NY creates $1 billion Green Bank for clean energy development
New York has committed $210 million in initial funding for the $1 billion NY Green Bank initiative. First introduced by N.Y. Gov. Andrew Cuomo in his 2013 state of the state address a year ago, the bank is expected to open for business early in 2014. The new market-oriented approach is to accelerate clean energy deployment, create jobs and help make communities more resilient and sustainable. The initial funding combines $165 million redirected from other programs that was approved by the state Public Service Commission on Dec. 19. Another $45 million is coming from the Region Greenhouse Gas Initiative.
The NY Green Bank will partner with private sector institutions 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 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.
A description of the NY Green Bank on the state website says the new institution will follow several operating principles:
-It will enhance total market participation by providing credit support and/or aggregation mechanisms designed to scale clean energy generation and energy efficiency projects.
-It intends to partner with those already working in the market, such as project developers, energy service companies and financial institutions that are already make progress, but being constrained by the lack of reasonably priced financing.
-It will look to leverage the capital and institutional capabilities of its private sector partners.
-It will not be in the subsidy business, but rather earn a return on investments to grow its capital base, creating a fully self-sustaining support system for the clean energy finance market.
The new bank is a division of the New York State Energy Research and Development authority, and will operate within NYSERDA’s system of internal controls for risk management processes, as well as applying banking and investment industry best practices. An investment committee to include senior officers of the NY Green Bank and NYSERDA will approve financial transactions.
“New York’s Green Bank will target existing market barriers which currently prevent the widespread deployment of clean energy,” said Richard Kauffman, chairman of energy and finance for New York state. “Given these obstacles in financing, merely setting up a competitive market that offers the promise of choice offers only that: a promise unrealized if projects cannot obtain financing. The Green Bank is just one component of the state’s new chapter on energy policy that focuses on enabling self-sustaining private markets and reducing dependence on subsidies.”
“The Green Bank will contribute to the important public goals and policies that the Public Service Commission has established for the state’s clean energy programs,” said PSC Chair Audrey Zibelman. “Furthermore, the bank will encourage the private sector to support projects which will result in reduced emissions, increased renewable energy generation capacity, improved system resiliency and a cleaner environment.”
As part of its oversight function, the PSC will work with the NY Green Bank to ensure financial offerings meet the investment criteria set forth in the PSC Order and will review and monitor quarterly progress reports.
"The American Council on Renewable Energy (ACORE) supports the Public Service Commission's visionary approval of this initial funding for the New York Green Bank," stated Michael Brower, interim president and CEO of ACORE. "The New York Green Bank directly complements other clean energy policies and further leverages private capital and ingenuity, bringing additional investment, energy infrastructure and jobs to New York State."