New York Green Bank to Kickstart Clean Energy Investment

Environmental Law

 

The State of New York wants to jump start investment in clean energy projects.

In Governor Andrew M. Cuomo’s 2013 State of the State address, he proposed the New York Green Bank (“NY Green Bank”), a financing mechanism to spur private sector investment in “commercially-proven energy efficiency, renewable energy, and other clean technologies.”

On December 19, 2013, the New York Public Service Commission (“PSC”) approved $165 million in funding of the NY Green Bank. This funding was combined with $45 million previously allocated to it from emission allowance sales under the Regional Greenhouse Gas Initiative (“RGGI”) and created an initial $210 million reserve to achieve the Bank’s objectives.

The NY Green Bank will not operate like your typical bank; you won’t be able to make deposits or get a free water bottle when you open an account. Rather, the NY Green Bank will partner with “financial institutions and industry participants such as energy service companies, developers and equipment manufacturers to support economically viable clean energy projects.”

The State realized that the current system of providing subsidies and grants to incentivize clean energy was not working. New York State entities spend approximately $1.4 billion annually towards clean energy development and implementation, yet despite this level of spending, clean energy goals were not being reached. That model was not sustainable. The hope is that this one is.

The NY Green Bank will leverage private capital to finance its initial investments, and once those investments mature, the capital will be returned to the bank to be reinvested in other new clean energy projects. There are many “economic and creditworthy” renewable energy projects throughout New York that cannot get the financing. Several barriers prohibit private sector capital from flowing to these projects, namely “federal policy uncertainty, the absence of standardized contracts and underwriting criteria, and limited loan repayment and project performance data.”

To overcome these barriers, the NY Green Bank will operate with the following objectives:

  1. To enhance total market participation by providing credit support and/or aggregation mechanisms designed to scale clean energy generation and energy efficiency projects.
  2. To partner, rather than compete, with market intermediaries — such as project developers, energy service companies, or financial institutions—that are already making progress in the market, but where that progress is constrained by the lack of availability of reasonably priced financing.
  3. To leverage both the capital and institutional capabilities of its private sector partners.
  4. To not be in the subsidy business, but rather will earn a return on investments to preserve and grow its capital base, recycling that capital into new clean energy projects when its initial investments mature, ultimately creating a fully self-sustaining $1B support system for the clean energy finance market.[1]

 

With the establishment of the NY Green Bank, New York has set itself up to compete in the renewable energy future and to attract cleantech and sustainable energy projects to the Empire State. The NY Green Bank compliments New York’s other clean energy objectives, such as the New York Renewable Portfolio Standard which is New York’s goal to reach 30% renewable energy supply by 2015.

A positive sustainability loop has been created for renewable energy in New York. As these programs boost finance and development of clean energy projects throughout the state, there will be real short and long-term benefits for the economy and environment; our dependence on fossil fuels are reduced, jobs are created, air quality is improved, consumer energy bills are reduced, and our energy system as a whole is more resilient. New York’s energy future appears to be very bright.

The NY Green Bank expects to begin engaging potential partners in January 2014.

For more information on clean energy investment and the New York Green Bank, please contact Miriam Villani or Jason Kaplan.


[1] New York Green Bank, Summary, Available at http://www.governor.ny.gov/assets/documents/GBBackgrounder91013.pdf.

One Response to “New York Green Bank to Kickstart Clean Energy Investment”

  1. barry boyd Says:

    As William James said, “Whenever you’re in conflict with someone, there is one factor that can make the difference between damaging your relationship and deepening it. That factor is attitude.” A better attitude towards the environment can make it a better environment
    !

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