SolarShare Bond Update

Received My SolarShare Bond Certificate!

If you meet someone new, start talking about global warming. It’s a real icebreaker! 😄 Climate change is very real and as a concerned citizen I want to help however I can. According to top scientists, earth is the only known planet with bacon. This is why I care so deeply about protecting the world.

So about a month ago I purchased $10,000 of bonds from SolarShare, which is a renewable energy company that allows investors to earn a competitive return while doing something good for the environment. I am finally stepping up and doing my part to save the planet and the next generation of food animals. 😉

Well this week I received a letter from the President of the company along with a certificate that looked so awesome I decided to frame it and hang it up. 🙂

The small words on the certificate say that SolarShare “acknowledges itself indebted and promises to pay, in Canadian money, to the Investor….” This piece of paper represents my $10,000 investment. But it’s actually a copy. The original certificate is securely kept with SolarShare for safe-keeping. It feels good to have someone else owe me money for a change, haha. 😉

2 Ways to Invest

The future looks green, and I’m not just talking about money. 😛 SolarShare offers 2 types of bonds that investors can buy; a 5-year bond with 5% return, or a 15-year self-amortizing bond with 6% return.

The 5 year bond has a lower minimum investment so folks who don’t have a lot of money can still take part investing in solar energy. But I bought the 15-year bond because I like the higher interest rate. 🙂 In either case, interest is paid semi-annually to an investor’s bank account via electronic fund transfer, or by direct deposit into a registered account.

The 5-year option works just like any other bond, which I’ve explained in the past. But the 15-year bond I purchased is self-amortized which means it works more like a mortgage. Every 6 months I will receive a payment made up of both principal and interest. This will continue for 15 years, or 30 payments in total, until all my principal is paid back in full.

So how much will I receive each payment? I know there’s a way to calculate the amount, but unfortunately math is not my strong suit. If I had a nickel for every time someone said I’m bad at math, I reckon I’d have 47 cents. But thankfully SolarShare sent me a customized payment schedule so I don’t have to do any math. Phew. 🙂

As we can see, every year I’ll earn $1,020.40 of income from this bond. By the end of the 15th year, I will have received over $15,000 for my initial $10,000 investment.

What I Like About SolarShare Bonds

• Each solar project is backed by a 20-year power purchase agreement with the Ontario government, guaranteeing fixed electricity prices and ensuring a long-term predictable revenue stream.
• Attractive risk-adjusted return. There aren’t many other fixed income investments that offer a 6% return with revenues backed by a provincial government with an A+ credit rating from Standard & Poor’s.
• Unlike other green energy companies, SolarShare has a solid track record of sustainable expansion. It currently has over 1,100 investors who have invested a total of $17 million. It claims to be the largest non-profit co-op in the country. SolarShare has 34 completed projects so far, and has 13 in development.

What I Dislike About SolarShare Bonds

• Bonds are illiquid and there is no secondary market to sell them.
• Even though revenue appears to be secured to 20-year contracts, management could still mishandle internal operations. For example, if the company overspends it could still face financial hardships. Plus, there’s the small possibility that the ON government will run out of money or try to get out of existing long term contracts.
• SolarShare bonds are only available to people who have an Ontario based address. This doesn’t mean you have to live in ON. The sales representative told me that lots of people from BC and Alberta invest in SolarShare because they have friends, relatives, a business, or a vacation home in ON. The address is only used as a regulatory formality.
• Other risk factors include currency risk, cash flow risk, depreciation of assets, equipment failure, tax risk, performance risk, etc.

This is not a conservative investment. These bonds are more likely to default than investment grade corporate and government bonds. But that being said, they’re still safer than all the high-yield bonds I’ve blogged about purchasing in the past. I’m trying to incorporate more fixed income into my portfolio. SolarShare fits my investment values and is also in line with my optimism in a profitable, low-carbon economy.

But that doesn’t mean it’s the right choice for everyone. After all, you can’t expect to make 6% annual return without accepting some degree of risk. 😕 I do not make financial recommendations on this blog. Feel free to visit SolarShare’s site to find out more info, and please consult with a professional before making any financial decisions.

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Random Useless Fact:

A couple in Brazil who have been trying to conceive a daughter for nearly 20 years has vowed to keep trying until they succeed, despite the fact that they now have 13 sons. 😮