# Solar Power Cooperatives

As I wrote in a post in the Michael Shuman interview thread, I have joined a solar power cooperative here in my area of Switzerland and I would like to share what I know so far about how this cooperative works, and also some of the technical aspects of the solar centers that it maintains, in the hope that others with experience with either individual solar systems or members of other solar cooperatives might also share their experience as far as what works well and what doesn’t.

Also, I'm a novice regarding solar power, so if anyone has anything to teach or share regarding solar power installations, I'd be grateful. One caveat: I have a lot of assumptions here, and don't understand the project as well as I like, due to some linguistic barriers, but I am on break for the next two weeks, so I will have time to meet with a representative of the coop one on one and ask some question regarding things I didn't fully understand in our general meeting, which is in French.

Here are the basic facts:

The cooperative is an independent organization, not tied to the local utility. It owns three arrays of PV panels at two locations at present. In a good year, the cooperative produces about 33,000 kWh of electricity. It sells the electricity at a premium through a program that encourages businesses to use some amount of renewable electricity. The price of everything is a little higher in Switzerland, of course, so hold your breath...the cooperative can receive 0.45 CHF (Swiss francs) per kilowatt hour. That's about 0.50 USD per kWh.

The capital invested in the coop, used to build these solar PV power stations is approximately 180,000 CHF. So, assuming the coop can continue to receive the 0.45/CHF per kWh and assuming that the coop can continue to produce 33,000 kWh per year, then this is the payback time that I calculate:

33,000 kWh per year * 0.45 CHF per kWh = 14850 CHF per year of revenue

180,000 CHF / 14850 CHF/year = 11.8 years.

So, making several tenuous assumptions, the payback for the project would be about 12 years.

BUT, there's a chance that we won't receive 0.45 CHF per kWh. In fact, we could receive a lot less (~0.25 CHF per kWh) under certain conditions, but I don't understand the probabilities of that very well yet. It's something I'm looking into. Assuming we only received an average of 0.25 CHF per kWh, the project would take about 21 years to pay for itself.

All of the info I've given so far is regarding the coop as it stands now. Here in our town, we have been meeting for about a year now to raise the capital for a new PV power station here in town that will have a capacity of 27 kW, and a potential annual generation capacity of 30,000 kWh. This project has now been finalized, and about 92,000 CHF of the 95,000 CHF needed for the project has already been contributed by the shareholders, so barring some unforeseen circumstance, this is a go. Here's the same math for the new project:

30,000 kWh per year * 0.45 CHF per kWh = 13500 CHF per year of revenue

95,000 CHF / 13500 CHF/year = 7 year payback time

But, at 0.25 CHF per kWh, this project in our town would have a payback time of a bit less than 13 years.

If the new project and existing projects are treated all together, as they will be in the cooperative, then the payback time at 0.45 CHF per kWh is 9.5 years and at 0.25 CHF per kWh is 17 years.

OK, there are some other nitty gritty details that I'll get into in a follow up post, regarding a crisis last year at one of the power stations, and how it was handled. (The contact points on the panels lost contact.... more on that later.)

For now, here are a couple of pictures of the projects:

The largest existing project: Potential for 23,000 kWh/year (But also the site where the contact points failed last year.)

The smaller existing project: approx 10,000 kWh per year, I think. (I need to clarify some details on this one.)

The roof site of the project that we recently approved here in my town.  It will be a 27 kW project, with the hope of producing 30,000 kWh per year.

Below is some info from the other post regarding the personal payoff potential of this investment.

I'd be grateful for any feedback, especially questions that I should be asking to the coop representative when I meet with him, hopefully next week.

Thanks!

Hugh

I bought one share for approximately \$1100 and the expected - but not guaranteed - dividend is a very modest 3% per year.  While 3% might sound like a pretty good dividend for a stock, the life of this project is assumed to be only 25 years, and there are all sorts of risks, such as the fact that the revenue assumptions are based on elevated prices for kilowatt hours by businesses that have pledged to buy a certain percentage of their electricity from renewable sources.  So, I'm not really crazy about the risk return ratio.  It's possible for me to sell my share, but if I don't sell it, then this doesn't seem to be a profitable investment, unless the price of electricity rises significantly and allows for a much bigger dividend.

Still, this 3% per year beats the almost non-existent interest rate on savings accounts offered by the bank here in town.   Even though I have a lot of concerns and questions about this investment, both on a technical level and on a governance level, I never hesitated in terms of commitment because it's a small enough amount of money that even if it turns out to be a loss, I will have learned a lot more about local investment, solar power, and how well or poorly cooperatives work here.  Fairly soon, I plan to post in more detail about this elsewhere at PP, in hopes of getting some feedback and ideas from other members of solar power coops, or individual owners of PV solar.

Also, this is as much about investing in social capital for me as it is about hoping for a financial gain.  One of the best things about the cooperative is that it gets me more integrated into a constructive project in the community, and helps me meet people here in town that have a similar vision regarding concrete action towards a different type of future.  While it seems to me that such cooperatives also need generate at least a little bit of financial profit to be viable models, I'm happy to participate in an early experiment in the hopes that we'll eventually get it right.

## Join the discussion

greered
Status: Member (Offline)
Joined: Apr 25 2008
Posts: 6
PV considerations

Hello Hugh -

It may be a while before a thorough study of your post is possible for me.  With that in mind, here are a couple of items that will likely be of interest to those interested in alternative energy and integration with a grid tie, which is most often helpful, if not absolutely necessary for PV to work well.

1.  Utilities are seeing the impact of paying for power from PV suppliers.  Their business model may not support that competition unless government policy forces them to do so.  As a result, there is a trend developing that includes PV suppliers actually being charged more for the electricity they use.  The justification for this is that the infrastructure and maintenance costs are being borne by an ever decreasing number of customers as the popularity of PV grows.

2.  We recently introduced wind turbines in concert with out PV and found it to work well.  There are low priced turbines that can produce 1 kw of power or more, if the weather conditions and location are right.  We have a business running out of our home and use a good deal of power.  It is not uncommon to see our meter running backwards at midnight, when our power use is reduced and the wind is blowing.

Best,

Edward

Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 578
Local PV Solar utility

The idea of forming a local PV Solar utility backed by investors is compelling. We belong to a rural electrical cooperative and have news that our local rates will rise significantly this summer.

I currently generate 9.5 KW on my property and am tied to the grid. The 2 systems have run with no issues for 2 years now. So, based on that experience,  I would be willing to invest in a larger scale operation.

Does anyone have experience or knowledge of a "cooperative" type of structure in the US that produces PV power and sells it to a local utility?

epgelinas
Status: Member (Offline)
Joined: Jul 15 2014
Posts: 6
My Solar experience

I recently purchased a 6K kW grid-tied solar array system, and I rarely see my meter running forward. I can have an AC on, plus my TV and the usual items around the house and my meter runs backwards during the day. In 3 months I've produced over 1200 kW more than I've used, and that's with a lot of AC being used(2 or 3 at a time) the last few weeks during the humidity and heat we've had. All that being said, I like the idea of adding a turbine to further boost the system. Between what I'm expecting to sell back to the power company, plus the Renewable Energy Credits I should receive back about \$500-600 versus the \$150 or so I'll pay annually for connection fees.

I am going to research your first point a little more, but I feel I remember this coming up during installation and mentioning it would be a hard sell for the power companies to not grandfather in people who already have grid-tied systems.

I am a new member to Peak Prosperity, though I've enjoyed their articles and interviews for a couple years, and hope to put together a better synopsis of my solar story for everyone to enjoy that may have question, because I can't encourage people enough to consider it!

Erik

silvervarg
Status: Bronze Member (Offline)
Joined: Mar 28 2010
Posts: 57
Not just financial investment

Great post Edward, special thanks to all the details and the photos.

If seen as just a financial investment it gives about 3% interest, but the capital is likely to be gone in about 25 years (roughly the expected lifespan of the project).
Taking this into the calculation the payback may even be slightly below 0%. Add to that the the project also has risks, so it is not comparable to risk-free interest rates.
So, if seen strictly as a financial investment it looks pretty bad.

Now look at the other sides, that are both much more positive and also harder to quantify.