How Rural Colorado Roots Helped One Solar Company Become 'The Fastest Growing'

Jan 21, 2015

Just five years ago, as recession gripped the country, a tiny Colorado energy company, opened up its first solar project. Sited in the rural town of El Jebel, population less than 4,000, Clean Energy Collective's effort was called a community solar garden -- smaller than a solar farm, but big enough to power a neighborhood.

Now, Clean Energy Collective, which just cut the ribbon on a brand new solar garden in Fort Collins, is the fastest growing solar company in the country. Its founder and head Paul Spencer said its roots in the state's rural Roaring Fork Valley (it is now based in Louisville, outside Boulder) are what allowed it to try out a new energy model that is taking root across the country.

Why? First, said Spencer, because his local electric utility was willing to take a chance. Holy Cross Energy is one of Colorado's many rural energy cooperatives, providing electricity to about 55,000 customers in five Western Colorado counties. When Spencer developed his idea for the solar garden, it came when he was developing a "green" neighborhood, and about a third of the houses were too shaded for good solar options. A light bulb went off, he said.

"The thought was, well, if we just pull all the solar off of all these roofs and we put it in this park all together in one big system, it would probably be about the right size."

To do that, though, he'd have develop a system to credit each house for the power its panels generated, and get the utility to buy in to this new system.

Spencer brought the proposal to the Holy Cross board. They basically said, "we've never heard anything like this, this sounds crazy, but if you can figure out how to do it, we'll work with you to actually do it," he recalled.

That concept -- putting all the solar panels in one place, allowing customers to buy as many as they want, and then crediting them for the energy their panels produce, is the essence of the many solar gardens Clean Energy Collective has built since then. They developed the software to do this and have figured out ways to make it work nationally.

The company, which went from seven employees to 100 in the last two years, now has three offices and gardens in eight states, from Massachusetts to Minnesota, and is "in active conversations about solutions being installed 160 utilities across 49 different states," said Spencer.

Rural Roots Allowed For Experimentation

Had the company been based in, say, San Francisco, said Spencer, and trying to work with PG&E, one of the largest utilities in the country, "there's no way. First of all, there's no way they wouldn't have said yes. And even if they would have said yes, we'd probably still be talking about it on paper as opposed to doing it."

Nikhil Garg, vice president at Black Coral Capital, an investment firm with a major stake in the company, agreed.

"All the credit to Holy Cross Energy, they were a fantastic first partner and really willing to take a risk," said Garg.

Steve Casey, who manages member services for Holy Cross, said the cooperative's member-owners shaped its ability to move forward with the new concept.

"Holy Cross has the benefit that our members are really progressively forward, They support renewables. They support energy efficiency."

Holy Cross now has two sold-out solar gardens through Clean Energy Collective, with plans for a third, bigger one, to come online this year.

Rural Colorado also posed some other advantages. Somewhat ironically, this is due to the area's tough financial environment for renewables. Different states often have different electricity costs, and Colorado is one of the least expensive. That meant Spencer's solar gardens had to compete with cheap kilowatt-hours from coal and natural gas power plants.

"It's kind of like training at high altitude," said Spencer. The company, in its early days, learned to build solar gardens at the lowest possible cost. They make most of their money by building the garden and selling the panels to customers -- homeowners. The cheaper they can build the garden for, the more money they make on the panel sales.

Now that CEC has expanded to other states where power costs are much higher than Colorado, they can sell the panels at a higher price, because they electricity they generate is worth more. The pain of starting at high altitude pays off at sea level.

Black Coral's Garg said the company also differentiated itself by figuring out all the complicated tax and securities law that allows them to create a garden, sell panels to homeowners, and work with the utilities to credit those homeowners.

Even as rooftop solar has grown over the years, it's still not an option for many customers, either because of factors like roof orientation, cost, a requirement for home ownership and good credit.

The company's solar gardens solve those problems, allowing customers to own as many panels as they can afford, up to their total home electricity use, and avoid the hassle of a rooftop set. Other companies, following Clean Energy Collective's model, have also begun building solar gardens, but they usually offer a leasing option, which Spencer said is less attractive to customers.

Gardens A Utility Crowd-Pleaser

Utilities like the gardens too.

"It's a very, very simple process for us," said David White, member relations manager at Poudre Valley REA, a Northern Colorado electrical utility. The new garden the cooperative opened, in collaboration with Clean Energy Collective, is the second they have worked on together.

The first garden, which was small, sold out before it was built, said White. This new one isn't huge, it's about 632 kilowatts, or around 2,200 panels, but it is about 70 percent sold.

Casey, of Holy Cross, agreed. One of the key innovations was making the entire process simple, "so it became very attractive for our member-consumer to participate in this program."

Investors are taking note. In late December, First Solar, the largest solar company in the world, became a major investor in Clean Energy Collective. It was a bid by the company, which builds large scale solar power plants, to get into the residential solar market.

It was also an acknowledgement that the solar garden model, pioneered five years ago by a tiny company in a quirky Western Colorado mountain town, is probably here to stay.