The Empire State has opened the doors to the New York Green Bank.
The largest such statewide institution in the US, it seeks to accelerate the flow of capital into the state’s small but fast-growing renewables sector.
The bank, which follows models like the UK’s Green Investment Bank, was initially capitalised with $210m in public money which will be used to leverage up private investment in renewables and energy-efficiency.
Of the state’s contribution thus far, $165m was redirected from other clean-energy programmes and the remainder comes from proceeds from the Regional Greenhouse Gas Initiative, the carbon cap-and-trade covering nine northeastern US states.
While the NY Green Bank will be open to most “commercially proven” technologies, the focus will be on “near frontier” sectors – including wind and solar – that may struggle disproportionately in the financial markets.
PV is expected to be one of the primary beneficiaries of the NY Green Bank, in a politically progressive state which has the third largest population in the US, but which is only the 10th largest solar market.
NY officials point out three specific challenges facing solar projects looking for financing – the long loan tenors needed; the relatively small individual sizes of projects; and the often marginal creditworthiness of the counterparties.
The NY Green Bank could alleviate such problems, they say, by purchasing solar loans from intermediaries and “warehousing” the loans until the pool has grown to a sufficient size to attract capital-market investment.
Other possibilities include credit-enhancement mechanisms or simply co-investing alongside the private sector.
The bank “will send a message to the financial markets that expanding our clean-energy economy is a priority for New York state,” says Governor Andrew Cuomo.
While it has not played as large a role in sectors like offshore wind as initially hoped, the UK's Green Investment Bank has been quietly successful since being launched in 2012.
The Edinburgh-based GIB has committed more than £700m ($1.2bn) to several dozen projects, mobilising more than £2bn in private-sector investment in the process.
While many of the GIB’s investments to date have been in areas like biomass boilers and waste-to-energy schemes, it has also invested significant sums of money in the London Array and Rhyl Flats offshore wind farms.