Green Bonds are bonds that are designated as having some sort of environmental bent to them. The world of green bonds is still young, so there is not a lot of regulation around them yet. I have wanted to invest in green bonds for awhile, but until now they have not been available to the consumer. Enter CoPower.
CoPower was formed in 2013 when the founders identified a particular hole in the green investing and technology market. They have developed a market for people who want to invest their money in clean-tech while providing businesses who do clean tech with capital. But they are not looking at start-ups and risky investing. CoPower is providing money for a variety of businesses that install renewable energy projects and energy efficiency projects such as improving a building’s insulation and replacing lighting with LEDs. They only invest in projects using experienced designers-installers who use proven technologies.
The best part for the consumer is that these bonds have a minimum investment level of $5,000 with a 5% yield for 5 years.
The projects they have invested in so far have been projects with triple-A rated municipalities and the companies that install them. CoPower looks very carefully at both the project goals and the installer before committing their funds to the project. In terms of how it works, the savings garnered from the installation of the new efficient equipment pays for the debt financing. Once the debt is paid off, the savings are kept by the project owners.
One thing to note: because this is a new company, they are able to save costs by having investors go direct to them. The fund is currently not available to brokers on a commission basis. I asked if it could be put into a Tax-free Savings Account and was told that at this point the extra fees involved to set it up negate the interest earned. CoPower is looking at developing some ties with some brokerage firms down the road, but so far the product is so new and small by investment standards that it hasn’t been feasible.
Bottom line: CoPower has found a particular niche in the marketplace by providing smaller investors with an opportunity to put their money into projects that promote renewable energy and energy efficiency while providing smaller companies the funds to install the projects.
While the company is still young, it has a zero default rate on its loans. The next green bond is being issued in June 2016. For more information on how to invest with them, please contact the company directly.
Disclaimer: This article is meant for information purposes only. It is important that you speak with a financial advisor and do your own due diligence before investing.