On CoPower, an investment platform for renewable energy and energy efficiency projects, you don’t have to make concessions between decent financial returns and decent environmental impact (as is often the case elsewhere). If you’re willing to put up at least $5,000, you’re promised 5% a year over five years, and your money goes to solar farms, geothermal installations, and building retrofits.
The only catch: Currently, you need to be a Canadian citizen to access the site.
For everyday investors wanting to put their money into social and environmentally themed projects, Canada offers better options than the U.S. does at the moment (along with universal healthcare, a lower drinking age, and soon, legal marijuana). Since it relaxed its financial regulations last year, Canada allows ordinary “non-accredited investors” to make direct investments online in private projects. In the U.S., by contrast, options are currently limited to public companies, various forms of crowd-investing, and community notes, all of which have their drawbacks, from their level of impact to their level of financial return.
“There are lots of market driven and profitable solutions to social and environmental problems and lots of investors seeking social and environmental returns,” says Trish Nixon, CoPower’s director of investments, in an interview. “The challenge is in connecting the two and having financial products that meet the needs of investors from a risk-return-impact and access standpoint. That’s the problem that CoPower is solving.”
Nixon argues that many clean energy and energy efficiency investments make good financial sense, but lack necessary financing to achieve. Switching an old building’s lighting from incandescent bulbs to LEDs easily pays for itself in energy savings, for example, leaving plenty to share among investors and financial intermediaries. But owners need to raise funding ahead of time, and banks, without track record data to go on, frequently are unwilling to back such proposals.
“The economics of LEDs are pretty attractive,” Nixon says. “The deployment challenge is more about upfront cost and looking at these as project finance opportunities.”
CoPower pools loans in individual projects into Green Bonds with five and three-year terms (the latter has a 3.5% annual return). It secures the loans with repayments from the investments–for instance, the savings large condo buildings can make on their lighting costs. Since launching in 2013, it’s raised about $2.9 million for each product–more than half of its $4.5 million goal for each.
Non-accredited investors can invest in clean power and efficiency through the public markets–e.g. through stocks like SolarCity–or through mutual funds and robo-advisers that screen out arguably unethical activities, like tobacco, guns, and gambling. CoPower is more direct: your money goes towards building specific projects, not companies.
“We’re not saying we’re investing in the most responsible companies in each sector. We’re letting you proactively participate in building clean energy, and there’s not a lot of products out there that do that,” Nixon says.
CoPower-like platforms do exist in the U.S. for accredited investors earning more than $200,000 a year, or with a net worth of more than $1 million. Wunder Solar Funds is one. BlocPower–which focuses on energy efficiency in poorer neighborhoods–is another. Both would like to open themselves up to wider groups of people, but currently, because of regulatory restrictions, that’s not possible. Better to be Canadian.