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.
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. 😮
Have you considered the potential for interest rates to rise, lowering the value of these bonds? While I understand there is no secondary market and you do not expect to sell them, the opportunity cost would bother me personally.
Good point. Yes I think interest rates will probably rise sometime over the duration of this bond. It doesn’t bother me though because I try not to time the market. Investors who stayed out of long term bonds 10 or 20 years ago are most likely regretting their decision. The good news is my principal is slowly getting paid back over time so I can reinvest the money into higher yielding investments if interest rates move higher. I’m more concerned about rising inflation, but that’s out of my control.
You will only see a loss of value if you decide to liquidate before the maturity date in case of interest rate rise — this is the case with most bond funds, since there is no maturity date/expiration. With individual bonds, you are ok with any changes in the interest rates as long as you hold to maturity
Very interesting…I looked into a co-op program here in Ottawa but the bond returns were ridiculous, so I decided to skip it. Solarshare sounds interesting and that is a much lucrative investment. I’ll have to do some research and find out if its the right investment for us. Thanks for sharing
That is a nice looking certificate 🙂
What would be the ROI if you had invested in a solar panel or solar hot water or solar heat? That’s after tax income and may be more than 6% before tax income…
I don’t know about the ROI of installing solar panels directly to power your home or hot water tank. I’m pretty sure in most parts of the country the return would be higher than 6%. But I’m lazy so I probably won’t take on that kind of project any time soon. 🙂
The way the payout schedule works with the bond doesn’t that make it more like a 3% return?
Nvm I figured it out. 😉
Cool. The benefits of this payment plan is I get paid back more quickly so I can do something else useful with my money. 🙂 But the negative side is I won’t be able to get the full 6% return on the face value for 15 years like a conventional bond would.
Thanks for profiling us here, Liquid Independence! If anyone has any questions, I’m happy to help!
Jennifer Bryan, Community Investment & Marketing Manager, SolarShare
The Ontario address thing??? Even an issue when you buy through your self directed brokerage?
This investment wasn’t available on any public market at the time of my purchase so I didn’t use my brokerage. It works like an exempt market security. Investors make a private placement for the bond by filling out a form and sending it to the company along with payment instructions. There’s the option to hold it in an RRSP but the account will go through a third party and the previously mentioned form is still required to be completed. 🙂
LOL! The cognitive dissonance is strong on this site! “I am finally stepping up and doing my part to save the planet…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.” WTF?! You say you care about saving the planet and wanting to do your part in limiting global warming but then you willingly, and by design, accept PAPER products from this so-called “green” company. Meaning trees — the natural antithesis of global warming — were destroyed in order to satisfy your greed. Well done. If you TRULY cared, you would have contacted the company, esp. Mike Brigham, prior to investing and insist that they change all their correspondence to the electronic type, including certificate issuance, before you sent them one red cent. (How many reams of paper will you receive over the next 20 years? How much green house gas will be created recycling all that paper?). And if you deeply truly cared, you would lobby the government to create policy which would ban all paper product within the financial sector (which operates almost wholly on the electronic level; e.g.… Read more »
I think his investment in solar energy more than offsets 1 piece of paper. BTW- the trees used for pulp/paper are not old growth high quality timber. They are usually plantation based fast growing trees, or trees that were not much use for anything, even firewood. SO paper is just an example of utilizing a resource. Trust me, we are not going out to log exotic rainforest hardwoods to make paper.
“I think his investment in solar energy more than offsets 1 piece of paper.” It might. But how do you know? Where’s the math behind your “I think…”? And it’s not just “1 piece of paper”, it’ll be 20 years of paper. And it’s not just 20 years of paper, it’s the fundamentally erroneous mentality behind the choice. “SO paper is just an example of utilizing a resource.” Ah, yes. More simplistic, superficial opinion (as is most often displayed here) . As previously stated, trees are the natural antithesis of green house gases, so utilizing them as “a resource” has the exact same result as utilizing oil as a resource. Not only that, but in this specific instance, there is exactly ZERO need to utilize trees as a resource; in this specific instance, it is a 100% wasteful and destructive choice — one which he proudly put on display. “Trust me, we are not going out to log exotic rainforest hardwoods to make paper.” Nope, we’re not. We’re “going out to log exotic rainforest hardwoods” to make….COWS!!! Which, BTW, are great for global warming (oh, sorry, the scientists have now changed the terminology to “climate change”). We, meaning Canadian mining… Read more »
There’s a lot more society can do to help the planet. I could have used the $10,000 on something more meaningful like maybe donating it to the David Suzuki Foundation. I plan to contribute more to green charities in the future instead of making a return for myself. 🙂 Thanks for the video link. I didn’t realize before that stocks with more pronounceable symbols can impact a company’s market cap haha. Maybe that’s why my Dollarama (DOL) shares are up 25% this year, but my Mondelez (MDLZ) shares have been flat so far. From now on I will incorporate this idea into my stock picking strategy.
Amazing. Thanks for proving a perfect example of the rampant cognitive dissonance I’m talking about: “Sustainability is very important to me…if there is too much pollution then entire ecosystems or farms where animals live could be destroyed. I simply cannot allow that happen…but my Mondelez (MDLZ) shares…” You claim to care about keeping the ecosystem healthy and pollutant, thus investing in a red herring solar power company, yet you support the share price of Mondelez, a company whose products are nothing but biological pollution and do nothing but cause sickness and disease (e.g. diabetes, obesity). Save the animals, kill the humans? Not to mention you support the share price of companies like Dollarama whose entire low-quality inventory is i) manufactured in China = pollution, and ii) comprised of imminent landfill/garbage = pollution. Don’t pretend to be “eco” just for the sake of appealing to the masses and/or fooling yourself. I sure don’t. I invest my money purely to grow my wealth. Period. It’s about money. In no way, shape, or form do I confuse investing with morals or ethics or any of that other ‘soft’ junk. I reserve that for personal actions (e.g. energy conservation). You’ll be much better off,… Read more »
That’s really cool – I think it’s a great idea to frame it and hang it up proudly. That also seems like a great 15-year interest rate, so you are getting two for one!
Solar-panel industry stuck in limbo waiting for Alberta government incentives
When government subsidies are funding both the producer and the consumer, you know it’s a fraudulent industry.
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Could you provide a link for the S&P A+ credit rating, please?
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Were you able to purchase the solar bonds and have the interest deposited to a TD account?
Yes. I receive payments directly in my TD account. They use the information based on the blank cheque I sent them.
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