While no two “green banks” are exactly the same, the idea behind these government-created financial institutions is to dramatically expand the clean energy market. Rather than providing grants to stimulate clean energy investment, green banks use attractive interest rates and other incentives to leverage money from the private sector.
In addition to offering attractive interest rates, loan-loss reserves and other market supports, these innovative banks draw on deep expertise from the public and private sectors to help demonstrate the profitability of clean energy investments.
By the end of the year, green banks should be up and running in Connecticut, New York and Hawaii. We hope that California will follow soon. These states form a vanguard that has recognized the value of using a small amount of public capital to generate significant private investment in clean energy.
It’s working in Connecticut
In 2012, Connecticut created the first green bank, known as CEFIA, in the United States. It did so by combining several state agencies, increasing their responsibility and funding, and leveraging a small amount of public funds to generate lots of private-sector investment. According to CEFIA’s 2013 annual report, for every one dollar of ratepayer funds CEFIA invested, roughly $10 was invested by private sources.
Connecticut’s Property Assessed Clean Energy program accounts for much of this investment. It lets commercial customers finance clean energy upgrades to their buildings through their property tax bill with no money down. Additionally, CEFIA has been able to create an innovative financing solution that is expected to dramatically expand the market for solar projects on commercial properties. Read More