New York opens its Green Bank
New York’s Governor Andrew Cuomo announced the launch of the state’s Green Bank to provide financing for in-state alternative energy projects. Here is the skinny:
Governor Andrew M. Cuomo today announced the start of business operations for the New York Green Bank, which will work to stimulate private sector financing and accelerate the transition to a more cost-effective, resilient and clean energy system. The largest green bank in the nation, the NY Green Bank is seeking proposals from private-sector lenders, investors and industry participants that facilitate the financing of creditworthy clean-energy projects in New York State.
The proposed financing structures appear to put the Green Bank in the first loss position for some private sector risk:
Examples of the types of investment partnerships the NY Green Bank may engage in include credit enhancements, co-investing with the private sector in a loan fund for clean energy, loan warehousing/short-term project aggregation or other similar arrangements.
Who will be overseeing the investment process?
The NY Green Bank is a division of the New York State Energy Research and Development Authority (NYSERDA) and will operate within NYSERDA’s system of internal controls. In addition, the NY Green Bank will seek to apply banking and investment industry best practices with regard to risk management and compliance, including processes and procedures for evaluating and selecting proposals. An investment committee, which will include senior officers of the NY Green Bank and NYSERDA, will be required to approve any material financial transaction prior to closing.
It’s not only career public officials who will be involved in the investment process. Governor Cuomo appointed Alfred Griffin, a banking veteran from Citigroup, as the President of the New York Green Bank:
Mr. Griffin, a New York City resident, joins the Green Bank from Citigroup Global Markets Inc. where he has been employed since 1997. At Citi, Mr. Griffin specialized in structured finance with roles in corporate and investment banking, capital markets and risk management. Over his career, Mr. Griffin has worked with multiple asset classes and industries including alternative energy and new product development to finance renewable energy generation and energy efficiency.
Where does the funding coming from? FAQs (PDF):
On December 19, 2013, the New York Public Service Commission (PSC) approved an initial $165 million in funding for the NY Green Bank from idle clean energy ratepayer funds. This funding will be combined with at least $45 million already allocated to the NY Green Bank from emission allowances sales under the Regional Greenhouse Gas Initiative. Future funding for the NY Green Bank is likely to come from these sources, pursuant to subsequent proceedings.
Here is the mission statement, of sorts:
The NY Green Bank will partner with energy service companies, regional banks, larger multinational banks, and other investors and lenders to support economically viable clean energy projects. The NY Green Bank’s ideal partners are entities that are achieving success in clean energy markets but that success is limited by lack of availability of financing. NY Green Bank’s wholesale financing approach not only allows the Green Bank to leverage its capital to bring in multiples of private capital. It also allows the Green Bank to leverage the existing infrastructure, pipelines, and due diligence capabilities of successful partners with existing channels and on-the-ground resources.
What kind of alternative energy projects are permissible to apply for financing?
Projects to be supported by the NY Green Bank can include a broad range of commercially proven technologies including: solar, wind and other renewable energy generation technologies, residential and commercial/industrial energy efficiency measures, electricity load reduction, on-site clean generation, and similar projects that can support the State’s clean energy objectives.
My fantasy is a company that installs microhydropower units for homeowners who have running water on their property. New York is not blessed with a lot of sun, but it does have hydro and wind potential. I hope the New York Green Bank spawns a thousand alternative energy projects.
Image source: U.S. Department of Energy