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Clean Power Solar Bonds v Traditional Savings Account

Published on October 10th, 2011 | by John Farrell

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SolarShare Bonds Let Citizens Make Money and Finance Local Solar

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October 10th, 2011 by
 
You’re an earth-friendly person and want to go solar, but a large tree shades your house; or you’re a renter; or you don’t have $20,000 to drop on a solar power system. Or maybe you just want to get more than 0.5% interest on your savings account while getting a piece of the clean energy economy.

If you live in the U.S., you’re probably out of options. Not so in Canada.

Thanks to innovative energy policy, residents of Ontario can invest in local solar power projects by buying SolarShare bonds. The $1,000 bond provides a 5% annual return over five years and the money is invested in solar power projects across the province (as the chart below shows, this beats a savings account with 0.8% interest or even a 5-year U.S. treasury, with 0.91% interest).

Investors also become voting members of the SolarShare cooperative, a project of the TREC Renewable Energy Cooperative that both develops community-owned renewable energy projects and educates Ontarians about renewable energy, energy conservation, and the community power model.

The SolarShare cooperative already operates 18 solar projects with a combined capacity of 600 kilowatts (enough power for about 130 homes). The program could grow rapidly, once the bond program gets its regulatory approval and removes the $1,000 cap on investments.

The SolarShare projects have low investment risk, thanks to the provincial feed-in tariff, an awkwardly named but highly successful policy that guarantees solar projects a long-term contract and a favorable price for their electricity output. While U.S. incentives for solar power are tax-based and generally preclude non-profit and cooperative enterprises, the feed-in tariff is available to anyone who wants to become a renewable energy producer.

Not only does the SolarShare program help finance more solar energy projects, but by enabling local investment, it helps capture much more of the economic development from solar within the province. As I’ve covered before, locally owned renewable energy projects have an economic impact 1.5 to 3.4 times higher than absentee-owned projects. In the case of SolarShares, this is the direct result of funneling revenues from solar projects back to investors within the province.

The U.S. isn’t without examples of successful community renewable energy projects. One South Dakota community wind project, for example, enabled more than 600 state residents to invest in a local wind project (though only due to a temporary switch of the federal tax credit to a cash grant). But this kind of project is the exception rather than the norm and better energy policy might open the doors to more Americans to become investors in a local clean energy future.

Photo used with permission from the SolarShares photo gallery.

This article originally appeared on Energy Self-Reliant Statesa resource of the Institute for Local Self-Reliance’s New Rules Project.

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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.



  • http://www.ontariowebpagedesigner.com/ Ontario web designer

    This all sounds well and good BUT… as of June 2011, and to quote The Oshawa This Week Newspaper: “Roof-top solar providers on hold in Durham” …a story you many want to read BEFORE embarking on such a costly investment IF this project has been put on hold in your area of Ontario.

    Just a thought,
    Trish

  • http://pulse.yahoo.com/_KBYM37QEABM6E2754OVYVQVV5Q Daniel

    I think the best way to invest in solar is through an index fund like TAN.

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