Janice Ashworth is the Operations Manager for the Ottawa Renewable Energy Co-op. OREC brings Ottawa residents together to invest in local renewable energy projects in our own communities. What does this all mean? Join this neophyte on a journey of discovery.
Ashworth was in her undergrad in Environmental Science and International Development at Dalhousie University when she began taking a serious interest in the environment and sustainability. A growing concern with climate change drove her to the green energy movement. Through her Master’s research and volunteering and working with the Ecology Action Centre in Halifax she first researched the potential of feed-in tariffs – the policy mechanism designed to accelerate investment in renewable energy technologies.
When she returned to Ontario in 2009, the Ottawa Renewable Energy Co-op (OREC) was still at the ideation phase. Between 2010 and 2012, it built its foundation and found the right business model. OREC very much benefited from the province’s commitment to becoming a leader in sustainable energy.
The FIT Program
In 2009, the Ontario Power Authority (OPA) developed the Feed-In Tariff (FIT) Program for the Province of Ontario to encourage and promote greater use of renewable energy sources including on-shore wind, waterpower, renewable biomass, biogas, landfill gas and solar photovoltaic (PV) for electricity generating projects in Ontario. The fundamental objective of the FIT Program, in conjunction with the Green Energy and Green Economy Act, 2009 (Ontario) and Ontario’s Long Term Energy Plan, 2010, was to facilitate the increased development of renewable generating facilities of varying sizes, technologies and configurations via a standardized, open and fair process.
The FIT Program has been open to projects with a rated electricity generating capacity greater than 10 kilowatts (kW) and generally up to 500 kW. Each type of renewable energy has its own Feed-In Tariff, i.e. x cents per kilowatt/hour guaranteed for the electricity that is produced.
As part of the Green Energy and Green Economy Act, Ontario adopted a policy to prioritize community-owned enterprises, which explains why several renewable energy co-ops sprouted around the same time. OREC was born out of this context.
How does it work?
The producer – i.e. OREC – is taking on the risk of the generating equipment not producing. It’s not a grant system, there is an incentive to produce and produce efficiently.
OREC works with public, private, and not-for-profit property owners. It identifies interested building and land owners in Ottawa communities, then enters into 20-year lease agreements with partnering property owners to use their land or roof space for OREC-owned solar energy systems.
The solar panels are funded by the co-op members through the sale of preference shares and OREC ensures the panels produce power through regular maintenance.
All of OREC’s renewable energy systems are connected to the Hydro Ottawa or Hydro One grid.
OREC signs a 20-year Feed-in Tariff (FIT) contract with the Ontario Power Authority (OPA) to sell the power generated by each system, and each contract provides guaranteed tariff rates for every kilowatt hour (kWh) generated for the grid for the full 20 years.
Revenue generated from projects enables Co-op members to receive a dividend annually in proportion to the size of their preference share investment. The 20-year guaranteed tariff rates enable OREC to fully repay invested capital over a 20-year period as well as a reasonable rate of return (a dividend targeting 5%) competitive with other investment options. OREC pays its partners rent for the use of the roof space.
Currently, OREC has a portfolio of thirteen projects. Among these are four high schools that have seen this as an opportunity to increase their solar portfolio without having to find the upfront financing themselves or funding they may not have access to. Schools are a great partner, Ashworth says, because they are there to educate, and by participating in this initiative, they can concretely demonstrate to students and others how to practice sustainability showing tangible results.
Financially, projects where at least 50kW can be generated make more sense. This means that OREC tends to work with large commercial, institutional, or non-profit buildings. Most OREC projects are financed through equity from their members however, larger projects may be co-financed with other parties.
The average member purchases on average $10,000 in preference shares. This is something that blew me away when I spoke to Janice.
She explained that several people see many positives with this type of social investing and little downside: it is local, green and clean. And through the FIT program, there is a guaranteed buyer, a guaranteed revenue stream and a guaranteed price for twenty years.
Individuals can also use their existing RRSPs to purchase shares. “It’s a really attractive option for some people where folks put money that they’ve already saved up for retirement and invest it in something they feel good about.” It’s a tangible opportunity.
Successful investments to date
OREC’s initial foray in share offering in 2012 brought in $1m in two and a half months. At that time they did not even have confirmed solar projects. People invested because they liked the idea and believed in the people running the organization. The second share offering brought in $1.25m in 2013.
OREC is now on its third round of investments by way of selling Preferred Shares and hoping to raise between $2.5 and $3m for 6 solar projects. If you are interested in learning more about investing, see here.
Janice will be speaking at Hub Ottawa’s Impact Academy about OREC’s experience on social financing November 4th.