Greenpenny Puts Community Banking to Work for Clean Energy — Episode 123 of Local Energy Rules

20 years ago, our bank began financing wind and solar projects. The family that controls the bank began asking how they themselves could live their lives in a carbon neutral way. So the father of our current CEO has a farm that has a wind turbine on it. It’s got solar panels on it. It’s heated geothermally he buys carbon offsets every time he takes a flight. I mean, he’s very serious about living his life in a carbon neutral way and that extended to how the bank operates. So the bank has solar, the bank has LEDs everywhere. The bank buy its carbon offsets for employee travel and employee commutes. So we operate in a carbon neutral way. And then the bank was key to forming the, what we think is the first in the country’s energy district that structured the way that ours is: Winneshiek Energy District and the combination, all of that plus getting more and more experience with financing projects has enabled us to now be in a community that has one of the highest per capita adoption rates of renewable energy, mostly solar, in the country, 10 times more than our state’s average. And we did it through collaboration. We did it for working together through bringing groups of public and private sector, folks that each want to do their part to develop real effective solutions, to expanding renewable energy and talking to anybody who would want to talk to us about how we can all do our part. And now we want to deploy that same model of cooperation to more communities through Greenpenny.

The second thing is the money is only going to go, the deposits are only going to go to clean energy projects like solar. And so if you’re not a banker, you may not know that when you bank at an institution, they take your deposits. They might pay you out a little bit of a rate for those deposits. And they lend those to other people at typically a higher rate and they keep the difference. That’s how they make money. So what are the, what are they doing with those deposits? Are they financing things that might not be helpful to environment? Of course we know that most banks are and it’s unique, we think that there’s relatively few of us that are committed to only lending those deposits out to renewable energy projects like solar. And we’re hoping that that’s enough to combat the kind of inertia that exists in banking. You know, it’s, it’s, it’s not the easiest thing to move your financial relationship from one station to another. We get that. Now we’re going to do our part to try to make it as easy as possible, but we know it’s, it’s easier to stay where you are more convenient to stay where you are than it is to switch. But we want you to switch. We want you to ask yourself the question, is it worth the inconvenience to switch my banking relationship, knowing that I’m supporting a company that’s only going to finance a sustainable tomorrow and do what I’m doing today and just allow the bank I’m banking with to continue to finance the fossil fuel industry. It’s an example. We hope you say to yourself, it’s worth it to switch. And we got to prove that we don’t, you know we’ve launched the site six months ago, so still early days, but we’re hoping that as we get the word out and build awareness, we’re gonna, we’re going to see a lot of folks who join our community.

Now is it exact to exact? Sometimes, sometimes it’s a little bit less. Sometimes it’s probably a little bit more, but of course you’re eventually going to pay that off and you’re going to own those solar panels for 20, 25 years. And the latest technology is lasting that long. So without a lot of maintenance as well. So the economics are generally there and we have no hidden fees or hookup charges. We have a $50 processing fee, that’s it. And the approval is good for 120 days, which people are asking us all the time. Why are we promoting solar, it’s about to become the middle of winter? Well, it’s, we want to get your financing set up so that in 120 days, when it comes Spring, as one residential solar installer said to me, Jason, we’re bringing essentially into the people. So, so we want them to schedule their projects now and think about the sun you’re coming back when the spring comes. So, so we think that the terms and the features of our program are fair and reasonable, and we want them to stay that way. We really want them to be so that the economics makes sense for the customer, for our borrower. We’re not interested in kind of having hidden fees or not making the economic argument and are very transparent, clear lane.

And the way this works, if your listeners have not heard, maybe they have is a power purchase agreement allows the owner of the solar energy system, which is typically a third party private investor to install a solar field on a host customer, such as a local government. In this case, a university, a hospital, a school district, and they sell the electricity produced by that facility that they’ve invested in to that customer under a contract designed to provide long-term electricity cost savings. So folks, I think know that generally utility costs go up over time. So one of the benefits to this is it fixes they a school or the university or the nonprofit’s energy costs. If you, if you do things like our creative with battery solutions and et cetera, you can even lower their actual energy costs from what they are now.

So there’s ways to do this, that immediately produce savings from, from utility payments to the nonprofit and this agreement, bringing these folks together creates really four wins. The first win is to the private investor because they get to generate a return. They get to benefit from accounting treatments like depreciation and tax credits and the like, and they eventually will sell this investment back to the nonprofit who will eventually own it. So they get a nice return for their investment. The next win is for the public entity, obviously the school or the university that now says they can are, you know, powering their, uh, organization with a renewable solar field as an example. And they can benefit from the tax benefit that tax exempt entities likely cannot benefit from. And then of course, we at Greenpenny can finance that investment. We can finance the private investor because of the PPA and the more, most important way. And the fourth win is that all of us can know that we’ve just done something significant to produce a sizeable, renewable energy project that’s helping to save the planet. So it’s an example of, you know, a creative way that we can, and we’ve done a lot of these now, help these large nonprofits to do what they would really like to do, which is power their facilities with renewable energy, which also helps themselves. It becomes a big selling point for in the case of the university, again, their emissions, right? They can say that they have this renewable experience and that’s, their students will really like that. So when, when, when, when we want to do more of that.

And home ownership, for those who don’t know, first of all, your home is probably for most Americans, the largest investment that they will ever make. It’s also so critical to building wealth and to wealth on to future generations. So this persistent gap in homeownership between white Americans and Black families has significantly contributed towards, at the average American white family, having 10 times more or wealth than black families. And that impacts purchasing power, which of course right now in this move towards renewable energy option, which requires capital, that significantly diminishes the purchasing power of Black families and businesses. So, so what do we do about it? Well, first of all, we need to talk about it. So you ask this question is really important and we want to be part of conversations where this is addressed. There are a few ideas. Every bank in the country gets a, uh, CRA rating, a community reinvestment act rating that looks at things like community development, small business development, and the like in low to moderate income communities are also part of that scorecard. So what if, as part of that rule-making around CRA and those scorecards, we thought about energy and we thought about how we’re investing and the banks are helping to have low to moderate income families make investments in renewables. What we don’t want to do is, we don’t want to go back to the practices of a hundred plus years ago, where ethnicity is being considered in any sort of way and underwriting practices at all. You don’t want certainly unconscious bias, but definitely not conscious bias to go into lending decisions. And as an industry and the regulators have gone light years away from that those practices that were really problematic long ago. So we don’t wanna go back there, but we do want to understand how funds are flowing into low to moderate income communities. And we want to understand what that means for renewables and maybe in a blind way that keeps the banks out of it. What does that mean for people of color? I think another thing that we have to recommend is we can get creative here, because funds are flowing to energy utility and, you know, paying utility bills today that can be converted into finance payments that then creates the investment in renewables. So we have energy assistance programs, as an example, for low to moderate income folks who, you know, might be spending 13, 14, 15, 20% of their monthly income just on utilities. And so imagine if rather than just giving them the money to pay for your, their utility bills, we came up with a creative way to, to invest in solar and renewable energy installation and funded it through that program and wiped the bill out for those folks for many, many years. I mean, imagine the wealth creation, maybe not wealth creation, maybe just the freeing up of some money to be able to live a more healthy and sustainable way could happen. I mean, there’s other ideas like that, but we need to come together and really think about, uh, ways that we can create, which we can do that enough. There are things that Greenpenny can do to make that.