Tag: Impact Investing

Over the last several years, I have realized that there has been a compelling shift in the minds of investors in our business.

Historically, most investors wanted to know the numbers. What would be the return on their investment and how soon would it happen? But more and more, I meet people who are asking about impact, not just dollars.

The momentum of that sea change hit home this spring when we met new investors, a couple. They were mission-driven. They wanted their money to have a measurable impact on the world.

From the first days of our courting this couple, we focused on why we do what we do.

For a decade, our company has acquired land for large wind and solar projects, often leasing it to developers for 30 years or more. We do that by selling shares to people excited about investing in land for wind or solar projects.

We pointed this couple to the impact of clean energy. We explained how it’s more efficient to invest in large-scale solar utility projects, than to convert individual houses to solar. We noted that an investment of $100,000 is the equivalent of converting 41 houses to clean power. We pointed to studies showing that renewable energy generates more jobs per megawatt than traditional energy. We explained that it displaces the carbon equivalent of driving 86 cars annually.[1]

They wanted to know the story of our company, asking questions about us personally and professionally. Our passion and our commitment, it seems, were also a selling point. And, yes, we outlined the financials of our fund, how land leases from clean energy projects pay high rates for a long time.

Today, we told them, doing right and making money are not-so-strange bedfellows. They became one of our largest backers, choosing to invest in their ideals.

For us, that story is symbolic of the change in our industry. As the threat of climate change becomes ever more pervasive in daily life through intense storms, droughts, wildfires, and heat waves, we’ve found backers who want to see real-world changes.

They’re investing with their hearts as well as their minds. They are looking to the future or, more accurately, looking to preserve a future for their children and grandchildren. They are turning their backs on dying industries like coal, oil, and gas. They are not alone. According to a 2016 USSIF report, impact investing grew a staggering 33 percent from 2014 to 2016.[2]

The investors who joined us this spring represent the present and the future. Companies, both public and private, money managers, policymakers and investors who have failed to see this shift, are already being left in the dust of the past, the dust of mountaintop strip-mining and red-dirt drilling.

Renewable energy is mainstream. Finally. Renewables were the most-added source of new generation in 2017.[3] In an increasing number of regions, clean energy is the cheapest source of new electricity. Confidence in the clean energy sector can be seen in the large commitments made by major banking institutions.

We’ve known this was coming. Now, the public — and our investors — are grasping the reality of a renewable energy future. Rooftop solar panels are commonplace and are required on new homes in some California cities. The rise of the electric cars by Tesla and even more surprisingly by auto behemoths like General Motors with the Volt, speak volumes about where fossil fuels are headed. Solar photovoltaic installers and wind turbine service technicians have become the nation’s two fastest-growing occupations. Even the military looks at a low-carbon future as a security issue. The European Defense Agency [4] cites reducing greenhouse gases as “vital” while a Pentagon report [5] says that more than 50 percent of U.S. strategic sites are threatened by climate change.

It has been a long road for us. John Copyak [6], our founder, saw the necessity of transitioning from fossil fuels and the promise of investing in land long before others did. We signed our first wind power lease in 2007. The financials have always been in our favor. Solar leases pay from 20 to 30 years and wind leases typically pay for nearly 35 years. Return rates are 5 percent before projects are built, but ramp up to 12-18 percent in the power-producing years. These things have been true for years, but old money has continued chasing old ideas.

The perceptions of clean energy investing went through some tough years with high-profile bankruptcies and the turn towards fracking with the dubious claim that natural gas was environmentally friendly. But the economics and a broad understanding of the dangers of climate change have won over investors.

People up and down the ideological and socioeconomic ladder are backing our funds. Among our investors, we count individuals with deep family roots as coal executives. The U.S. energy tradition has been one of family legacy and honored history. We, too, have relatives who worked in the coal mines for decades.

When John founded Clean USA Power, he realized there was a problem — human-induced climate change — and he had the skill in real estate to be part of the solution. We are experts at pulling together the pieces of a land puzzle that make wind and solar projects reality. Our developer partners trust us to deliver. Our investors know we don’t rely on tax incentives. We’re well beyond the early fringe adopters’ phase. Ours is a business on solid footing.

There is no simple fix for our energy future. Climate change will force a new economic reality on the energy industry. The grid of tomorrow will be smart and dynamic, responding to demand through artificial intelligence (AI). When your phone is the guidance of AI-powered systems, electricity can be redirected from an electric car battery to power your home while you sleep. Your smart device will know your schedule, ensuring the car will be fully charged before your next use. You’ll never know the difference.

Global strides through the Paris Accords and other agreements will propel us toward a sustainable 100 percent renewable reality by 2050. The state of California has mandated 50 percent renewable energy by 2030 and a bill requiring 100 percent renewable by 2045 was recently signed California’s Governor Jerry Brown. These policies are powerful, but our power demands won’t end in 2050.

We are moving towards a global civilization that will harness all of the energy hitting our planet from our closest star, the sun. We are not close now. But if we can focus our thirst for innovation and discovery, we’ll be there before the century’s end.

The rapid changes of the past few years have made me optimistic. We’re riding the momentum of a clean-power rocket that can’t — and won’t — be stopped.

Article by Maxwell Roe, Business Development, Clean Power USA (cleanusapower.com). Mr. Roe is passionate about the renewable energy transition as an effective way to combat climate change. He has worked in property management and real estate for 8 years and is an expert in communication, business strategy, and negotiation. Maxwell loves doing anything outdoors with his wife and dog. He is an avid mountain biker who can usually be found out on the trails in Bend, OR.

Article Footnotes:

[1] www.linkedin.com/pulse/how-we-discovered-3-big-impacts-our-solar-wind-real-estate-roe

[2] www.ussif.org/trends

[3] about.bnef.com/blog/sustainable-energy-america-factbook-2018

[4] www.eda.europa.eu/docs/default-source/news/military-green-leaflet.pdf

[5] www.reuters.com/article/us-usa-climatechange-military/climate-change-threatens-half-of-u-s-military-sites-pentagon-idUSKBN1FK2T8

[6] cleanusapower.com/about

The existing extractive energy economy isn’t working. Our dependence on coal, oil and gas contributes to global warming, the physical destruction of communities and pollution-related health issues which impact all of us – and disproportionately affect low-income people and communities of color. It’s not sustainable. And it’s fundamentally unjust.

At Sunwealth, we believe the future of energy is decarbonized, decentralized and democratized. We invest in that future by financing diverse renewable energy projects that reduce greenhouse gas emissions, strengthen local resilience and bring the benefits of renewable energy to under-served communities. Since 2014, we have financed over 70 solar installations on rooftops and open spaces across our communities. Our investments bring critical capital to the commercial solar market – supporting smaller-scale solar projects ranging in size from 5 to 500 kilowatts. These are the buildings and spaces you see as you walk through your neighborhood: schools, houses of worship, child care centers, fire stations and local businesses; apartment buildings and rooftops of low- and moderate-income homeowners; and underutilized brownfields, parking lots and odd-shaped parcels ill-suited to development.

Institutional capital has neglected this market, seeking out large utility-scale transactions and aggregations of residential installations in affluent communities with high credit scores which are easier to underwrite. Their focus has created “solar deserts” among the very populations who could benefit most from clean, affordable electricity, including low-income residents, nonprofit organizations and municipalities.

We provide these consumers with clean, locally-generated energy that offers significant savings on their electric bills. Our investments create green jobs with local solar developers, whom we contract with to maintain these projects long-term. Located across our neighborhoods and business districts, our projects provide visual testament that all of us can contribute to the fight against climate change.

Sunwealth has attracted investment from over 100 investors – individuals, families, foundations, endowments, intermediaries and corporate investors looking to invest in a renewable energy future that benefits us all. Our Solar Impact Fund provides them with fixed-income returns in a non-correlated alternative asset. Investors know what projects they’re invested in and can track their investment’s financial performance and its impact in terms of carbon reduction, energy savings and jobs created. Moreover, they know their investments are regenerative rather than extractive, contributing to a more just, sustainable and inclusive energy future.

The Future of Energy is Decarbonized…

Our partners – investors, solar developers and the individuals, organizations and businesses who lease us roof space and purchase our power – understand that the future of energy is de-carbonized. They know that renewable energy improves air quality while helping address global warming, and that solar provides a proven, efficient and durable alternative to fossil fuels. Since 2010, solar installation costs have fallen 70 percent, while installations themselves have grown at an annual rate of nearly 60 percent.[1] According to the U.S. Department of Energy, nearly 350,000 Americans work in solar power generation – more than in coal, natural gas and oil combined.[2]

Sunwealth’s investment makes it possible for our partners to participate in our transition to a clean energy economy. In Somerville, MA, for example, we’ve partnered with the City to help them achieve their sustainability goals and reduce energy costs. Here’s how we do it: We use capital from investors to secure long-term rooftop leases and install solar panels on the rooftops of apartment buildings and local businesses like cleantech incubator Greentown Labs [3], providing rooftop rental income that improves their financials. We partner with local developers like United Solar, founded by a Somerville High School graduate, to install and maintain the projects, ensuring that jobs and revenue remain in the region. We sell the energy credits for the power we generate to the City to offset energy consumed by City facilities. Finally, our investors get repaid as customers pay their electric bills. A virtuous circle.

The Future of Energy is Decentralized…

We envision a future where rooftop- and ground-mounted solar installations across a community act as mini-power plants, contributing energy to the larger grid and storing that energy for future use. Puerto Rico’s experience with Hurricane Maria highlighted how vulnerable a community can be when it relies solely on an aging and centralized power infrastructure. Distributed renewable energy systems can help a community weather a storm and bounce back more quickly from natural disasters. They strengthen long-term resiliency while providing near-term savings and clean, affordable power.

Moreover, small, distributed solar installations are critical to reducing our dependence on fossil fuels. According to the National Renewable Energy Laboratory, rooftop solar installations have the potential to generate close to 40 percent of the nation’s energy. Installations on small buildings (<5000 square feet) represent close to two-thirds of that overall rooftop capacity.[4]

For investors, a decentralized energy future doesn’t need to be a complicated one. Sunwealth aggregates these smaller installations into portfolios that mimic the size and performance of a utility-scale project. These portfolios offer diversification across a range of building types, geographies and off-taker types, reducing overall investment risk. The economies of scale we obtain allow us to make solar accessible to groups who otherwise wouldn’t be able to afford it.

The Future of Energy is Democratized…

We believe renewable energy can and should benefit all communities – not only those who can afford the upfront installation costs. These costs are often a barrier to low- and moderate-income individuals and to nonprofit organizations, houses of worship and municipalities. These individuals and entities are in many cases unable to take advantage of tax credits and subsidies designed to make solar more affordable, creating an even larger gap between solar “haves” and “have nots.”

Sunwealth’s model helps address this inequity by connecting community-based solar projects with investors. We partner with on-the-ground developers who help us identify strong projects and work with community organizations from conception through installation. Our projects undergo a rigorous underwriting process to ensure they meet the highest quality standards and provide consumers with savings of 15-30 percent on their monthly electric bill. We also rigorously underwrite our power purchasers, paying attention to long-term viability and as well as ability to pay. We are investing for the long haul in projects and partners who will be here for decades to come. Investors have the opportunity to invest directly through our bond and tax equity offerings.

This innovative structure allows us to bring renewable energy to solar deserts. In Holyoke, MA, we turned a two-acre vacant parcel sandwiched between turn-of-the-century manufacturing buildings into a solar installation providing clean, affordable power to Holyoke Housing Authority residents for the next 20 years. [5]

The Future of Energy is Ours to Create

Sunwealth’s vision of the future of energy has attracted attention. We are poised to invest over $12 million in solar energy and storage projects in 2018, more than double our 2017 investment. We have a 2019 pipeline of over $40 million in new solar projects that will provide 20 megawatts of solar power across 50 communities, generating lifetime energy savings of over $30 million.

The future we are investing in fights climate change while promoting ecological preservation, community resilience and social equity. It generates powerful returns for our communities, our local economies, the environment and our investors.

The way we see it, this future is bright.

For more about our company:

Call (617) 714-9717 or Email – hello@sunwealth.com

Visit our website – www.sunwealth.com

Solar Impact Fund – www.sunwealth.com/featured-investments

Article by Jess Brooks, Chief Development Officer at Sunwealth, where she helps investors put their money to work building a more just, sustainable and inclusive energy future. Prior to joining Sunwealth, Jess was a Senior Vice President at Boston Community Capital, a national community development financial institution (CDFI) where she helped grow assets under management from $60 million to over $1 billion, leveraging over $5 billion in public and private investment in under-served communities nationwide; she has also worked as a director of online communities at The New York Times Company, in technology sales and as a securities trader on Wall Street.

An active civic leader, Jess serves on boards of Generation Citizen Massachusetts and First Teacher, and chairs Brown University’s Advisory Council on Relations with Tougaloo College, a historically black college in Mississippi. She is past chair of the boards of The Food Project, Cascap and Social Venture Partners Boston. Jess holds a BA from Brown University. She and her family live outside Boston, MA, where they enjoy kayaking on the Charles River and going to Red Sox games, especially in October.

Article Footnotes:

[1] www.seia.org/us-solar-market-insight

[2] www.usenergyjobs.org

[3] www.sunwealth.com/blog/2018/5/31/connected-by-the-sun

[4] www.nrel.gov/docs/fy16osti/65298.pdf

[5] www.sunwealth.com/blog/2018/1/24/going-the-extra-mile-for-impact-in-holyoke

A recent article in Bloomberg New Energy Finance predicts that two-thirds of the world’s power will be generated by renewable resources by the year 2050. This projection is based on the continuing growth of new renewable power generation projects, primarily wind and solar, over the next thirty-plus years. Conditions have certainly changed since New Alternatives Fund entered the investment world in September 1982.

When New Alternatives began operation as the first mutual fund concentrating on what was generally called “alternative energy,” the sector was seen as a niche area. Socially responsible investing was still a relatively young concept. Investment professionals were still skeptical about the idea that principles, human values, the environment and other non-financial metrics factor in their business decisions. There were concerns about “energy security” growing out of the economic disruption caused by the OPEC oil boycott in 1973. In addition, there was a growing consensus that damage to the environment could have a negative effect on the general health of populations and economic growth.

The publication of Rachel Carson’s Silent Spring in 1962, which raised awareness of the damage that widespread pesticide use was causing, created a wider concern about water and air pollution. This sensibility eventually led the U.S. Congress to pass the Clean Air Act in 1963 and the Clean Water Act in 1972, mandating controls on waste materials that were being generated by mining, manufacturing and power generation and dumped in waterways and in the air. These laws also put limits on the amount of dangerous emissions from cars and other transportation. The Environmental Protection Agency (EPA), created under President Nixon in 1970, oversaw the enforcement of most of these regulations. But the broader concept of an emerging challenge of “climate change” was not generally part of the public consciousness as yet.

During this same period, however, the science and awareness of the larger issues involving carbon emissions and the long-term effects on the world environment were growing and would come to bear on how we viewed the total costs of energy. The United Nations Environment Programme (UNEP), starting in 1972, worked on providing support to countries around the world, with an emphasis on developing nations, to create energy plans based on systems that reduced the carbon emissions they produced. The UNEP would eventually create the Intergovernmental Panel on Climate Change (IPCC) in 1988, to provide scientific research on climate change causes and effects and promote wider introduction of clean energy production.

Hydropower for electric generation was well developed and broadly used. But solar power, in the form of photovoltaic cells and direct solar heating technology, was still mostly the province of “off grid” simple living pioneers and a few developing nations that lacked wider power infrastructure. Wind turbines were still relatively small scale, generating, on average, several hundred watts (kw) of electricity. In response to the 1973 oil crisis and the increased cost of oil and gas, the U.S. government increased funding for renewable energy research and development. As a result, more efficient and powerful turbines were designed and the first wind farms were created in the U.S. and Europe. But as late as 1981, one year before New Alternatives Fund opened, there were still only two wind farms in the U.S., generating about 10 megawatts (mw) of electricity, enough to power just over 8,500 homes. In the early 1980s, as oil and gas prices came down, solar and wind power development declined because they were now economically noncompetitive.

Governments around the world, primarily in Western Europe, Japan, South Korea, Canada and, to a lesser extent, the United States, began funding renewable energy development and enacting policies that supported the introduction of renewables into their power and transportation systems. New technologies, many with government support, improved the efficiency of wind and solar power systems, energy storage capacities and energy efficiency to the point where, today, most renewables can compete economically with fossil fuel energy generation. Considering the “externalities” of the existing power system and the growing concerns for the health and future of the world’s environment, renewable energy has emerged as the way forward. Or so it would seem if science and logic were universally applied.

New Alternatives Fund’s approach has always been to consider the broad sector of energy and related environmental areas like clean water, clean air, and naturally grown and organic food. Energy is not just the production of electric power. Conservation and efficiency play major roles in the future of the world’s energy. As populations grow and more people move to a higher standard of living, we will face greater energy demands. One of the most important trends in recent years has been the advancement of technologies that produce units of energy more efficiently, whether it is larger wind turbines being developed by Vestas Wind Systems of Denmark, more efficient solar modules from First Solar, lighting systems from Signify NV of The Netherlands or building energy management controls from Ingersoll-Rand PLC of Ireland. The ability to “do more with less” is an important aspect of the future of renewable energy.

But the path has, obviously, not been so straight. Human beings are not always rational actors. The entrenched economic interests of the existing power systems, coupled with the enormous expense involved with creating an entirely new structure for humanity’s growing power demands, has led to a back-and-forth struggle that does not always reward the renewable sector. Like any other commercial enterprise, not every company will be well run or necessarily develop a successful product. The push-back from more conservative political forces has, at times, caused a financial retreat from renewables. Fortunately, we have weathered these storms and continued the growth and development of what must ultimately be the energy of the future.

Article by Murray Rosenblith, who has been the Co-Manager of New Alternatives Fund (www.newalternativesfund.com) since 2008. He has served as a Director of New Alternatives Fund since 2003. From 1985 to 2008, he served as Executive Director of the A.J. Muste Memorial Institute, a publicly funded charitable foundation which supported activist groups working for nonviolent social change. While at the Institute, he helped start and manage the endowment of an affiliated group and was a 20-year member of the Social Investment Forum. Prior to his position at the Muste Institute, he was an editor and business manager at WIN Magazine from 1974 to 1982. Murray has been an activist and organizer in social justice movements for over 40 years. He received a B.S. in Journalism from Boston University.