They knew the zoo was interested in building a biogas facility that could turn manure from elephants, giraffes and other animals into renewable electricity and heat. They also knew that after several years of trying the zoo, despite its good intentions, couldn’t make it happen. The project it envisioned was simply too complex and risky for commercial investors.
Bida proposed a new approach: build a smaller, more manageable facility and open up investment to the broader community through the issuance of bonds.
He was inspired after watching Toronto’s Centre for Social Innovation (CSI) purchase and retrofit a building using $2 million it had raised selling community bonds at $10,000 apiece. The bonds, which could be purchased by anyone, offered a 4 per cent annual rate of return over five years and were RRSP-eligible.
If the banks wouldn’t lend the money to a not-for-profit organization like CSI, then individuals who support the organization’s mandate just might. Tapping into CSI’s “social asset” proved a good gamble, as the community was quick to scoop up the bonds.
“This told me that the whole community bond thing was for real,” say Bida, convinced he could adapt the approach to support renewable-energy projects.
The zoo executives liked the idea and several months later Bida helped form the ZooShare Biogas Co-operative, a not-for-profit community co-op that plans to build a 500-kilowatt biogas plant at the zoo for about $5 million.
Electricity from the plant will be sold into the grid under the province’s feed-in-tariff program, while waste heat could end up being pumped into a nearby greenhouse, potentially used to grow bamboo for the new pandas expected to arrive in 2014.
About 70 per cent of the project, or roughly $3.5 million, will be funded through the sale of community bonds that, like the CSI bonds, could be purchased through a self-directed RRSP. ZooShare hopes to offer bonds with a seven-year term and up to a 7 per cent annual return on investment.
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For existing zoo members and those living within one kilometre of the zoo, the bonds will be sold in $500 units. Everyone else can pick them up for $5,000 each, unless they want to purchase a zoo membership. “We’re hoping this will sell more memberships for the zoo as a result,” says Bida, whose company ReGenerate Biogas is managing the project.
ZooShare is just one of several co-op ventures going the community bond route to raise capital for renewably-energy projects. Others include Options for Green Energy, SolarShare and WaterShare.
Their approach represents a low-risk investment for people who want to support “green” community projects and make some money, but who don’t want to spend thousands of dollars putting solar PV systems on their own rooftops.
It also offers a way for those without property, such as renters, or without the proper land or rooftop exposure, to participate in the feed-in-tariff program. Community bonds, in essence, make the FIT program more inclusive and get the broader population directly invested in their energy future, be it solar, wind, biogas or hydro.
“This idea of massive public involvement in the ownership and economic benefit of these projects is what we’ve all been working towards for the past 15 years,” says Deb Doncaster, executive director of the Community Power Fund, which supports community co-op projects with grants and low-interest bridge financing.
“All it will take is for one or two of these projects to be successful and the approach will take off.”
Social media will certainly play a role. Facebook, Twitter and other social networking applications make it much easier for community co-ops to reach out to supporters. Spreading the word to the right people has become almost effortless.
Still, a couple of barriers need to be overcome before you or I can purchase such bonds. For one, RRSP-eligible community bonds must be approved and registered with the Financial Services Commission of Ontario before they can be sold. Some say the commission is dragging it feet.
SolarShare, for example, wants to issue community bonds in $1,000 increments that would offer a 5-per-cent return annually and be redeemable after five years. The funds raised from the bond issue will support construction of solar PV projects across southern Ontario.
It’s all new territory for the financial services commission, which has proved a major bottleneck. “They’re tight on the resources needed to deal with this new landscape,” says Matt Zipchen, who as project manager for the Toronto Renewable Energy Co-operative is overseeing development of SolarShare.
Zipchen says another roadblock is the banks. “These community bonds may be RRSP-eligible, but whether or not your bank will let you hold them is another question,” he says. “Banks are finicky about them. We’re just starting the process with the banks to see which ones will hold these bonds and which won’t.”
It will all get sorted out over time. Indeed, all it will likely take is for one big bank to break from the pack before others start to follow.
If demand for community bonds is high enough, that will likely happen. That’s what SolarShare, ZooShare and others are counting on.
Tyler Hamilton, author of the upcoming book Mad Like Tesla, writes weekly about green energy and clean technologies. Reach him at firstname.lastname@example.org