A small Toronto co-op is tapping into the huge appetite for green investing by letting individual investors buy into solar projects across Ontario.
SolarShare has raised $5-million in the past three years from about 700 "members," who in return get a stake in a portfolio of rooftop and small ground-mount solar projects. The co-op members get a guaranteed 5-per-cent annual return on their bonds, which can't be cashed out for five years.
This week, the co-op is cutting the ribbon on its 25th project, and its biggest so far, a 600 kilowatt rooftop solar installation on a mixed-use commercial building in Brampton.
Essentially, the co-op sells "green bonds" – the fixed-term investments that are becoming hot commodities in the investing world, as baby boomers look for environmentally friendly places to park their money, along with sufficient returns to help them survive in retirement.
The market for these investments – sometimes called "climate-themed bonds" – is accelerating dramatically. The Climate Bonds Initiative, a British-based research group, says the market has exploded to more than $500-billion (U.S.) worldwide. In 2014 alone, about $40-billion worth of green bonds are expected to be sold, up from $11-billion in 2013.
But for SolarShare, the motivation is not just to raise money for projects, but to get people involved in renewable energy.
SolarShare president Mike Brigham said the overriding goal at the co-op is to raise awareness. "[The idea] is to speed Ontario's transition toward a renewable energy future, and do it by building projects that people can invest in," he said. "That is our way of getting them to talk to us and getting their attention."
People who have their hard-earned money invested in renewables are far more aware of the value of green energy, he said. "There are enough vested interests in the market that do not wish to see renewable energy succeed," he said, so it is important to get people "familiar with it and comfortable with it and realize it is a good investment and good technology."
SolarShare general manager Matt Zipchen noted that one of the reasons for the success of renewables in Europe is the fact that there is so much community ownership. In some European countries, more than half of green power installations are owned by farmers, communities or co-ops. "There has been a lot of policy research to show that local ownership not only increases awareness but also increases uptake and deployment of renewable energy," he said.
SolarShare is one arm of a broader co-operative initiative, the TREC Renewable Energy Co-op that was created 16 years ago as a non-profit designed to boost renewable power. It has other arms that hold wind-power projects, including the turbine at Toronto's Canadian National Exhibition grounds.
SolarShare projects sell their power under Ontario's feed-in tariff (FIT program), which pays a relatively high price for power generated from renewables. Installations are on commercial building rooftops from Ottawa to St. Catharines to Goderich, with a smattering of units installed in farmers' fields on Manitoulin Island and Southwestern Ontario.
The co-op is aiming to reach $8-million of community investment by the end of this year, and Mr. Brigham says he sees no reason the group couldn't hit the $100-million mark within five years.
Craig Alexander, chief economist at Toronto-Dominion Bank and the author of a 2013 report on green bonds, said it is difficult to determine just how big the market for green bonds is, but "our sense is the appetite for these products is in fact rising."
One issue is that there is no clear definition of green bonds, he said, and thus there is a lot of opportunity for "greenwashing," where investments purported to be environmentally friendly may not really be green.
That's one reason for SolarShare's success, he said. Its investors know exactly what they are investing in, and they are also getting a reasonable payout. "The successful green bonds are going to be the products that are simple and transparent," yet offer competitive investment returns, he said
That's what attracted Dianne Saxe to SolarShare's bonds. The Toronto lawyer is investing for her retirement and needs a good return, but she also want to "make the world better, not worse." The SolarShare investment meets those criteria, and are "a reasonable way of achieving both my financial objectives and my social impact objectives … in my local market," she said.
Ms. Saxe is not surprised the whole green bond market is exploding. "There are a lot of boomers who are concerned about the future and having to support ourselves for a long period of time, but who also do want to have a positive impact," she said.