by Amanda Bybee
One day in late 2013, Blake Jones was feeling disillusioned. As a cofounder of Namaste Solar in Boulder, Colorado, he was well versed in the world of solar finance. He couldn’t, however, seem to find a financing option that was both aligned with his company’s values AND that offered competitive terms in the solar market. And so he began researching the possibility of simply opening a financial institution himself.
After looking into starting a loan fund or a bank, he became very excited about the credit union model.
Credit unions are democratically owned, nonprofit financial cooperatives that serve an identified community. They provide a vehicle for members of that community to pool their money and then use it to make loans to other members. The appeal of the cooperative structure was strong – having started two other coops, he could personally attest to the merits of the model.
"Namaste Solar became an employee-owned coop in 2011, and it has been very successful for us. We believe that having an ownership stake in the company results in our employee-owners being uniquely motivated to provide great customer service and workmanship," he explains. "Similarly, when we cofounded the Amicus Solar Cooperative, we found that our success stemmed from the fact that the other solar companies that joined were aligned with its mission and its democratic ownership structure."
As Blake tells it, Amicus has become more than just a way to aggregate members’ purchasing power. It is a forum where members share best practices and strengthen partnerships with one another around the country.
"There’s something to be said for the value of sharing an ownership stake and having a democratic voice in an organization that you care deeply about," he says. "We wanted to apply the same concept to the new financial organization."
Building the Team
Blake approached other solar companies in Amicus with the idea, and they too were excited. Sun Valley Solar Solutions (Arizona), SunCommon (Vermont), Technicians for Sustainability (Arizona) and Third Sun Solar (Ohio) climbed on board, and the steering committee was launched.
Founding members (from left, back row): Duane Peterson, SunCommon; Kevin Koch, Technicians for Sustainability; James Moore, SunCommon; Blake Jones, Namaste Solar. Front row (from left): Russ Patzer, Sun Valley Solar Solutions; Amanda Bybee, Namaste? Solar; Michelle Greenfield, Third Sun Solar; and Stephen Irvin, Amicus Solar Coop. Image: Brian Gately.
The first order of business was to find a willing partner, an organization whose values were aligned with this concept, and whose members would serve as the official "field of membership" of the credit union. Unlike banks, credit unions don’t serve the general public. They serve specific communities of people.
When the steering committee started brainstorming, the American Solar Energy Society (ASES) rose to the top of the list. ASES’ mission is to "inspire an era of energy innovation and speed the transition toward a sustainable energy economy," and the Clean Energy Federal Credit Union intends to do both.
"We are very excited to partner with the credit union," said Carly Rixham, executive director of ASES. "We feel strongly that there is a need to provide financial resources to consumers who wish to install solar PV and other clean energy technologies, and the new credit union will offer a new and valuable benefit to our membership."
Democratizing Solar Financing
The idea is straightforward – every dollar that a member deposits in the credit union will go toward helping another member finance a clean energy product or service.
The credit union will:
- Provide affordable loan terms for clean energy purchases that are better than other loans on the market today for solar PV, electric vehicles, etc.
- Offer federally-insured investment opportunities in clean energy, which are less risky than other investment products on the market today
- Provide these services as a nonprofit, cooperative financial institution that serves its members and will remain dedicated to its mission over the long term, as opposed to a bank, which serves its stockholders.
"If solar is the key to democratizing our electricity, then credit unions are the key to democratizing financing," says Duane Peterson, co-CEO of SunCommon in Vermont. "We are committed to the idea of building a credit union that will outlast all of us and serve as on ongoing source of financing. Our mission is to tear down the barriers to renewable energy and the credit union will do that."
Blake Jones is also excited about another important aspect of the credit union. "Many clean energy investment opportunities that I come across require you to be an accredited, or relatively wealthy investor who understands the crazy dynamics of the clean energy market and also has the expertise to research and understand the risks associated with those opportunities."
In contrast, with low minimum account balance requirements that are federally insured, participation in the credit union will be open to all people across the economic spectrum – from well-to-do investors to "Main Street" investors – without the need for specialized, financial due diligence.
To join the credit union, you will have to be an ASES member. When the credit union is chartered, you will be able to sign up online for a savings account or "share account," where you purchase an ownership stake in the coop for a nominal amount (usually $5-$25). As a member-owner, you’ll be able to take out loans, make deposits, and vote for the board of directors.
Adopting a lean operational model, there will be no brick-and-mortar offices – it will be online-only, with phone and other services to assist members with questions and transactions. Initially, it will offer savings accounts, CDs, a variety of loan options, and online banking.
"Working closely with Amicus members, I can attest to the high demand for solar loans. Member companies will sell about $70 million in residential PV systems financed through loans in 2015," says Stephen Irvin, president of Amicus Coop. "Loan demand is likely to exceed the credit union’s capacity for the first few years."
"Impact investing is a growing field in the investment world," says Kevin Koch, CEO of Technicians for Sustainability. "The Solar CDs the credit union will offer may be the only product out there to exclusively support clean energy and carry the backing of the federal government. The potential for this low-risk product has attracted the attention of the growing number of impact investors who want to put their money into values-aligned organizations and get safe, market-based returns."
There are more steps to go, but the steering committee is optimistic they can obtain charter approval this year and open the doors in early 2016.
Questions? email firstname.lastname@example.org.
This article first appeared in Solar Today, May/June 2015.
Read our article, Credit Unions Across US Finance Residential Solar.