introduction to the green energy co-operative of...
TRANSCRIPT
Introduction to the
Green Energy Co-operative of Ontario
November 1, 2012
Introduction to GECO
The Green Energy Co-operative of Ontario Inc. is a renewable energy co-operative incorporated under the “Co-operative Corporations Act” in Ontario.
The mandate of the Co-op is to marry solar projects that are currently under development with community investor-members that reside in the same municipality as the project.
GECO was started by employees of Spark Solar in an effort to provide professional management to attract quality projects to the community investor-members of GECO.
First, Some History…
Who is Spark Solar?
Spark Solar is an Ontario developer of renewable energy projects with a focus on developing co-ops and community power projects. The three community projects that Spark Solar currently manages are:
1. AGRIS Solar Co-operative
Over 1,000 Ground Mount MicroFIT projects (10 MW)
2. Sunny Shores Solar Project
10 MW Ground Mount Solar Farm
3. Green Energy Co-operative of Ontario (GECO)
Recruiting for members in Hamilton, Halton and London
Partnering with developers in the same municipalities to bring projects to the co-op
In 2010, Spark Solar joined forces with AGRIS co-operative, an 80+
year old agricultural co-operative, whose members wanted to
participate in the OPA’s FIT program. Spark Solar assisted AGRIS’s
members by forming AGRIS Solar Co-operative.
Spark Solar History AGRIS Solar Co-operative
AGRIS Solar Co-operative itself has no employees. It is managed by Spark Solar under a management agreement. Under this agreement, Spark Solar has:
Funded over $1.5 million in start-up costs
Managed the Co-op’s Offering Statement submission to Financial Services Commission of Ontario
Raised $15 million from members and $45 million from lenders
Completed all FIT and other regulatory requirements
Managed all construction of projects
Managed all business of the Co-op
Spark Solar History AGRIS Solar Co-operative
Management Contract
750 Co-op Members
$15,000,000 in Equity Raised
100% Member Ownership
10.8 MW of MicroFIT Projects
Spark Solar History AGRIS Solar Co-operative
Farm Credit Canada
$45,000,000 in Debt Provided
The 10MW Sunny Shores Community Solar project has a FIT 1.0 contract with the OPA. The project is located in Prince Edward County, Ontario. Spark Solar has:
Funded all development costs
Managed all development efforts including:
Land acquisition and negotiation
All OPA contract requirements
Environmental Approvals
Contract negotiations for $30 million of Equipment and Construction
Securing financing for project
Source: Natural Resources Canada
Transmission Station
Project Location
Project Location
Spark Solar History Sunny Shores Project
…Now the Present…
Why are Renewable Energy Co-operatives So Important?
On August 10, 2012, the Ontario Power Authority released the new rules for their Feed-In-Tariff program (FIT 2.0). The FIT program provides generators of renewable energy with a 20 year fixed price contract to sell electricity to their local utility. In the new rules, the OPA states:
“The OPA encourages Aboriginal, community, school, hospital, university and similar institutions’ projects under the FIT Program and these rules provide incentives for projects involving such groups.”
These incentives include:
1. Setting aside grid capacity for community projects
2. Granting “points” that improve the odds of getting a FIT contract
3. Reducing the fees required to submit an application
As a result of these “Incentives”, developers in the solar marketplace are looking to partner with co-operatives that have the ability to finance the 50% equity required to get their applications to the “front of the line” via the OPA’s Set-Aside program under FIT 2.0.
Why are Renewable Energy Co-operatives So Important?
The Set Aside Opportunity:
OPA has set aside grid capacity for community projects
Developers can partner with Co-ops or Aboriginal groups to access this Set-Aside capacity
The Set-Aside Rules:
Co-ops must have >50% “Direct Economic Interest” in projects
A Co-op must have at least 50 members that are property owners in the same municipality as the project
...And the Future…
Green Energy Co-operative of Ontario
GECO was formed to take advantage of the opportunity created by the community rules outlined in FIT 2.0. GECO provides:
Professional Management
Good Returns
A say in how things are done (One Member/One Vote)
Access to Developers
Developers’ and Spark’s buying power
Ability to raise money from the “local” community as well as from across Ontario
Green Energy Co-operative of Ontario
The Seven Principles of Co-Operatives
1st Principle: Voluntary and Open Membership (All Welcome – no pressure)
2nd Principle: Democratic Member Control (One member = one vote)
3rd Principle: Member Economic Participation (No free rides)
4th Principle: Autonomy and Independence (Self‐control, no parents)
5th Principle: Education, Training and Information (Share, Learn, Grow)
6th Principle: Co-operation Among Co-operatives (Together Everyone Achieves More)
7th Principle: Concern for Community (Building strong communities)
Anticipated Timing of Events
1. GECO recruits 50 members in each of several municipalities
2. GECO forms partnerships with developers
3. GECO submits applications for FIT 2.0 contracts
4. GECO submits offering statement to FSCO
5. Contracts awarded by OPA for FIT 2.0 projects
6. GECO obtains “receipted” offering statement from FSCO
7. GECO presents opportunity for preferred share investment
8. NTP for projects is granted and construction begins
9. GECO Annual General Meeting
10. Commercial operation of projects commences
Oct/Nov 2012
Nov/Dec 2012
Dec/Jan 2012/13
Mar 2013
June 2013
July 2013
Aug 2013
Oct 2013
Nov 2013
Mar thru Dec 2014
Items Involving all membership
Green Energy Co-operative of Ontario - Structure
Management Contract
Green Energy Co-operative of Ontario
Currently forming JV’s and LP’s with Developers
Currently recruiting members in London,
Hamilton, and Halton*
100% Member Ownership
*Members can be from anywhere in Ontario, but we specifically require 50+ members from the municipalities where we have projects
Comparison of Cumulative Cash Flows for a $1,000 Investment
$1,380
$2,000
$2,453
$1,953
$-
$500
$1,000
$1,500
$2,000
$2,500
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Year
GIC
TREC
GECO (10%)*
GECO (7.5%)**
Payback of Original $1,000
*It is expected that GECO Preferred Shares would return between 9 and 11% ** GECO’s returns would have to drop to 7.5% to match returns of similar investments
Today’s Activity (Cheap and Cheerful)
What Are We Doing Now
Signing up members to meet the OPA’s 50 land-owner members per municipality rule Sign Statutory Declaration
stating that you are a property owner
Filling out a membership application
Paying $10 for membership share
What Are We NOT Doing Now
Taking risks Spending money Making investments Committing any additional funds Creating any future obligations
There is NO Obligation to do Anything or Invest Anything Beyond the $10 Membership Share