offering and would require authorization.

Subscription certificate

The document the company issues confirming how many shares you acquired, at what price and what percentage they represent. Example: it is the formal receipt of your entry into the project, and it goes hand in hand with your entry in the shareholders' book.

Shareholders' Registry Book

The company's official record of who owns how many shares. Example: it reads "Ana Restrepo — 500 shares", and that is what legally proves your participation: not an email, not a screenshot, not a dashboard capture.

Shareholders' meeting

The gathering of the company's owners, where the year's accounts are approved and profit distributions are decided. Example: if the project earned COP $200 million in profit, the meeting decides whether to distribute or reinvest it — and you vote in proportion to the shares you hold.

CAPEX

The upfront investment required to build the project: panels, inverters, mounting, wiring and installation. Example: the COP $400 million it takes to get the system running on day one, before it earns a single peso.

Residual value

What the project is worth once its operating horizon ends. Example: after 25 years the shareholders' meeting may sell the system and its contracts; the proceeds are split among shareholders in proportion to their stake.

EOSF (Decree 663 of 1993)

Colombia's Organic Statute of the Financial System: the rule defining what financial activity is and who may carry it out. Example: it is the law that makes taking public money without a banking license illegal, and the reason this model is structured as a share purchase rather than a deposit.

Unauthorised deposit-taking

Taking money from the public while promising to return it with a yield, without being a bank. It is illegal in Colombia. Example: this is why you will never see a "deposit here and I'll pay you 2% a month". What does exist is buying shares in a company and sharing the project's real fate.

Public securities offering

Offering investments to the general public, which requires registration and authorization from the Financial Superintendency under Law 964 of 2005. Example: it is what a company does when it lists on the Colombian Stock Exchange. Circular Urban's model is private and sits outside that regime.

FNCER tax incentives

Three benefits Law 1715 of 2014 grants renewable projects: deducting part of the investment from income tax, depreciating equipment faster than usual, and skipping VAT on eligible equipment. Example: they are not automatic — the project has to be filed with UPME and certified before the equipment is bought.

FNCER

Spanish acronym for Non-Conventional Renewable Energy Sources — how Colombian law refers to sun, wind, biomass and geothermal. Example: only a project recognized as FNCER can claim the tax incentives created by Law 1715 of 2014.

UPME certification

UPME's stamp confirming that a project and its equipment qualify as FNCER. Example: without that paper the project pays VAT and loses the income tax deduction, even though the installed panels are exactly the same.

Superintendency of Companies

The state body supervising commercial companies outside the financial sector, such as SAS entities. Example: it is the authority that can demand answers from a project's SAS if something does not add up in its accounts or governance.

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Circular Urban S.A.S. — Medellín, Colombia · circularurban.co

This article was reviewed by Circular Urban's legal team. It is not a public securities offering nor deposit-taking from the public. Participation in projects happens through the private subscription of shares under Law 1258 of 2008.

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