ClearSky Solar Investments Ltd is a not for profit company that was established by the community environmental group Clean Energy for Eternity Inc to provide opportunities for community members to invest in solar power. The motivation for establishing the company was that there were many in the community wanting to invest in clean energy who did not have a suitable roof, or a roof of sufficient size. This assumption has been proven correct as we have no shortage of investors.
Clearsky is effectively a peer-to-peer lending broker. An end user is identified who want to benefit from solar power but, for whatever reason, does not want to make a capital purchase. ClearSky investors lend the money and have their capital repaid with interest via by selling the electricity generated by the system at an agreed price over an agreed term. At the end of the term the panels become the property of the end-user.
ClearSky thought hard and long about how to do this in a way that was sustainable in the long term and the answer they came up with was that we could best achieve our objective by working in close and exclusive collaboration with a carefully selected commercial partner. This has allowed them to develop streamlined administrative procedures which don’t have to be reinvented each project, and the volunteer component is easily within our capacity over the long term
What it is
Aims/values/purpose that underpin this model (strengths and benefits)
- Accelerate the uptake of solar PV in Australia. Provide a source of low cost finance for solar PV installations, thus eliminating profiteering by banks who might wish to exploit an individual’s desire to do the right thing. Provide individuals committed to cutting greenhouse gas emissions with the opportunity to shift their investments from fossil fuel to clean energy. Provide opportunities for local communities to invest in clean energy in their own community.
Technology (which one/scale/other technical details)
- Solar PV between 15 and 100 kW.
- System size carefully scaled to minimise export to grid.
- Energy generation data accessible over internet.
- Behind end-user’s meter.
Finances (where does the money come from, where does the money go)
- Money comes from community investors. Maximum of twenty investors. Offered first to immediate community and then to anyone in Australia. Money is used to provide a loan to our commercial partner to finance the installation.
Community (what makes this a community energy project?)
- The investors come from the community. ClearSky is a community based social enterprise.
Organisation (legal structure, decision making)
- A Trust and a Trustee company is set up for each projects. Investors purchase units in the Trust. ClearSky Solar Investments (CSSI) is a not for profit company limited by guarantee. CSSI contracts with each Trustee company to provide administrative services on a cost recovery basis. CSSI has three directors who act in the own right but in practice consult with the membership of the Northern beaches Chapter of the community climate change organisation Clean Energy for Eternity
- The CSSI directors are unpaid. They work closely with the MD of the Commercial Partner solar installation company about potential projects, negotiating the details of the end-user agreement and ultimately signing an agreement as directors of the trustee company covering the responsibilities of all parties, including the term and the price the end-user must pay for the energy generated by the system.
- The Commercial Partner takes care of installation, monitoring, maintenance and billing. ClearSky has a contract with each trustee company to undertake all administrative and compliance tasks including billing our commercial partner for energy generated, distributing the proceeds to investors according to their unit holding, keeping accounts, and submitting the annual tax return. To streamline operations two of the directors of each trustee company are also directors of CSSI.
What it isn’t
ClearSky provides finance for PAYG solar systems. The investors don’t own the installation. They simply provide finance to the partner installation company in return for specified $ amount per kWh for the energy generated by the system over the contract term.
What is this model most fit for purpose for?
Where a community organisation decides that its aims can best be met by partnering with a commercial organisation and where the intention is to get projects underway quickly and get an income stream coming in reliably to investors with a minimum of volunteer effort.
Essential requirements for viability
There is a balance to be struck between efficiency, which means concentrating decision making power and day to day management in a few hands, and community buy-in, which means giving as many in the community the opportunity to become involved in decision making. ClearSky needs a network of supporters to ensure that when projects come up, news of the investment opportunity can be spread as widely as possible. (It is not permitted to publicly advertise an investment opportunity as they are relying on an exemption in the Corporations Act which avoids the cost of obtaining a Financial Services Licence or the need to have a Prospectus formally registered.). This group is the larger community, but they have no role in day to day management. To keep the operation efficient they have a custom designed web-based administrative and records system and a small number of individuals who are well versed in its use. For viability we need ensure that on the retirement of one of our trained administrator there is always another fully trained an able to take over, drawn from our investor pool.
Constraints
Cash flow is a constraint. At present they don’t seek investment capital until it is needed, i.e. when the system is about to start routine generation. They thus have a short time to raise the capital. To date we overcome this problem by having a network of potential investors (those who have registered on our website) who we keep informed about upcoming projects. A member has agreed to take up in full each investment on a temporary basis so that funds are available to pay our Commercial Partner on completion of the installation. As funds come in from the permanent investors the temporary investor transfers their unit holding. then transfer their holding to each investor. This may not be viable in the long term.
Other constraints are that they work exclusively with a single commercial partner and as outlines above we may ultimately find it difficult to get investors given we cannot advertise. They have plans to speak at community groups when they need to to spread the word further about what we do and how to get involved.
How to utilise this model
See
What not to do
Don’t be tempted to add complexity. Keep things simple.
Key lessons from other groups using this model
Consider using ClearSky for your project rather than setting up an equivalent. The investors can still be local.
More Information
Website: https://www.clearskysolar.com.au/
Email: admin@clearskysolar.com.au.
Intellectual Property
The End User agreement and the design of the web based administrative system are the property of the Commercial Partner and ClearSky respectively.