Crowd-funding for solar power

So you like the idea of generating power from the sun, but don't want a dozen solar panels bolted to your house's roof?

For the first time in Minnesota, an electric power cooperative is offering its customers an alternative -- investing in a community-owned solar-power array, and getting credit for the output on their utility bills.

"A lot of people are confounded by the idea of installing solar on the home, and this makes it very simple," said Matt Christian, who with his wife, Amber, purchased 15 solar panels on the array, enough to supply most of the power for their Maple Grove townhouse.

The project is a joint effort of Wright-Hennepin Cooperative Electric Association, a utility serving 46,000 customers northwest of the Twin Cities, and Clean Energy Collaborative, a company based in Boulder, Colo., that has built similar projects in Colorado and New Mexico.

The ground-level solar array, with 171 total panels, will be located behind the utility's headquarters in Rockford, 30 miles northwest of the Twin Cities. Its electricity will go on the power grid but be credited to owners' electric bills. Only Wright-Hennepin customers were eligible.

Rod Nikula, vice president of power supply for the co-op, said that all 171 ownership units -- one for each panel -- had been sold as of this week, raising $148,600. Construction should begin in February.

It will be the first community-owned solar array in the nation that also features batteries to store electricity for use when the sun is down.

For $869, an investor could buy one solar panel and its output. Nikula said 17 customers signed up, purchasing from one to 27 panels each.

Christian said he and his wife purchased 15 panels, and he expects it will take 12 or 13 years to pay them off. After that, most of their electricity will be free, he said.

"I look at it as prepaying for electricity," said Christian, who considered solar panels atop his townhouse, but the owners' association didn't allow it.

Under the terms of the deal, Clean Energy Collaborative will set up a trust to cover maintenance and repairs over 50 years. If a solar investor moves out of the Wright-Hennepin service area, his ownership in the array could be sold to another co-op customer.

Wright-Hennepin CEO Mark Vogt said the co-op intends to build additional solar arrays with the same group financing if customers want them, and that seems likely. A survey of 160 metro-area co-op members by wholesale co-op Great River Energy found that 32 percent of homeowners were somewhat or very interested in installing solar power.

At least 40 U.S. solar projects have used customer financing or "crowd-funding" to raise money, said Joy Hughes, founder of the Colorado-based nonprofit Solar Gardens Institute. Such projects often are called solar gardens.

Solar Mosaic, an Oakland, Calif.-based company that received a $2 million U.S. Energy Department grant, last week launched an online service that lets anyone invest in solar projects across the country, offering traditional returns in dollars.

Economies of scale

Advocates of community solar say that bigger solar arrays benefit from the economies of scale, tax credits and, in some cases, other incentives. Many people who are interested in solar can't install systems because they are renters or their homes have too much shade.

Colorado passed a law two years ago to encourage community solar. This year, 13 customer-financed solar arrays are underway in parts of that state served by Xcel Energy, based in Minneapolis.

Xcel, which is Minnesota's largest power company, has not created a similar program in this state but says it is discussing the idea with legislators and others.

Solar investments often have long payback periods that don't attract traditional investors.

David Schmidt of Corcoran, who purchased one of the Wright-Hennepin solar panels for $869, compared the purchase of clean energy to other consumer choices -- such as picking a restaurant -- that aren't made solely on price.

"I try to think of the quality of the electricity, not just the cheapest," he said.

Schmidt said he didn't want to invest in a solar array on his family's home, partly because of the expense. He also wondered about resale. "If I am the next homeowner, maybe I do or maybe I don't want solar," he added.

Thomas Sweeney, chief operating officer of Clean Energy Collaborative, said customer-financed solar arrays help utilities achieve state renewable energy goals with little capital. "It also allows them to have a product that customers are asking for," he said.

Unlike Xcel in Colorado, Wright-Hennepin is not offering a community solar subsidy. Yet the project poses a built-in revenue loss for the co-op because solar output displaces electricity on which the utility otherwise would make money.

Battery technology by Silent Power of Baxter, Minn., will store solar-generated electricity from the Wright-Hennepin array and put it on the grid hours later. Nikula said the system is likely to be used to release stored power from 5:30 to 7:30 p.m., when sunshine is weak or nonexistent, and customer demand soars, especially in the summer.

Wright-Hennepin officials believe this "load shifting" will save money on peak-price wholesale power, offsetting the revenue loss from solar. The co-op also is an investor in Silent Power.

Christian, the Maple Grove homeowner, said the mix of innovative storage technologies and locally made solar panels from TenKSolar in Bloomington appealed to him.

"It's all bundled up in a nice, easy-to-use package and I don't have to get my hands dirty," he said.

David Shaffer • 612-673-7090 Twitter: @ShafferStrib