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New York Banks on a Clean, Green Economy
Green Technology Featured Articles
September 10, 2013

New York Banks on a Clean, Green Economy

By Cheryl Kaften
TMCnet Contributor

It’s the color of money, of environmentalism, and of brand-new initiatives—so it’s fitting and proper that the Empire State’s new financing organization in support of the clean energy economy should be called the New York Green Bank.


On Sept. 10, New York Governor Andrew M. Cuomo launched the first step of his $1 billion cleantech financing initiative—which he originally proposed in his “State of the State Address” nine months ago, stating, “Gone are the anti-business, obstructionist, tax capital, and gridlock mentalities, replaced with an entrepreneurial government that collaboratively works together for the people and partners with the private sector to create jobs and get the economy back on track. The agenda laid out today is a comprehensive plan for New York State to rise to meet the challenges of today and the future.”

The Green Bank’s primary socioeconomic objectives are to:

  • Increase the amount of clean energy deployed for every dollar of state money spent;
  • Spur economic development and clean energy jobs across the state;
  • Leverage private sector capital to develop sustainable clean energy financing markets; and
  • Animate capital markets, so as to reduce the cost of capital and the need for government support.

The bank initially will be capitalized through a petition filed with the New York State Energy Research and Development Authority (NYSERDA) to use about $165 million in uncommitted funds. This primary funding, once approved by the Public Service Commission (PSC), will enable the Green Bank to leverage private sector financing for clean energy projects that create jobs and help make New York’s communities more sustainable.

NYSERDA anticipates that further capitalization of the Green Bank will be considered by the PSC in a subsequent proceeding. Both this petition and the subsequent PSC proceeding will include public comment periods. When fully capitalized, the Green Bank is expected to have a $1 billion balance sheet.

The capitalization of the Green Bank is coming at no extra cost to New York ratepayers. With the petition filed by NYSERDA, the State is seeking to capitalize the bank by repurposing a portion of existing energy funds which have not delivered the impact needed to grow a more affordable and cleaner energy economy. Once capitalized, the Green Bank will be able to preserve, recycle and eventually grow its capital base, which will enable it to become a self-sustaining support mechanism for clean energy.

Three Efforts

Indeed, the new bank is one of three efforts outlined in the governor’s January 9 speech that he intends use as a “financial engine” to spur public-private partnership and to make New York synonymous with next-generation power and innovation. The others include:

  • Extend NY-Sun Solar Jobs: The program will be expanded at $150 million annually for 10 years to increase solar panel installations for homes and businesses.
  • Charge NY Program: The Charge NY Program will invest in an electric car network to reduce reliance on fossil fuels by installing a statewide network of charging stations and providing charging infrastructure tax credits.

To coordinate the state's cleantech agenda and oversee the state government's energy portfolio, the governor has named Richard Kauffman, who served as a senior advisor to the nation’s former Secretary of Energy Steven Chu, to a seat in his Cabinet as the "Energy Czar."

Kauffman commented, “By incorporating a financing model into the state’s clean energy support toolkit, the state will derive greater private sector leverage from scarce public funding than the current incentive model alone. The Green Bank is the next step in our strategy to unleash markets to provide economic growth and to help transform New York's energy system into one that is cleaner, more efficient and offers more value to customers."

Attracting Private Capital

The Green Bank will partner with private sector lenders by providing financial products such as credit enhancement, loan loss reserves and loan bundling to support securitization and build secondary markets.

These products will support—and enable the flow of private capital to—economically viable clean energy projects that cannot currently access financing due to market barriers, such as federal policy uncertainty, insufficient performance data, and the lack of publicly-traded capital markets for clean energy.

Preliminary models suggest that, over a five-year period, the Green Bank can at least double the amount of private capital available to grow clean energy markets; and, over a 20-year period, it has the potential to deliver nearly ten times more private capital into the current system. The Green Bank’s ultimate goal, which is to enable a stand-alone, dependable private sector financing market that no longer needs government support, will provide the greatest value for ratepayers.

Michael Eckhart, global head of Environmental Finance at Citigroup, said, “The private sector welcomes the governor's Green Bank initiative. The task of scaling up clean energy and energy efficiency in New York and across the nation will require access to significant amounts of capital. Governor Cuomo and Richard Kauffman are uniquely qualified to facilitate partnership between the private and public sectors, which is critical to achieving success. We look forward to working with the Green Bank to bring clean energy and green jobs to New Yorkers.”

Douglass Sims, senior policy analyst at the Natural Resource Defense Council's Center for Market Innovation, said, “NRDC is pleased to see the New York Green Bank taking shape. We expect the bank, which is being designed to leverage public and private capital, also to create synergies with the state's most effective existing clean energy programs. This comprehensive and innovative approach promises to yield more clean energy per New York dollar invested and set a national and international precedent for smart climate investment.”

The Green Bank is anticipated to open for business and offer its initial financial products in early 2014.  




Edited by Alisen Downey


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