introduction to the green energy co-operative of...

Introduction to the

Green Energy Co-operative of Ontario

November 1, 2012

Introduction to GECO

The Green Energy Co-operative of Ontario Inc. is a renewable energy co-operative incorporated under the “Co-operative Corporations Act” in Ontario.

The mandate of the Co-op is to marry solar projects that are currently under development with community investor-members that reside in the same municipality as the project.

GECO was started by employees of Spark Solar in an effort to provide professional management to attract quality projects to the community investor-members of GECO.

First, Some History…

Who is Spark Solar?

Spark Solar is an Ontario developer of renewable energy projects with a focus on developing co-ops and community power projects. The three community projects that Spark Solar currently manages are:

1. AGRIS Solar Co-operative

Over 1,000 Ground Mount MicroFIT projects (10 MW)

2. Sunny Shores Solar Project

10 MW Ground Mount Solar Farm

3. Green Energy Co-operative of Ontario (GECO)

Recruiting for members in Hamilton, Halton and London

Partnering with developers in the same municipalities to bring projects to the co-op

In 2010, Spark Solar joined forces with AGRIS co-operative, an 80+

year old agricultural co-operative, whose members wanted to

participate in the OPA’s FIT program. Spark Solar assisted AGRIS’s

members by forming AGRIS Solar Co-operative.

Spark Solar History AGRIS Solar Co-operative

AGRIS Solar Co-operative itself has no employees. It is managed by Spark Solar under a management agreement. Under this agreement, Spark Solar has:

Funded over $1.5 million in start-up costs

Managed the Co-op’s Offering Statement submission to Financial Services Commission of Ontario

Raised $15 million from members and $45 million from lenders

Completed all FIT and other regulatory requirements

Managed all construction of projects

Managed all business of the Co-op


Management Contract

750 Co-op Members

$15,000,000 in Equity Raised

100% Member Ownership

10.8 MW of MicroFIT Projects


Farm Credit Canada

$45,000,000 in Debt Provided

The 10MW Sunny Shores Community Solar project has a FIT 1.0 contract with the OPA. The project is located in Prince Edward County, Ontario. Spark Solar has:

Funded all development costs

Managed all development efforts including:

Land acquisition and negotiation

All OPA contract requirements

Environmental Approvals

Contract negotiations for $30 million of Equipment and Construction

Securing financing for project

Source: Natural Resources Canada

Transmission Station

Project Location

Project Location

Spark Solar History Sunny Shores Project

…Now the Present…

Why are Renewable Energy Co-operatives So Important?

On August 10, 2012, the Ontario Power Authority released the new rules for their Feed-In-Tariff program (FIT 2.0). The FIT program provides generators of renewable energy with a 20 year fixed price contract to sell electricity to their local utility. In the new rules, the OPA states:

“The OPA encourages Aboriginal, community, school, hospital, university and similar institutions’ projects under the FIT Program and these rules provide incentives for projects involving such groups.”

These incentives include:

1. Setting aside grid capacity for community projects

2. Granting “points” that improve the odds of getting a FIT contract

3. Reducing the fees required to submit an application

As a result of these “Incentives”, developers in the solar marketplace are looking to partner with co-operatives that have the ability to finance the 50% equity required to get their applications to the “front of the line” via the OPA’s Set-Aside program under FIT 2.0.

Why are Renewable Energy Co-operatives So Important?

The Set Aside Opportunity:

OPA has set aside grid capacity for community projects

Developers can partner with Co-ops or Aboriginal groups to access this Set-Aside capacity

The Set-Aside Rules:

Co-ops must have >50% “Direct Economic Interest” in projects

A Co-op must have at least 50 members that are property owners in the same municipality as the project

...And the Future…


GECO was formed to take advantage of the opportunity created by the community rules outlined in FIT 2.0. GECO provides:

Professional Management

Good Returns

A say in how things are done (One Member/One Vote)

Access to Developers

Developers’ and Spark’s buying power

Ability to raise money from the “local” community as well as from across Ontario


The Seven Principles of Co-Operatives

1st Principle: Voluntary and Open Membership (All Welcome – no pressure)

2nd Principle: Democratic Member Control (One member = one vote)

3rd Principle: Member Economic Participation (No free rides)

4th Principle: Autonomy and Independence (Self‐control, no parents)

5th Principle: Education, Training and Information (Share, Learn, Grow)

6th Principle: Co-operation Among Co-operatives (Together Everyone Achieves More)

7th Principle: Concern for Community (Building strong communities)

Anticipated Timing of Events

1. GECO recruits 50 members in each of several municipalities

2. GECO forms partnerships with developers

3. GECO submits applications for FIT 2.0 contracts

4. GECO submits offering statement to FSCO

5. Contracts awarded by OPA for FIT 2.0 projects

6. GECO obtains “receipted” offering statement from FSCO

7. GECO presents opportunity for preferred share investment

8. NTP for projects is granted and construction begins

9. GECO Annual General Meeting

10. Commercial operation of projects commences

Oct/Nov 2012

Nov/Dec 2012

Dec/Jan 2012/13

Mar 2013

June 2013

July 2013

Aug 2013

Oct 2013

Nov 2013

Mar thru Dec 2014

Items Involving all membership

Green Energy Co-operative of Ontario - Structure

Management Contract


Currently forming JV’s and LP’s with Developers

Currently recruiting members in London,

Hamilton, and Halton*

100% Member Ownership

*Members can be from anywhere in Ontario, but we specifically require 50+ members from the municipalities where we have projects

Comparison of Cumulative Cash Flows for a $1,000 Investment

$1,380

$2,000

$2,453

$1,953

$-

$500

$1,000

$1,500

$2,000

$2,500

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Year

GIC

TREC

GECO (10%)*

GECO (7.5%)**

Payback of Original $1,000

*It is expected that GECO Preferred Shares would return between 9 and 11% ** GECO’s returns would have to drop to 7.5% to match returns of similar investments

Today’s Activity (Cheap and Cheerful)

What Are We Doing Now

Signing up members to meet the OPA’s 50 land-owner members per municipality rule Sign Statutory Declaration

stating that you are a property owner

Filling out a membership application

Paying $10 for membership share

What Are We NOT Doing Now

Taking risks Spending money Making investments Committing any additional funds Creating any future obligations

There is NO Obligation to do Anything or Invest Anything Beyond the $10 Membership Share

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