According to Project Drawdown, a nonprofit that researches solutions to climate change, renewable energy ranks as one of the most important solutions in the race to ensure a safe and healthy climate for ourselves and future generations. Solar panels and wind turbines are highly visible and enduring symbols of our potential and progress in the increasingly urgent mission to shift to clean energy. Quite simply, we need to build a lot more of them, and the sooner the better. Fortunately, as investors, we can help make this happen—and earn a fair return in the process.
At Natural Investments, we’ve gravitated toward two investments that support renewable energy in different ways: Sunwealth Power and Greenbacker Renewable Energy Company.
Sunwealth is the smaller of the two, primarily because it works at the community level, installing photovoltaic (solar) systems on the rooftops and parking lots of businesses, multifamily homes, municipal and nonprofit buildings, schools and churches. Founded in 2014, Sunwealth is a Public Benefit Corporation and a B Corporation with a dual mandate to protect the environment and invest in low-to-moderate income (LMI) communities that are typically overlooked when it comes to renewable energy projects. Through the end of 2021, Sunwealth has invested $86 million in 512 projects that collectively generate 26 megawatts (MW) of clean energy. In terms of carbon emission reductions, that’s the equivalent of taking 6,400 cars off the road or powering 5,000 homes for one year.
In the process, Sunwealth invests an enormous amount of money in and around these LMI communities which are located across the U.S. but primarily in the northeast. Sunwealth contracts with local developers to build its projects, paying them $69 million, or 80 cents for every dollar invested through the end of 2021, and in the process creating much-needed local green jobs. The individuals and institutions receiving their energy from the sun replace their utility bills with smaller power purchase agreement payments to Sunwealth, which will save them more than $41 million on electricity over the panels’ lifetimes, or about 48 cents for every dollar invested with Sunwealth. All those savings remain in the communities, helping to build wealth and to close the inequality gap. Environmental benefits also accrue for the region and the planet: as fewer fossil fuels need to be burned to produce energy, pollution and carbon emissions decrease. Impressively, Sunwealth has been able to deliver these positive impacts in a financially sustainable way, making seven straight years of interest payments to its investors in full, without any defaults.
Greenbacker Renewable Energy Company has been building its renewable energy generation portfolio at a much larger scale since 2016. Greenbacker’s niche is medium-sized solar and wind projects that are bigger than Sunwealth’s community-scale projects and primarily feed power directly to utilities.
Greenbacker has grown dramatically: In 2021, Greenbacker’s portfolio hit 2,220 MW of renewable energy generation capacity, which is enough to power 385,000 homes for a year. Since Greenbacker was founded, the company has prevented 2.1 million metric tons of carbon from entering the atmosphere. That’s roughly equivalent to the amount of carbon that 2.6 million acres of forest can absorb in a year. Building out all these facilities takes a lot of work; Greenbacker’s portfolio currently supports 2,700 green jobs. Clearly, Greenbacker is up to the challenge of rapidly scaling renewable energy capacity, which is a crucial part of our path forward on climate. Greenbacker is thoughtfully enhancing other positive impacts of its business operations. For example, when possible, Greenbacker leases land for its wind farms from actual farmers, who receive reliable long-term supplemental income while continuing to productively farm the land under the turbines.
Another example: Maintaining the grass on solar farms typically involves hiring commercial mowing businesses, which invariably burn significant fossil fuels and work against Greenbacker’s mission of reducing carbon emissions. As a response, Greenbacker planted pollinator-friendly groundcover on 800 acres across 14 of its projects as of 2020. Not only does this reduce mowing costs and emissions, but it also benefits biodiversity, ecosystem health and human food systems, stabilizes the soil to prevent erosion, sequesters even more carbon than grass, and creates cooling microclimates that improve solar panel performance.
We love seeing these kinds of innovations from our investments, as they show that smart, creative approaches to old challenges can be good for business bottom lines as well as communities and living systems.
This publication is distributed to clients and friends of Natural Investments, LLC (NI). NI is an investment adviser registered with the SEC. It is for educational purposes only and is not intended to contain recommendations or solicit sales of any specific investment. Authors, representatives, or related persons of NI may own securities mentioned in here.