Clean Energy FCU Embodies Efficiency & Supports Sustainability

Since April 2018, the $7 million, Centennial, Colo.-based Clean Energy Credit Union has offset 36,000 tons of carbon dioxide. To put that into perspective, the average car emits about six tons of carbon dioxide every year, according to the website Car Talk. That means Clean Energy has helped to offset the emissions of 1,800 cars that have been on the road a year.

The credit union has done it all through its online-only model, which includes offerings of loans for solar electric systems, clean energy vehicles, green home improvements, electric bicycles, and investment options such as CDs, IRAs and savings accounts.

“Our vision is a world where everyone participates in the clean energy movement. Clean Energy Credit Union makes that possible in two ways: One is by making it easier for everyone to use clean energy or to save energy. We do that by providing the best or among the best loan terms and interest rates to help some afford [it]. And another way … is to make it easier for everyone to invest in clean energy,” Blake Jones, co-founder and board chair for Clean Energy, said during a podcast.

In just over a year, 900 members have joined Clean Energy, the credit union has originated 500 clean energy loans throughout 36 states and it has $5 million in loans in the pipeline.

In order to offer members the best possible rates, the credit union adopted a lean operational model. It has kept costs low thanks to more than just the absence of a brick and mortar location – it’s virtually paperless and all transactions must be completed online. That means no loan coupons or paper statements, documents are signed via digital signature, and 100% of loans are paid through a direct debit from a checking or savings account.

“We give our members a 2% rate deduction [for the direct debit],” Terri Mickelsen, president/CEO of Clean Energy, said. To date, the credit union has a 0% default rate.

The credit union also outsourced its accounting, human resources and IT departments, and uses a shared office space. The purpose of the outsourcing isn’t to replace current staff, but to keep costs low, and focus on strategic initiatives and higher priority tasks. In the case of Clean Energy, which didn’t have any staff to begin with, outsourcing these functions made even more sense.

“We’re really targeting members who don’t need to go into a branch. If they do, we can do shared branching. Because there are already branches out there, there’s no need to continue to build them and it saves our members money. We can keep fees lower, we can keep our overhead lower and hopefully the savings will go back into the member’s pocket,” Mickelsen said.

Impressively, the credit union has gotten all of its business in spite of virtually no marketing, other than a few media articles and a podcast. The majority of its membership originated from blogs and word-of-mouth marketing.

“We’ve never had to advertise. I just got a member yesterday who said, ‘Hey, I was looking for someone who could help with a Tesla loan and I had four people tell me to come to you.’ The Tesla community is tight. You treat them well and they’ll treat you well,” Mickelsen said.

Before the credit union even has an opportunity to do any marketing or advertising, it needs to continue expanding its capabilities and infrastructure, Mickelsen said. Currently, it has five employees and only two of them are full-time. It’s bringing on two more and hopes to hire three to four more by the end of the year.

Mickelsen said she is always looking for ways to be more efficient. Having previously served as COO and vice president of internal operations at two other credit unions, each with more than $500 million in assets, efficiency and cost savings are core principles for her, according to a press release from CU Service Network.

Efficiency and conservation don’t just take place in the office, though. Mickelsen joked that she’s a recycling ninja, and said upon finding a can in the garbage at her house, she nearly did a DNA analysis on it to find out which one of her children threw it in there.

“We do try to walk the walk and make the little impact that we can. I tell people when they interview that this is something we’re passionate about,” Mickelsen said.

One of Clean Energy’s advantages is that it’s not geographically bound by a branch location, so it can lend in all 50 states and spread out potential risk. If one area or city is impacted by an economic downturn or natural disaster, it can count on a number of loans to remain unaffected.

There appears to be public support for renewable energy. A 2017 Pew Research Center survey found 83% of Americans said increasing the use of renewable energy sources is a top or important priority for the country’s energy policies.

“As far as I know, we’re the only online-only credit union, and I think that’s a new model for a credit union, to start and not have all the branches,” Mickelsen said. She also emphasized that renewable energy lending could potentially be a huge market for credit unions in the future.

Despite public support for renewable energy, the Trump Administration has rolled back benefits for using renewable energy, including rolling back an electric vehicle tax credit. According to the IRS’s website, beginning Jan. 1, 2019, the tax credit for Tesla’s eligible vehicles is $3,750. On July 1, 2019, the credit will be reduced to $1,875 for the remainder of the year. After Dec. 31, 2019, no credit will be available.

The impacts of the reduction and ultimate elimination of the electric vehicle tax credit for these vehicles are unknown. However, what is known is that while a car has a limited lifespan, the use of solar panels on a home offers longer lasting benefits and savings, and it’s also great for the environment. “Solar systems [from] the 80s are still working. They may not be as efficient, but they still work,” Mickelsen said.

Regardless of the tax credit’s status, there are still benefits to renewable energy lending. “If a person wants to take out a loan from an existing financial institution, they are often forced to choose between attractive loan terms and putting their money into a values-aligned institution. With Clean Energy, members will not need to choose one or the other; they will get both,” Mickelsen emphasized.

While the path forward may hold some unknowns, Mickelson said she believes Clean Energy also has an opportunity to show that small credit unions can survive.

“We might have to do a different business model, but I feel that there’s a really important place out there for small credit unions,” she said. “We’re going to teach other credit unions how to lend in this area as well by participating out loans to them so they can see how we’re lending. I’m hoping that it will help them not only with their loan portfolios, because our average credit score is high, but also they’ll be able to learn about this type of lending.”