Cooperative Ownership Puts Community Solar in the Community — Episode 94 of Local Energy Rules Podcast

Subin DeVar

The mission of the cooperative as a whole is to really enable a just transition to renewable energy that allows everyone to own and be involved in shaping energy future and really to tap into the broader benefits that come from the transition to renewable energy, beyond just the clean and green electricity.

John Farrell

What if the panels for a community solar project could be on the home rooftop of one of its members? Subin DeVar is the director of the community renewable energy program at the Sustainable Economies Law Center in Oakland, California. His organization provides the legal framework for community ownership, along with several partners. They recently launched the People Power Solar Co-op, the community solar project using residential rooftops. We discuss how this model breaks the barriers to community renewable energy and how it has the potential to scale up. I’m John Farrell, director of the energy democracy initiative at the Institute for Local Self-Reliance and this is Local Energy Rules, a podcast sharing powerful stories about local renewable energy. Subin, welcome to the program.

Subin DeVar

Thanks John.

John Farrell

So I am super excited about this. I’m a big fan of Sustainable Economies Law Center, especially Janelle’s illustrations that she puts together in your newsletter. But I really want to talk to you about this project because it really, it has a novel approach to community renewable energy. So as I was saying in the intro, most community solar is offsite. So when you subscribe to a project to share some of the energy from that community solar project, it might be on a local church or it might actually be out in a field of a farmer that’s not being used, several miles away. But this People Power Solar Co-op puts solar on an individual’s rooftop in an urban area. So could you describe this project for people? Like what was involved in it? Where is the solar and who are the people who are participating in it?

Subin DeVar

Yeah, just to give some context as well too. And that we went to this approach only because of challenges to having a community solar garden you might think of in other parts of the country and challenges to that in California. So that’s just some background and I’ll tell you a little bit more about this first project. So the People Power Solar Cooperative aimed to get around the barriers for communities to own and control renewable energy assets in California. The policies make it difficult to have an economically viable shared solar garden in California. So what we did was launch a process of reaching out to community groups, community members who are interested in more community ownership and control of energy and started this process of looking for potential sites for a, a net metering based project that could then be owned by the larger community. So what we ended up finding was a well known advocate in the labor justice and fights against fossil fuel movements in California. Someone named the lora jo foo, who was known in the community and most recently helping to fight a coal terminal from coming to Oakland. And she was interested in offering up her roof to the community for the community to own solar panels on her roof. And so her house, actually a duplex, is the site of the first project and the project itself was built, the solar panels were built and constructed by raising money through community memberships in the cooperative. And so we had about 50 community members buy membership shares of People Power Solar Cooperative, and through those membership shares raised the funds necessary to build that first project.

John Farrell

So I just have to ask one question in terms of the structure. So I, when I first read about this project being developed, loved to share it out on social media, pass it around. I also wrote back and said, Hey, can I subscribe as someone who lives in Minnesota but thinks this model is awesome? And I was told no, unfortunately it was only open to residents of California. So I know this probably gets into their weeds a little bit, but was hoping you could just talk about, why couldn’t somebody from somewhere else participate? Noting, of course that it’s exciting that we’re talking about it being community based. And maybe you didn’t want people from Minnesota to be sort of be jumping into it, carpet bagging or something, from a long way away.

Subin DeVar

Well it’s, it’s a good question and it really, it really hit the two main issues that really are at play with trying to build a community solar project wherever in any state, there are one of the two big legal and policy issues that you’re going to navigate are what are the energy regulations for building a solar project and then what are the financial regulations and securities regulations that you need to be aware of. And so one of the, the challenges for community ownership of projects is navigating securities regulations. And so what the project that we worked on, how it is structured to both work in the regulatory environment. So that first thing I mentioned is there’s no good shared solar policy. And so it’s built like a net energy meeting policies. That’s how we navigate that first issue. But then the reason why it’s limited to California residents is that California has certain policies. Um, and, and various States have policies like this that apply just to cooperatives. And so in California there is a form of entity called the cooperative corporation and AU membership shares in a cooperative are exempt from the more onerous California state regulations. Um, and then navigate federal regulations. It’s also possible to ensure that your, your project is limited to within one state and that’s one way to qualify for a intrastate exemption for federal securities. And so that’s, that’s sort of the short the story of applied structured that way.

John Farrell

And for people who want a deeper dive on the security stuff, I’m just going to offer that we did, ILSR published a 2016 report called Beyond Sharing that looked at some of these issues. If you want to kind of more of the 101 on what we’re talking about with security stuff. But without having to go deeper into that here, I do want to ask about the net metering arrangement because what’s interesting about the issue around compensation for community renewable energy and the offsite projects has been this long running debate about whether or not people could treat this as investment income or if it’s some kind of income that’s taxable or not. And sort of the compromise most community renewable energy projects make is saying, to avoid any kind of issues around taxable income or or things like that, they simply say, well, we’ll get credits on the bill and bill credits have been agreed upon by the IRS to not count as income, but in this case your net metering it to a single customer. So how do you share the financial benefits of this with the co-op members?

Subin DeVar

Yeah, so that’s a great question. And just to take a step back to why even trying to think about who benefits is really important. The mission of the cooperative as a whole is to really enable a just transition to renewable energy that allows everyone to own and be involved in shaping energy future. And really to tap into the broader benefits that come from the transition to renewable energy beyond just the clean and green electricity. So in this project, how we navigated expanding the benefit that this transition has. What are the benefits of this one project that’s through the community having this ability to get dividends from their membership share in the project at the same time as the homeowner has a bill savings directly on their bill. And so the homeowner sees a savings now given this older system that they have on their roof, but all the community members that own the cooperative also will get dividends on the membership shares the investment that they’ve made into the cooperative. And so that’s one way, but that’s the only one in a set of benefits that the community has really come together to see. And so another way that we’ve kind of described the cooperative is that it’s a movement cooperative. And one of the gaps we saw was not just there was these policy barriers, but there was really a barrier for folks to get involved in something to really feel like they were empowered and able to be agents of change in the future that they wanted to see. And so being at the, at the table to run this organization because it’s democratically owned and run by all of the member owners of the cooperative, that really empowers the community to have the added benefit of being able to steer what projects they want to develop and to design those projects in such a ways that navigates where they want benefits to go, what other social economic health or other wealth benefits these projects could have. So it really, really empowers more than just, you know, subscribing to power and getting from bill savings.

John Farrell

Yeah, that’s really cool. It really fits with the way that ILSR and of course, SELC talk about energy democracy. I love that you’re talking about this kind of co-op membership as being more than just a financial arrangement. There’s a, in Minnesota as well, and we’ve interviewed Timothy Den Herder Thomas from Cooperative Energy Futures, which has had a similar approach in terms of their discussion of the meaning of, of membership rather than it just being a financial arrangement. And we did an interview with him back a while ago on local energy rules. So one other question I had, I of course I’m a stickler for trying to figure out all of the nitty gritty details when these kinds of projects happen. A was curious, so you, you mentioned that you know, all the co-op members came together to raise the money for the project to be built. Did it require any kind of subsidies and for example, was it able to access the federal tax credit, which has been so important to so many solar energy projects?

Subin DeVar

This project, it did not utilize the federal solar investment tax credit. Part of the ways that we kept the cost low was to partner with a nonprofit installer called Sun Work that is able to offer a much more competitive pricing for mission aligned solar installation. And so that brought the cost down and the relatively compared to what other projects we might build in the future. You know, this was a relatively small project, is about a seven kilowatt capacity system. The house is actually a duplex and so it’s a little bit larger than a single residential users. A system that would be sized for that. But no, no other incentives or credits were used.

John Farrell

One of my big questions here is that, and I reflect on this being in California, you know California has been a state that has really seen a remarkable growth in the rooftop solar market. You know there was some very deliberate state policy to guide that. One million solar roofs, the California solar initiative, you know, we’ve got a fancy time-lapse graphic for people who are interested in kind of seeing the growth of that rooftop solar over the past decade. Can this kind of project scale up like that like individual rooftop solar has? Do you see this as something that’s easily replicable where you could get either these co-op members or additional co-ops created to do more projects in California and to really broaden the number of people and community members that could participate in community and renewable energy?

Subin DeVar

We do. And part of that is because the cooperative is not limited to building projects. Just in this one way, what it’s really structured as is creating the umbrella and framework for communities to get involved and then be able to tap into an array of different energy regulations or programs that come online in California and to navigate each of those. And so it really just creates this community based movement driven entity that can be involved in building those different projects. And so those could look like a number of small residential systems. But what we’re, what we’re also aiming to do is to be able to in the long term serve the member owners of this property itself. And so as California adopts programs that make it easier to build solar on multifamily affordable housing for example, though that’s coming online and as it’s exploring maybe improving community solar laws in the state, which are sort of in flux, it’s current policy isn’t ideal for really promoting community solar projects, but they’re experimenting with potentially better models that’s targeting low income communities and communities that have higher pollution burdens. So this is program that’s called a community solar green tariff and that might come in line. So there are these avenues or programs that could involve larger installations. So that could mean solar projects on community buildings. It could mean in the future ground Mount larger system. And the the other side of it, while in addition to this being a vehicle for community capital, is also a vehicle for mission-aligned investments. Patient capital from, for example, foundations that are looking to divest their funds from fossil fuel entities. How do they then move that into investments in really community based and equitable models for renewable energy? Um, and so this could be a model that taps into that and that would really enable more scaling. And replicability.

John Farrell

Oh, that’s cool. I am curious in terms of if you know, let’s just say a foundation came to you and said, Hey, we’ve got $10 million in our endowment that we want to invest. You know we can do it at a relatively low rate of return because this is aligned to our mission where you know, how we grant our money, how does that work? How does that mix in with the member dollars? Like what does that enabled you to do differently and how would those resources be invested differently from member dollars or it would be very similar, would it, would it just be sort of like the foundation is another co-op member who just happens to come to the table with a much larger investment?

Subin DeVar

That’s a good question. Without going into it in too much steps, I mean it definitely takes a lot more exploring and it’s a pathway that we’ll look into more as we scale, but the short answer is that it’s not the, it wouldn’t be the exact same structure as that funding would most likely come in as a separate financing vehicle where there were terms to ensure that it, that it was non extractive that that it was patient capital, um, either through some form of loan or that arrangement or some, there’s some other arrangement, but it wouldn’t involve that entity then having a, a stake in, in driving the direction of the cooperative in the way that the community members do.

John Farrell

We’re going to take a short break. When we come back, I ask if this solar cooperative model can work in states outside California, how folks can learn more about this project, and what developments and energy democracy keeps Subin hopeful in a warming world.

John Farrell

MIDWAY PITCH

John Farrell

We talked at the beginning about poor John Farrell who can’t invest in this co-op because he lives in Minnesota. And so are there any plans by the Sustainable Economies Law Center or the People Power Solar Co-op to model this in other States anytime soon? Or is there an, even if you are not planning to do that, are there any barriers to this being done in other States setting up this kind of co-op framework as you mentioned to do community renewable energy?

Subin DeVar

Well that’s a great question. We definitely approached this, we being, you know, I’m working both for Sustainable Economies Law Center and then helping the Law Center’s incubating the People Power Solar Cooperative. Um, and I’m a member of the board, but the Law Center’s interest is to really create a model that could be shared and learned from in other States. And so we’re, we’re actually being very deliberate about creating the documents in a very user friendly way. They are geared to apply specifically to California for now. And based on an analysis of the legal framework, you know, and I couldn’t stay on this call what the legal framework is in various States and exactly how that would be navigated. But what we’re, what we’re planning to do is to, um, provide these resources as a model for other States and, and to work in partnership with others that are considering this. And so, uh, since we’ve started to do this process, people have reached out to the law center wanting to learn more about this model and you know, and we can be a helpful resource for legal information to kind of explore what are the laws that are play in your state. And there are similar structures, even though the laws are different, there’s similar sort of issues that one will have to navigate. Like I mentioned those two main areas of navigating what the regulations are and what the securities laws are. And so I think with the combination of creating these documents, um, and with those partnerships with folks, um, we’re really open and hopeful that others will reach out to us and they look at the materials that we have. Actually on our website we’ve posted the cartoon version of our bylaws, which I think folks will find very useful. So there are people power solar.org documents and you can see the, the bylaws which don’t look like your typical legal ease. Uh, but it is a formal governing document but it’s easier to follow.

John Farrell

That’s great. And I love that you’re doing that format not just because I am assuming that Janell had a hand in doing the cartoons, which I’ve always enjoyed, but because it is one of those key issues of accessibility of course, that the fact that you need legal expertise to navigate this is a significant barrier because being a lawyer or being able to retain a lawyer, it can be very challenging. And I think about, for example, one of the, some of the early community solar projects that were created before there were laws in States sort of smoothing the way for project development as are in like Minnesota or Maryland. I’m thinking of the University Park solar project in Maryland where they had a lawyer that was part of their little cadre of folks interested in this who gave their time pro bono or the Monadnock Co-op project in New Hampshire where again they were able to get free legal advice. So I think this is really great that you are trying to create an accessible model for people, because finding that legal help to get the project structure setup is, is really complicated. So you already preempted my next question was where people can learn more. So I’m glad, let’s just have you give that again. Uh, and then I have just one last question for you.

Subin DeVar

Sure. Yes. I’ll point out both the people power website, peoplepowersolar.org and you can go there and you can also more learn more about the Sustainable Economies Law Center’s energy program at theselc.org for the word the sclc.org/energy and you know I want to make a point also related to what you raised, which I think is is great in terms of the accessibility of information. One of the foundational commitment that are in our bylaws is a commitment to just transition that focuses on two key values, a commitment to democracy and self-determination as as centering frontline communities. And so creating a structure and creating documents in a model that really allows people to take action themselves to self-organize that really allows more access to marginalized communities is core and important to this model. And I feel very strongly that it’s important to expanding equitable approaches to renewable energy in every state

John Farrell

So Subin, I just want to say thanks again for detailing this project. I want to leave people with hopefully a good answer to this question, which is, is there something that you have read about in the news recently, been following in the news recently about energy democracy, whether it’s a particular kind of project or a movement you’ve heard about or legislation, something out there that is keeping you hopeful about our ability to approach climate with equity and justice in our minds?

Subin DeVar

That’s a great question. I, you know, it may not sound that new or novel, but if folks aren’t aware of how much of a youth driven effort is behind the organization, the Sunrise Movement, that is something that has really given me a lot of hope over the last several months. So just to give you a little summary of of what’s going on there. The group Sunrise Movement that really was behind a sit in and Nancy Pelosi’s office back in November that got the Green New Deal on the table. That’s a group of, of young folks who for the last several years had been advocating many of them for divestment at the universities that they were a part of. And it’s been incredibly inspiring to me to see their energy. I went to a, the final event of their green new deal tour, their advocacy around making sure that presidential candidates are talking about climate change and debate and their, their ability to really inspire young people and folks all across the country to really get involved in the movement as well. Not just that energy, but combined with that, with the fact that they’re a generation that really looks at energy from an intersectional lens so they haven’t modeled out let’s, let’s address energy in such a way to test about decarbonizing as fast as we can, rather instead, they’re considering this from a perspective of, well, there’s an interplay of different social economic issues that play in terms of the harms that folks have seen from the current energy economy and the benefits that they might see in the future, and then they’re approaching it that way. So I’d say that really what has been giving me hope to see that passion and energy.

John Farrell

Well. Subin, thank you again for sharing that moment of inspiration and also for your work, inspiring others by helping to create this framework for cooperatively owned community solar.

Subin DeVar

Thank you very much for having me.

John Farrell

This is John Farrell, director of ILSR’s energy democracy initiative. I was speaking with Subin DeVar, director of the community renewable energy program at the Sustainable Economies Law Center in Oakland, California about their new People Power Solar Cooperative for more on busting the barriers to community renewable energy. Check out ILSR’s 2016 report titled beyond sharing. You can also hear another podcast about a community solar cooperative in episode 57 with Timothy DenHerder Thomas of Cooperative Energy Futures in Minneapolis. While you’re at our website reviewing these other resources, you can also find more than 90 past episodes of the Local Energy Rules podcast. Until next time, keep your energy local and thanks for listening.