Building the Clean Energy Federal Credit Union

One day in late 2013, Blake Jones was feeling disillusioned. As a cofounder of Namasté Solar in Boulder, Colorado, he was well versed in the world of solar finance. He couldn’t, however, seem to find a financing option that was both aligned with his company’s values AND that offered competitive terms in the solar market. And so he began researching the possibility of simply opening a financial institution himself.

After looking into starting a loan fund or a bank, he became very excited about the credit union model. Credit unions are democratically owned, nonprofit financial cooperatives that serve an identified community. They provide a vehicle for members of that community to pool their money and then use it to make loans to other members. The appeal of the cooperative structure was strong—having started two other cooperatives, he could personally attest to the merits of the model.

“Namasté Solar became an employee-owned cooperative in 2011, and it has been very successful for us. We believe that having an owner- ship stake in the company results in our employee-owners being uniquely motivated to provide great customer service and workmanship,” he explains. “Similarly, when we cofounded the Amicus Solar Cooperative (amicussolar.com), we found that our success stemmed from the fact that the other solar companies that joined were aligned with its mission and its democratic ownership structure.”

As Blake tells it, Amicus has become more than just a way to aggregate members’ purchasing power. It is a forum where members share best practices and strengthen partnerships with one another around the country.

“There’s really something to be said for the value of sharing an ownership stake and having a democratic voice in an organization that you care deeply about,” he says. “We wanted to apply the same concept to the new financial organization.”

Building the Team

Blake approached other solar companies in the Amicus Solar Cooperative with the idea, and they too were excited. Sun Valley Solar Solutions (Arizona), SunCommon (Vermont), Technicians for Sustainability (Arizona), and Third Sun Solar (Ohio) climbed on board, and the steering committee was launched.

The first order of business was to find a willing partner, an organization whose values were aligned with this concept, and whose members would serve as the official “field of membership” of the credit union. Unlike banks, credit unions don’t serve the general public. They serve specific communities of people. When the steering committee started brainstorming, the American Solar Energy Society (ASES) rose to the top of the list. ASES’ mission is “to inspire an era of energy innovation and speed the transition toward a sustainable energy economy,” and the Clean Energy Federal Credit Union intends to do both.

“We are very excited to partner with the Clean Energy Federal Credit Union,” said Carly Rixham, executive director of ASES. “We feel strongly that there is a need to provide financial resources to consumers who wish to install photovoltaics and other clean energy technologies, and the new credit union will offer a new and valuable benefit to our membership. Furthermore, as we seek new ways to grow our organization, sponsoring this initiative will expand our programming, increase our membership, and connect ASES with individuals, businesses, and nonprofits throughout the solar industry.”

Democratizing Solar Financing

The idea is straightforward—every dollar that a member deposits in the proposed Clean Energy Federal Credit Union will go toward helping another member finance a clean energy product or service. The credit union will:

• Provide affordable loan terms for clean energy purchases that are better than other loans on the market today for solar electric systems, electric vehicles, etc.
• Offer federally-insured investment opportunities in clean energy, which are less risky than other investment products on the market today
• Provide these services as a nonprofit, cooperative financial institution that serves its members and will remain dedicated to its mission over the long term, as opposed to a bank, which serves its stockholders.

By reducing the cost of financing, the Clean Energy Federal Credit Union will reduce the costs of installing solar and other clean energy technologies, opening doors to more people who wish to become part of the clean energy revolution.

“If solar is the key to democratizing our electricity, then credit unions are the key to democratizing financing,” says Duane Peterson, co-CEO of SunCommon in Vermont. “We are committed to the idea of building a credit union that will outlast all of us and serve as an ongoing source of financing to help everyday people acquire solar and other clean energy technologies. The mission of SunCommon is to tear down the barriers to renewable energy. The credit union will help do just that.”

Blake Jones is also excited about another important aspect of the credit union. “Many clean energy investment opportunities that I come across in the market today require you to be an accredited, or relatively wealthy, investor who understands the crazy dynamics of the clean energy market and also has the expertise to research and understand the risks associated with those opportunities,” he says.

In contrast, with low minimum account balance requirements that are federally insured, participation in the Clean Energy Federal Credit Union will be open to all people across the economic spectrum—from well-to-do investors to “Main Street” investors—without the need for specialized, financial due diligence.

“By opening the door to all,” Blake continues, “we will be growing the clean energy economy in a truly democratic way and will be leveraging the participation of newer and larger demographics towards our common cause.”

Next Steps

In order to join the Clean Energy Federal Credit Union, one will first have to be a member of the American Solar Energy Society. If you’re reading this magazine, then you are likely already eligible to participate. Once the credit union is chartered, you will be able to sign up online and open a savings account, or “share account,” whereby you purchase an ownership stake in the cooperative for a nominal amount (usually $5-$25). As a member-owner of a credit union, you will have the ability to take out loans, make deposits, and vote for the board of directors.

As of the publication of this magazine, the steering committee is still navigating the charter application process. The next step is to conduct a market research survey of the potential members of the credit union. By now, you should have received an email from ASES with a link to a short survey. The survey has 14 questions and only takes a few minutes. Your participation in the survey will help the steering committee compile information to share with the National Credit Union Administration (the agency that over- sees federal credit unions) as they write the business plan.

There are several more steps to go before it will all be official, but the steering committee members are optimistic that they can obtain the charter approval this year and open the doors in early 2016. Along the way, the steering committee intends to provide updates on its progress through SOLAR TODAY newsletters and other ASES communications. It will also have a booth at the SOLAR 2015 conference at Penn State July 28-30.

A Virtual Credit Union

In order to accomplish its goals, the credit union will adopt a lean operational model. It will not have brick-and-mortar offices; rather, it will operate online only, with phone and online services to assist members with their questions and transactions.

The credit union will start out with a manageable list of products and services, but will not likely replace members’ primary financial institutions at the outset. Initially, it will offer savings accounts, CDs, a variety of loan options, and online banking services. It will seek to streamline member communications by conducting them electronically.

All of these measures will contribute to an efficient and cost-effective operation, thus keeping overhead as low as possible. Combined with its tax-exempt status and its federally insured deposits, this will allow the credit union to provide the best possible loan terms to its members.

Members of the steering committee are convinced this will work.

“Working closely with the members of Amicus, I can attest to the high demand for solar loans out there in the market. Our member companies will sell approximately $70 million in residential PV systems financed through loans in 2015,” according to Stephen Irvin, president of Amicus Solar Cooperative. “Loan demand is likely to exceed the credit union’s capacity for the first few years.”

“Impact investing is a growing field within the investment world,” continued Kevin Koch, CEO of Technicians for Sustainability. “The ‘Solar CDs that the credit union will offer may be the only product out there to exclusively support clean energy AND carry the backing of the federal government. The potential for this low-risk product has attracted the attention of the growing number of people in the impact investing world who wish to put their money into values-aligned organizations AND get safe, market- based returns.”

For more information, feel free to email cleanenergyfcu@ases.org.

Amanda Bybee is co-owner and director of strategic planning and initiatives at Namasté Solar.