Apple and a select group of US companies are starting to sell renewable power to the electricity grid, a domain traditionally controlled by monopoly utilities and third party power plants.
The latest drone flyover of the Apple construction site in Cupertino shows steady progress on the future campus/power plant. Once finished there will be 700,000 square feet of solar panels covering the sprawling 2.8 million square foot complex.
A the beginning of the video, crews are busy installing the solar panel racking infrastructure on the main building's circular roof, but, a couple of minutes later, it's easy to see acres of finished solar panels already covering the parking structures and other buildings.
Getting paid retail
The campus is expected to generate around 75% of its own power, and get the rest from the $850 million, 130-MW solar farm south of San Francisco developed by First Solar.
Recently, a subsidiary named Apple Energy LLC applied to the US Federal Energy Regulatory Commission to sell excess power from the site as well as from Apple's own solar farms, hydroelectric plants and biogas facilities across the country, according to a June 6 application to the agency seen by PV Tech.
Apple also wants to sell the electricity at market rates. In other words, getting paid retail to subsidize its own costs.
Apple told FERC that it meets the legal criteria for selling electricity at market rates because it is not a major player in the energy business and has no power to influence electricity prices.
Helping cash-strapped families
Like Apple, many large corporations invest in clean energy like wind and solar — both on and off site — to control long-term electricity costs, but few have reached out to help financially strapped families get over the financial hurdle that prevents them from installing solar on their rooftops.
That changed when Patagonia, a billion dollar outdoor clothing retailer, entered the energy business — in its own unique way — by creating a $35M partnership to install solar panels on 1,500 homes in the US.
Patagonia will own the solar panels powering the homes and earn a decent profit, which will increase whenever surplus energy is sold to the grid.
The real upside is that Patagonia will help flood the renewables space with new money as it promotes solar energy among homeowners who still think solar is too expensive.
Obviously, becoming a residential solar installer like Solar City is a big change from selling outdoor clothing, but “it aligns with the DNA of what we do. Use business to influence environmental solutions,” Phil Graves, Patagonia's director of corporate development, told the Guardian. “We’re very passionate about moving away from fossil fuels.”
A generous federal tax credit helped Patagonia choose solar as an investment. It allows the company to own the energy systems and claim 30% of their costs as an income tax credit. In effect, the rules permit Patagonia to shift some of its federal tax burden to financing solar energy systems.
Patagonia's new solar outreach couldn't exist until 2012. That year the retailer registered to become California's first "benefit corporation," which allowed it to make environmental stewardship an integral part of its business.
The law shields a benefit corporation from shareholders filing lawsuits that argue management's social activism has diluted the stock's value.
Before the new law, California corporate law had mandated that shareholder interests trumped everything else. If Patagonia had wanted to divert capital into green programs that might take a long time to payoff — if at all — it would have had to restructure as a nonprofit, getting penalized by losing the ability to raise equity in the capital markets.
Patagonia's founder Yvon Chouinard, a surfer, kayaker and fly fisherman, who'd long written about combining environmentalism and business, signed up as soon as a the law gave him a way to restructure his business.
Assemblyman Jared Huffman sponsored the law that unleashed this new business model in California. Since he's no anarchist, just a do-gooding pragmatist, it required a two-thirds vote by shareholders before Chouinard could repurpose his company.
But after jumping that high bar, Chouinard adopted policies "that create a material positive impact on society and the environment."
More states and companies are starting to follow Patagonia's example. In 2012 California was only seventh state to bend the customary corporate governance law, following Vermont and Maryland in 2010, and New York, New Jersey, Virginia and Hawaii in 2011. Fast forward to 2016, and today twenty more states, including Delaware belong to the b-corp ecosystem.
So while the b-corp movement, as they call themselves, still remains an outlier, small compared to the larger economy driven strictly by capital markets, there are now more than 1,600 like-minded corporations across the country, including Etsy, Eileen Fisher, Method, Natura and Seventh Generation.
The b-corp ecosystem
Armed with its new legal status, two years ago Patagonia started a $27 million fund with Kina’ole Capital, a solar finance company, to install 1,000 residential systems in Hawaii.
Patagonia is again working with Kina’ole on the new solar project, as well as a close-knit group of certified B corps that include New Resource Bank, Beneficial State Bank, and the installer Sungevity.
Patagonia put up $10 million as the tax equity investor. New Resource Bank and Beneficial Sates are the lenders. Kina’ole is managing the fund, while Sungevity is the project developer.
“We all recognized that the B-corp relationship created mutual interest. That led to a conversation that became this deal,” said Andrew Birch, chief executive of Sungevity. “This is providing new funding for the solar sector, and that’s very important.”
The projects spread across California, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, and New York, where the fund makes solar easily available to homeowners through leases.
San Diego homeowner Gene Loucks is one of Patagonia's first customers. His solar panels just went live, and he expects to save $150 per month on his power bill.
“It seems like a good deal for everybody,” Loucks told the Guardian. “In Southern California there’s sun year round, so it’s silly to not take advantage of it. It’s good for the planet.”