Keeping our planet cool will be enormously expensive — a price tag of $1.6 to $3.8 trillion per year according to the UN’s climate scientists. This year’s $530 billion in global climate spending, a modest 15% uptick over 2017, as reported last Friday in the National Climate Assessment, is clearly no match for the climate crisis.
For David Berliner, the thirty-one-year-old founder of CoPower*, fighting climate change means figuring out the financing. “Cutting-edge cleantech is exciting, but the reality is that the basic technology needed to make deep emissions cuts is already here.”
“The big questions now are how do we unlock new sources of financing, and how do we use that financing strategically to get clean energy technologies up and running everywhere asap.”
Berliner’s answers to those questions have put his company at the forefront of distributed green infrastructure financing in Canada. With nearly $25 million already invested in clean energy and a goal of investing $75 million more over the next two years, CoPower is on a mission to change the way distributed clean energy project developers find funding.
Cracking the climate finance code
Berliner sees the convergence of falling costs for clean technologies with new funding and business models as a driving force behind an emerging trend in clean energy finance. “Many challenges remain and the industry is still young,” he says, “but if navigated correctly, finance is destined to have a profound impact on the low-carbon economy.”
Noting the analogy between the early rollout of car financing and the current barriers to clean energy financing, Berliner points out, “it was financial innovation, not technological innovation that gave birth to the age of the automobile.”
Between 1908 when the first Model-T Ford rolled off the assembly line and 1918, car sales grew slowly. It was only in 1919 when GM began allowing consumers to make a modest down-payment with the balance paid over time that car ownership took off.
An LED bulb in every lamp, and a solar PV system on every roof
Fast forward 100 years and the upfront cost of a turnkey solar installation or efficiency upgrade is as challenging for homeowners and business today as it was to prospective car buyers in the early 1900s. The notable difference, of course, is that today’s investment in clean energy is typically followed by significant savings in energy costs and/or an ongoing revenue stream from clean power production.
According to Berliner, a promising paradigm shift is already underway as developers move to new financing models like energy-as-a-service or leasing. For example, instead of trying to sell a homeowner a new $20,000 solar system (the equivalent of selling a car), developers are now offering to install solar on a homeowner’s roof for little money down and get repaid in affordable, fixed monthly payments.
For small projects to go big, financial innovation is essential
“By making clean energy more accessible, models like these are where the scalable impact potential is,” says Berliner.
The remaining challenge: developers are still left footing the bill for those steep upfront costs — a barrier preventing businesses from growing as quickly as they need to in the race against climate change.
That’s where CoPower comes in. While it’s now relatively straight-forward for a large-scale developer to find $50 million in financing for a utility-scale solar farm, traditional infrastructure lenders like banks and pension funds typically aren’t lending at the $0.5-$20M scale required to make smaller, distributed projects possible.
“By lending to portfolios of projects under the $20 million mark, we’re helping distributed clean energy developers bridge a sizable financing gap,” says Berliner. “What banks are doing on a large-scale, we’re able to do on a distributed scale with a small, nimble team and in-house clean energy project development and finance know-how.”
CoPower’s current Green Bond loan portfolio consists of more than 1,100 distributed climate-friendly projects, including CAD $11M in debt financing to several portfolios of LED lighting retrofits in more than three-hundred condo buildings across Ontario, Alberta, and BC; CAD $4M to four operational solar projects across Ontario; and more than $7M to two portfolios of more than seven-hundred residential geothermal installations in Quebec and British Columbia.
Green Bonds: a people-powered solution for clean energy finance
CoPower is primarily a clean energy financier, but what the company is known for is its accessible Green Bonds that are backed by the loans CoPower has made to portfolios of clean energy projects.
The model is simple: the projects CoPower lends to sell clean energy or save energy. The money generated (or money saved) is used to repay their CoPower loans. Those loan payments, in turn, generate the revenues used to pay interest to bondholders.
Green investments like these are increasingly appealing to everyday investors wishing to use their retirement portfolios for investing in the clean energy economy. Consider this: In 2016 alone, 6.3 million Canadians contributed $40 billion to a registered retirement savings plan (RRSP). In total, over CAD $775 billion are held in such plans. CoPower is focused on offering these investors clear financial, social, and environmental benefits via a private investment in its 6-year, 5% Green Bonds.
With its model of matching clean energy projects seeking financing with Green Bond investors seeking profit and positive impact, CoPower is literally driving private investments in clean, green power from the ground up. As David Berliner points out, “It’s a win-win proposition.”
A perfect storm of devastating impacts, increasing emissions and political obstruction may make for a gloomy outlook on climate change, but an equally powerful alignment between technology, innovative financial and business models and people power may offer a way through. Learn more about CoPower at www.copower.me
This post has been supported by CoPower; images from the company. CleanTechnica does not provide investment advice of any kind. Please consult an investment professional or use your own independent judgement on investment matters. To learn more about CoPower Green Bonds visit copower.me and be sure to review the company’s current offering memorandum (dated May 11, 2018) before investing to ensure the bonds are appropriate for you.