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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.

SolShare investments now qualify for RRSPs and TFSAs

Now you can get a tax advantage for supporting local renewable energy projects! Future investors in SolShare’s community solar projects will have the option of putting the investment in a self-directed RRSP or TFSA.

SolShare is BC’s first cooperatively-owned community solar project. Our first plant has been producing power for over a year. During the first year we paid out $1.63 per share (shares are bought at $50 each).

Our second plant is scheduled to begin construction in August. Over the next two months we will be doing another round of investments. The minimum investment for this round is $1,000.

The RRSP/TFSA does have a $55 annual fee, so it may not be best option for investors who will be buying at the minimal amount. But if you are looking at making a larger contribution it is something to consider.

SolShare Energy Pays Third Dividend

SolShare Energy has paid a dividend of $1.6308 per C2 share for the period from January 20th, 2016 to January 15th, 2017. The shares are sold at $50.

If you are interested in investing in community solar energy with Solshare Energy, check out our FAQs page.

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About Solshare Energy

Solshare Energy is BC’s first cooperatively owned community solar energy project. Solshare’s plan is to own a portfolio of renewable energy installations throughout BC that will engage BC residents and offer financial, social, and environmental returns. Solshare’s first installation was a 23kW system installed in east Vancouver. Solshare Energy is a project of Vancouver Renewable Energy Co-operative (VREC).

2nd Dividend Paid to Solshare Investors

Solshare Energy has now paid its second dividend of $0.19 per share for the period of 12/08/2015 to 01/20/2016. Solshare investments are Class C2 investments and receive 3.3% annualized interest.

These dividend payments were followed by a second opening for investments, contributing to a total $69,000 raised in share capital from investors.

If you are interested in investing in community solar energy with Solshare Energy, check out our FAQs page.

IMG_3994

About Solshare Energy

Solshare Energy is BC’s first cooperatively owned community solar energy project. Solshare’s plan is to own a portfolio of renewable energy installations throughout BC that will engage BC residents and offer financial, social, and environmental returns. Solshare’s first installation was a 23kW system installed in east Vancouver. Solshare Energy is a project of Vancouver Renewable Energy Co-operative (VREC).

SolShare Working with Local Community Groups

Solshare is happy to work with local BC Community Groups that want to set up a cooperatively owned solar project.

Why work with SolShare?

Given the economics of grid-tie solar energy in BC it is important to keep costs low in order to give your investors a good return on investment. There can be considerable costs associated with incorporation and meeting the requirements of the BC Securities Commission. By working with SolShare those costs are shared.

Here is what you need to set up a co-cooperatively owned community project with SolShare:

1. Investors

A group of investors, willing to invest at least $1,000 to own part of the larger solar array. Usually we will need at least 70 investors at $1,000 each. Of course if some investors are willing to contribute more than you will need fewer investors.

  • Investors should expect to receive dividends at 4% annualized
  • We take care of all the paperwork required by the BC Securities Commission. We use an “offering memorandum” to inform investors about the project and meet the requirements of the Securities Commission.
2. The Site

A building where the owner or tenant is willing to pay for the electricity generated by the solar. The building needs at least 4,000 square feet of roof space.

  • In most cases the building owner will be paying $0.14 / kWh for the power generated
  • We may be able to reduce the cost per kWh if we are able to also do energy efficiency upgrades and we are able to include those in the power purchase agreement (PPA)
  • For most building owners $0.14/kWh is a premium over their BC Hydro rates.
  • If the building is seeking LEED certification or buying Renewable Energy Certificates (RECs) the PPA might save them money even at the premium.
  • The premium declines over time so eventually the building owner may be paying less for the solar energy than the utility
  • Multi-family residential buildings are especially good candidates if they are paying residential rates for their common areas. In just a few years they will be saving money under the power purchase agreement.
  • We can evaluate the site to see if it is suitable.

How can you save by cooperating with SolShare?

  • Incorporation costs – we have already incorporated
  • BC Securities Commission compliance – unless you are raising a small amount with a small group of people you will need to file a Prospectus (which can cost $80,000 or more) or use another exemption.  We are using the Offering Memorandum exemption which requires paperwork to be filled and records kept.  We have templates and a database system already set-up to handle the paper work and filing.
  • Audit Costs – If you are using the Offering Memorandum exemption you will need to get an annual financial audit done at least once.  This can cost $8,000 or more.  By sharing the Audit costs amongst more than one project we reduce the costs and allow more profit to be returned to investors.
  • Administration Costs – We take care of the accounting and record keeping.  We also have automatic electronic funds transfers set up to handle the payment to investors.

Quarterly Update from Solshare

Quarterly Update (May – July 2016)
Plant 1 Production   10,608 kWh
Total from all plants   10,608 kWh
Revenue   $1,403  
       
YTD Production   14,630 kWh
YTD Revenue   $1,965  
       
YTD Return on capital   2.59%  
Annualized Return on Capital   5.17%  

Sharing Solar is Fun – A Children’s Story

Cooperatively-owned renewable energy is a fairly simple model. But we find some people still don’t understand it. Since I am spending a lot of time reading and telling stories to my three year old I decided to explain how the model works in the form of a children’s story. To simplify things I have changed the amounts by a factor of 1000 but the ratios would still be the same.

Once upon a time Sue, Tim, Jessica, and Pete pooled their money together and bough a solar system for $100. Each of them put in $25.

One day Jill noticed that they had a solar energy system. Jill said, “I have always wanted to put a solar panel on the new house I am building but I can’t afford the $100 upfront cost. Can I use your panel and just pay for the electricity that it generates?”

Sue, Tim, Jessica and Pete thought about it and decided that Jill could do that. They told her that they would charge her $4 per year for the electricity it generated.
Jill said, “Well that is a little bit more than I am paying now for electricity but I will consider it.”

Then Jill found out that the City government was requiring her to meet certain energy efficiency targets with her new home. Her builder told her it was going to cost $200 for these efficiently upgrades. But if she installed the solar energy system from Sue, Tim, Jessica and Peter, she could meet the energy target.

Jill decided that spending a few extra cents each year for the electricity from the solar energy system was worth it.

Jill was happy because she didn’t have to spend the $200 for the other efficiency upgrades.

Sue, Tim, Jessica and Pete were happy because they were getting $1 each per year. And that is more money than they would have received had they put their $25 in the bank.

So they all lived happily ever after.

BC’s First Community Owned Solar Project Raises $69,000

Solshare Energy, BC’s first community owned solar project, has just completed another round of financing and now has a total of $69,000 in share capital from investors.

The funds raised will be used to complete the purchase of a 23 kW photovoltaic plant recently installed in East Vancouver as well as other start-up costs. The photovoltaic system is installed on a multi-family residential complex and is expected to officially begin production later this week. The revenue from selling the electricity from the system will be used to pay dividends to investors. Dividends have already been paid out to investors who bought shares in earlier financing rounds.

Solshare Energy plans to add additional solar plants located throughout BC to its portfolio and will be seeking new investors as these plants come online.To receive updates on investing in Solshare fill out our contact form.

Van CC Cohousing solar
Cohousing Solar

BC’s First Community Solar Energy Project Pays Dividend

Solshare Energy has announced it has paid its first dividend of $0.41 per share. This is an annualized return of 3.3%.

“We are excited to offer BC residents an investment in local renewable energy projects that offers an ongoing income stream.” said Solshare CEO Rob Baxter. “We have seen considerable interest for a truly local ethical investment alternative.”

Solshare Energy is also currently accepting another round of investments that will help finance its first installation.
IMGP0747

About Solshare Energy

Solshare Energy is BC’s first cooperatively owned community solar energy project. Solshare’s plan is to own a portfolio of renewable energy installations throughout BC that will engage BC residents and offer financial, social, and environmental returns. Solshare first installation was a 23kW system installed in east Vancouver. Solshare Energy is a project of Vancouver Renewable Energy Co-operative (VREC).