Worried about climate change? Want to do more to support the spread of renewable energy? There’s a new credit union designed for people like you.
The Clean Energy Credit Union is a new federally chartered credit union with a mission to help speed adoption of renewal energy by making it more broadly affordable. It was founded by a group of self described “clean energy geeks and cooperative enthusiasts,” including executives from credit unions, clean energy companies and cooperatives.
When it launches later this year, the special purpose credit union will be offering savings accounts and clean energy CDs, which will be used to make low-cost loans for home solar installation, energy efficiency retrofits, electric cars and other high fuel efficiency vehicles. Every dollar deposited with the credit union will be federally insured and used solely to finance a clean energy project.
Over time, the credit union plans to add new products, including checking accounts and debit cards for credit union customers; and for borrowers, new clean energy-themed products such as loans for students enrolled in clean energy studies or for companies in the business of renewable energy.
“We envision a world where everyone can participate in the clean energy movement,” says Blake Jones, a founder of the new credit union and its board chairman. “There are lots of people looking for ways to get involved, and this will be relatively easy thing for people to do that will have a really big impact.”
The Clean Energy Credit Union (CECU) is based in Boulder, CO, but will serve all 50 states. It will skip branches and operate solely online—a move that will help lower operational costs and keep loan rates down. It is open to members of the American Solar Energy Society (ASES), a nonprofit solar advocacy group that anyone is able to join, and the credit union is looking to expand its member organizations.
CECU received its federal charter from the National Credit Union Association (NCUA), a federal agency, in September and plans to launch by year-end, with an official membership drive kicking off in early 2018. It is the first federally chartered credit union in Colorado in three decades, and the second one chartered nationally this year.
The idea for a credit union focused on renewable forms of energy grew from Jones’ experience at Namaste Solar, the solar panel installation cooperative he cofounded in 2004. Solar costs have come down dramatically as production has ramped up and the ecosystem has matured. There are more people trained to install solar panels, and key players like electrical inspectors and city permitters have become more familiar with the technology as well.
But one piece was still missing, says Blake: affordable financing.
There are specialty lenders in the solar and renewable energy world, he notes, and they have played an important role, but “costs were higher than we thought they should be.” Some of the specialty lenders are backed by venture capital, and therefore beholden to shareholders, he says. And banks tend to force fit their home equity loan products onto the solar market.
“You should be able to get good loan rates to do energy efficiency retrofits or a first mortgage loan for a net-zero home,” he says. Many lenders were overlooking the fact that energy efficient homes and cars save their owners money, so that they have more disposable income to make loan payments.
A Cooperative Model
Namaste Solar approached banks and asked if they could create a better solar loan product, but found little interest. So Jones decided to create one himself. As the founder of an employee-owned cooperative, the idea of a credit union, a form of cooperative, appealed to him. He stepped down as Namaste Solar’s CEO last year, in part to spend time on the new credit union.
Jones reached out to members of the solar purchasing cooperative, Amicus Solar Cooperative, which he describes as the “Ace Hardware” of solar installation companies. The organizing committee also included representation from the NCUA.
Credit unions are like banks in that they take deposits and offer financial services such as credits cards and loans for individuals or businesses. But unlike most banks, they are nonprofits that exist to serve their members, not shareholders. As such, they often have more attractive rates and fewer fees.
The process took almost four years—one reason, Jones says, there are so few new credit unions (or banks) started. In addition to regulatory hurdles, credit unions cannot raise equity funding like banks can; instead they raise money through donations similar to a nonprofit. Growth is typically fueled by retained earnings over time. Another difference: unlike at banks, credit union board members like Jones are nonpaid volunteers.
Credit unions have taken on newfound importance amid massive consolidation in the banking industry and consumer dissatisfaction with Wall Street. There were 5,812 credit unions in the U.S. as of mid June, compared to 5,795 banks, according to the Credit Union National Assoc., a trade group. Credit union membership has grown to more than 4.2 million individuals in mid-2017, up from 1.5 million in 2011 (see chart). And these financial cooperatives have outpaced banks in growth of saving deposits as well as loans.
Credit unions have always focused on targeted groups, for example, employees of a particular company or industry. And they are increasingly plugging gaps in conventional finance. In addition to CECU with its focus on clean energy, a specialized credit union called Maine Harvest is being formed to serve the state’s local food and agriculture sector, including helping finance land and food processing and agricultural equipment.
Crowdfunding the Effort
CECU is looking to raise a total of $5 million over two years. The team, including CEO and credit union veteran Terri Mickelsen, has already raised $1.5 million towards that goal from wealthy individuals and foundations. CECU has also launched a crowdfunding campaign on WorthWild, a fee-free, rewards-based crowdfunding site that specializes in environmentally-friendly businesses and nonprofits.
A pledge of $40 or more includes a year’s membership in ASES, which is required to join the credit union (although once a member of a credit union, you are a member for life). For everyone dollar that CECU raises in donations, it can accept $14 in federally insured deposits and then lend the combined $15 towards clean energy projects. The campaign ends on Nov. 18.
Although the small dollar donations are more work, Jones is excited about engaging potential customers. “As (Beneficial Bank’s) Kat Taylor has said, banks and credit unions are the oldest form of crowdfunding,” he says.
In the spirit of cooperation, the New Belgium Family Foundation, the charitable arm of the celebrated employee-owned brewery, will match your donation dollar for dollar.