Comparing BC’s Community Solar Projects

Over the last couple of years there has been a surge of interest in community owned solar projects in British Columbia. There are now at least five projects that are under way or planned. We thought it would be helpful to compare Solshare Energy to these other projects.

Two Models

When we launched Solshare we chose a cooperatively owned model that is widespread in Europe. Some of the others have decided to use a “Virtual Net-Metering” (VNM) model that is newer and more common in North America. We feel the cooperative model has several advantages.

Below we compare the various models. The comparisons are based on limited information we have on some of these initiatives and we will update this as we have more information. Let us know if you have any additional information.

The Projects

Solshare Energy was the first project that allowed community members to have direct ownership and benefit in community owned solar projects. It has one plant that has been generating revenues for two years and another plant currently under construction.

Nelson’s Solar Garden was the next project to come along. A solar array is up and producing power. They use a virtual net-metering model that is open to customers of Nelson’s electrical utility.

New Westminster’s Solar Garden is in the process of signing up supporters who are customers of New Westminister’s utility. It is also a VNM model.

Fortis BC has a proposal before the BC Utilities Commission to install a large 240 kW array in the Okanagan and will also use VNM.

Island Community Solar Co-op is a Nanaimo based project that plans to use the cooperative model.

Parameters for evaluating the models

Current ROI Potential ROI Legal Ownership Portability Return of Capital Transfer-ability Voice Accessibility
SolShare 3.60% 7.00% Yes Yes Possible Yes Yes Open
Nelson Solar Garden 2.80% 5.70% No Limited No? Limited Indirect Limited
Fortis BC negative ? No Limited N/A Limited No Limited
Island Community Solar Coop ? ? Yes? Yes? Possible? Yes? Yes? Open?
New Wesminister 3.51%? ? No Limited No? Limited Indirect Limited

ROI

Most models require community members invest a sum of money in the solar array(s) and then they receive a regular benefit either in the form of dividends or saving on their electrical bill. The amount of savings or dividends compared to the initial investment allows one to calculate the return on investment (ROI).

Solshare created a business model that would allow us to pay a dividend that was better than the anuual return investors would earn in a savings account or GIC. However, it is still lower than the long term average from a diversified equity investment portfolio. We have been paying out an annualized dividend rate of 3.3% and expect to pay 3.6% on the next dividend. Note: caution should be used when comparing dividend rates with total returns from other investments. See the information on return of capital below.

Most of the VNM models seem to be offering a return that is less than this.  The VNM model does have the advantage of being an after tax savings but if it the ROI is significantly lower that advantage is lost.

Fortis BC seems to be the worst of the lot and will have a negative ROI.  Although this project does not require an up front investment the “rental” of the panels costs almost twice as much as you save.

We feel that promoting solar energy projects with a negative return on investment does not help promote renewable energy as a viable alternative.

Legal Ownership

With Solshare the investors become shareholders of the solar plants. They have legal rights as such. With VNM models it seems as the though utility retains ownership of the solar array. Fortis makes it clear that customers are only “renting” the panels.

We think that we need a more diversified ownership model for energy and that this has an advantage over concentrated ownership in the hands of a few utilities.

Voice and Democracy

Solshare is governed by a board that has representatives from both the workers that build the plants and the investors that own them. The investors can nominate board representatives using one person / one vote (based on cooperative principles).

The VNM projects do not appear to have a board that represents the community members. In the case of New Westminster and Nelson there is an indirect voice since they are owned by democratically elected governments. The Fortis project will be owned by a corporation which has its own board.

Return of Capital

Most projects will require an initial investment to help fund the acquisition of the solar array. It is not clear if the VNM investors can get this sum back if they withdraw from the scheme or move out of the utilities boundaries.

Although Solshare does not guarantee return on capital we do offer two mechanism through which this could happen. If there are enough new investors waiting to invest we will buy back shares from those wishing to sell. We will also set aside a portion of revenues after dividends as a reserve fund. At some point in the future this fund will be large enough to start buying back a portion of shares from investors.

Accessibility

Most VNM investments are only open to utility customers. If you are outside of the utility’s service area you are not eligible. If you are a renter who does not pay for your electrical service you are also not eligible.

Solshare investments are available to almost anyone in BC. In fact although we are primarily focused on making community investments open to BC residents we can also accept investments from elsewhere.

Portability and Transferability

With utility controlled VNM projects you may no longer be able to participate if you move outside of the utility service area.  And if you want to sell or transfer your share you can only do so with other customers in the service area.

With co-operative models like Solshare you don’t have those restrictions.

3 thoughts on “Comparing BC’s Community Solar Projects

  1. As part of the Ironcor Solar team (Calgary), and responsible for promoting our Solar Carport system in south-western Alberta and south-eastern BC, we would be interested in speaking with SolShare about the potential to develop a partnership, related to commercial-scale systems, for installs in the Cranbrook region.

  2. Hi SolShare,

    It’s my understanding that Solshare is not a co-op but a corporation with multiple owners: is an investment share also a voting share? If not I’m not convinced that the accessibility is not “Indirect”.

    Regarding ownership, vrs. some other form of legal benefit, If I own part of a project it’s not like I can decide to take my share of the equipment home because it’s mine. Not sure this matters to most people either way.

    The main difficulty in developing a project through the SolShare model is the premium cost of the solar generated electricity which is necessary to give the investors a higher return on investment as well as cover the annual audit costs which are significant.

    For those who can find a way to make it work Solshare is a consideration considering the limits some utilities are placing on other models.

    1. Good Questions. Solshare is a separately incorporated subsidiary of a co-op. It was incorporated as a BC Corporation but since it is controlled by a co-op it is run as a co-op and adheres to the cooperative principles.

      For this reason the Canadian Workers Cooperative Federation and Concentra Financial allow Solshare investors to participate in the RRSP/TFSA program that is normally only open to co-ops. Solshare is also open to additional funding that is available to coops through Canadian Co-ops and Mutuals.

      Because we are operating as a co-op it is not one vote per share. That is how corporations work but not co-ops. As a co-op it is one vote per person. Solshare works a little different in that the investors can vote to nominate members to the board of directors. The workers that install (or manage) the plants will also have representatives on the board. Investors will also be consulted on corporate resolutions on a one person / one vote basis.

      I am not sure I understand your comment about “accessibility.” In this article we used accessibility to refer to who have the ability to invest. With Solshare there is no restriction on who can invest. With VNM it is limited to customers of a utility.

      We agree that most people may not be concerned with legal ownership and it is an issue that may never come up with this projects. However if something goes wrong with a project and the utility controlling VNM decides to pull the plug or make dramatic changes to the program the investors will have less rights than if they were legal owners.

      We find that some people don’t like the idea of a large unaccountable corporation being the gatekeeper for these projects.

      Yes, the rate Solshare charges means that that there is a limited number of potential sites. However, we do now have two sites and there are many more that would work. We have identified over 2 MW of potential additional sites. So right now the limiting factor is investment – not sites.

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