A solar club provides ownership potential for people who do not own their own homes, have suitable roof space on which to erect solar panels, or who lack significant capital to invest. The Haydern Solar Club in a suburb of Munich, provides local residents the chance to participate in renewable energy generation.
The club works like this: citizens pool small investments and then invest in solar arrays located on the roofs of local, public buildings. The minimum investment is 1,500€, which equals one share. A conservative estimate of investors’ average rate of return is 5%. Investment of the same money in a German mutual fund might earn 7-8%, but as Eugen Kunze of the Haydern Solar Club says, climate protection is the goal, not maximizing the rate of return. The number of investors per installation ranges from 10 to 40. All solar arrays are roof-mounted on public buildings to prevent legal issues should the building owner change hands. Since inception in 2002, a total of 35 projects have been realized under the Haydern Club’s umbrella, with a total installed capacity of 1MW.
The average investor is middle-aged or retired. It is not uncommon for a grandmother to make the investment in the name of a grandchild as a gift. Investments in solar clubs are also tax advantaged. “We’ve found that once someone makes an investment and becomes a member of the club they are really activated for climate protection. One roof becomes not enough and they want to own a share in another roof,” reports Eugen. Kunze.
The maximum investment is 10 shares or 15,000€. According to Mr. Kunze, “We don’t want people with thick wallets coming in and making the whole investment themselves.” To this end, more than 50% of the participants contribute one to two shares. Shares are not managed with elaborate software, but rather an Excel spreadsheet. The investment functions like a life insurance policy payment, returning monthly principle and earnings payments. The term of ownership is limited to 20 years, reflecting the term of the German feed-in-tariff remuneration schedule; thus a portion of principle must be returned with every interest payment. The club carries a 5M€ insurance policy on each solar installation. The insurance protects against risks to people or property as well as protection from hail, lighting, vandalism, etc. The organization is administratively light, run by a 5 person Board of Directors, with an elected president per installation.
Mr. Kunz emphasizes the role of the German Feed in Tariff. Because of this financial policy, the rate of return on even micro investments is economical. What is a Feed in Tariff?
Many people are on the waiting list to invest, so the club has plans to install a 2 Megawatt greenfield array. Greenfield solar arrays are controversial in Germany, given the potential for arable land to become more attractive as solar fields rather than cultivated agriculture. To prevent a food vs. fuel scenario, some regions of Germany prohibit greenfield development. The Haydern club recommends public buildings like local schools or city halls.
The Solar Club concept has expanded to other German cities including Hannover, Berlin, Kiel and Saarbrücken. The Hannover Protestant church community was among the first to adapt the model, and other church communities have raised solar clubs among their congregations.
Whenever a new solar installation is officially opened the ribbon cutting ceremony is instead an Einspeisungsfest. In German, Einspeisung is a play on words between the term for feeding electricity into the grid, and the formal word for eating. The chance for member owners to come together and eat foods from the region underscores the community purpose and path to realizing a solar club.
Marienkoog, in North Germany, offers an example of a citizens’ Wind Club. The wind developer offered 1/3rd of the shares in the wind park to locals; 240 residents invested €5 million -- representing 40% of the district’s adult population. It is proven that enfranchising local citizens reduces resistance to new projects dramatically.
In Carbondale, Colorado, the Clean Energy Collective innovates on the club model, with an ownership structure that offers micro-investment opportunity for citizens, while passing along tax credits and rebates, providing access to bulk purchase of solar panels, and a maintenance contract — yet providing investor autonomy unlike the solar club model. CEC investors receive a direct credit on their electricity bill, proportionate to their investment and the solar electricity generated. Cooperation between CEC and the Holy Cross Electric negotiated a credit at a premium to the standard residential rate to participating citizens. The minimum investment is $3.50 per Watt, and includes an iPhone app to monitor the electricity produced. Their first initiative is a 77 kW project sited adjacent to a water treatment facility. Prospective sites for expansion include a nearby airport and former landfill.
