Solar Crowdfunding in California: Part 3, San Francisco Energy Cooperative
- Dec 22, 2012 11:30 am GMT
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More options are emerging for solar for the rest of us — including Mosaic’s new online marketplace, which is making it possible for people to invest in community solar projects and earn solid returns.
This three-part series profiles some other startups that are paving the way to spread solar to all.
Just across the bay from Mosaic in San Francisco, three young entrepreneurs are finding new ways to crowdfund solar projects — and include the 75%. Not content to wait for someone else to do something, they’re taking matters into their own hands, rolling up their sleeves, and making projects happen.
Empowering the 75% through co-ops
Evan Wynns founded the San Francisco Energy Cooperative in 2011 with the 75% in mind. He began with the question of why we don’t have more green energy in the United States: “It’s frustrating because we have this technology which can take off a lot of the load of consuming fossil fuels, and we have the will — we see green energy growing in popularity all the time — and the question is why don’t we have more. We thought about that, and the benefits of green energy, and how can we distribute those benefits to more people.”
In keeping with the philosophy of the Sharing (or Access) Economy, Wynns is seeking to give people who don’t own green energy technology access to the services the technology provides.
The SF Energy Co-op has found a way to make the benefits of green energy available to anyone, through the power of collective investment and organization. As Wynns puts it, “Say it costs $20K to put solar on your roof, but you can’t do that, for whatever reason. So you go to your neighbor and say, ‘I’ll pay to put it on your roof, and then you pay me what I would have been saving, and you’ll still be saving money on your power bill.’ And say instead you go to 100 friends and you all pay $200 to do the same thing. You can do the same good when people pool together small amounts of money.”
Being incorporated in California as a co-op makes it possible for the organization to crowdsource funding. This comes with some limits: for one thing, members must be California residents. And California co-op law requires that if you pay returns to individuals, the amount they invest has to be under $300. So the SF Energy Co-op has set their maximum investment at $250.
Being a co-op also means not being restricted under SEC rules, because the donations are kept low and members have a vote. In fact, the Co-op is very democratic: regardless of the amount you contribute, you get one vote. This gives people equal ownership in the green energy they’re supporting.
Unlike with a donation to a nonprofit, you will get a return on your investment in the SF Energy Co-op. Profits are shared equally among members who, with an expected rate of return of 5% – 7%.
And because the amounts invested are small, the SF Energy Co-op model lowers the bar for investment, allowing anyone to get a piece of green energy for as little as $10. Wynns likes to call it “solar for renters” — which is also solar for the 75%.
Wynns hopes there will be opportunities to raise the Co-op’s investment limit once the JOBS Act goes into effect in 2013. But in the meantime, the low bar to investment does allow most people to participate.
Even with small amounts, the SF Energy Co-op can do big things. As Wynns notes, “When we prove we can get a decent return on investment on a $50 share, we can prove that solar is profitable for everyone.”
While funds for the Co-op projects come from member investments, financing structures can vary. For most projects, the Co-op will serve as a third-party owner, all Co-op members being part owners. As the owner, the Co-op will maintain a lease or power purchase agreement.
The first project is slated to be a solar PV system for the Bernal Heights Neighborhood Center in San Francisco. For this project, the Co-op might serve as financier rather than owner, because of a city solar program that allows the neighborhood center to get a bigger rebate for the system if they own it.
Whatever model is used, the payback period for the project is expected to be just a couple years.
Spreading the model
The message of the SF Energy Co-op is that we don’t need to wait for the government to take action but can act now at the grassroots level. Wynns is hoping that the Co-op will be a model for other communities and will serve as a seed to teach others how to follow suit.
Like the founders of the other startups profiled in this series, Wynns sees his role as going beyond the success of his own organization. While he hopes his model will succeed, he has a larger vision for what he’s doing: “Our job as community leaders on energy is not necessarily to make our own thing work (though we do have to prove that the models work) but to popularize that everyone should be invested in green energy.”
How you can get involved
If you’re a California resident, you can become a member of the Co-op or even work for them as a part-time canvasser. The Co-op also partners with other green businesses. If you’re not in California, keep an eye on the progress of the San Francisco Energy Cooperative — it may turn out to be a great model to emulate in your own community.
This is part 3 in a 3-part series on solar crowdfunding models in California and was originally published at Mosaic.