Over the last decade New York has invested over a billion dollars in its clean energy and climate action programs. To take these investments a step further and ensure money is making a difference, in his 2013 State of the State Address, Governor Cuomo announced a brand new $1 billion Green Bank initiative to be led by energy finance expert, and now chief energy policy advisor, Richard Kauffman.
So, with a portfolio of clean energy programs labeled with enough acronyms to make the alphabet blush, why would we need another? And just what is a green bank anyway?
Since the Governor’s announcement in January, there have been scant details revealed on just how this green bank is going to work, but that is about to change. Over the past few weeks the curtain has slowly been pulled back. In July, Mr. Kauffman appeared before the U.S. Senate Energy and Natural Resource Committee and presented testimony making the case for the new initiative and outlining the role the green bank will play in advancing the state’s clean energy goals.
New York’s existing energy efficiency and renewable energy programs have delivered substantial economic, environmental and consumer benefits, especially when it comes to the development of wind farms and behind the meter residential projects (think rooftop solar or energy saving home renovations). While this approach has been successful on both the large and small end of the clean energy spectrum, it has failed to establish a workable market model for mid-sized ventures.
Simply put, the traditional private sector capital financing mechanisms are not designed to support the clean energy sector. Companies seeking to operate in this realm cannot take advantage of today’s historically low interest rates, nor can they attract investors through the stock and bond markets. As a result, we are leaving a significant amount of achievable energy and environmental benefits on the table because developers are unable to achieve the economies of scale necessary to make these mid-sized projects cost effective.
Here is where the green bank comes in: New York plans on utilizing this new tool to work with the private sector to develop strategies aimed at advancing promising energy efficiency and renewable project opportunities otherwise hampered by insufficient capital availability. This innovative approach to financing mid-sized clean energy projects aims to bridge the so-called “valley of death” that too often stymies the commercialization of new technologies and market opportunities, such as the aggregation of building retrofits and community-wide solar installations.
This month, New York will take the first step toward turning the green bank concept into reality.
On August 13th, NYSERDA will close on a $24.3 million bond offering backed by the Green Jobs – Green New York revolving loan fund. If Mr. Kauffman is successful in implementing Governor Cuomo’s bold initiative, New York’s clean energy markets could finally make the leap necessary to end our over reliance on dirty climate-altering fossil fuels.