Jeff Schub and Bryan Garcia
This article announces a new project at Yale Center for Business and the Environment.
Working to build a strong support system for financing energy efficiency and renewable energy requires a collaborative approach with all hands on deck. In the rocky seas of this year’s federal and state climate and energy policy, state and local green banks are emerging as a potentially protective anchor that policymakers can create.
Yale Center for Business and the Environment is currently building a training program that will use a set of green banking case studies on innovative clean-energy-finance structures that students developed last year. This week, the first case study is being published.
We have both been working with student teams as they develop these case studies. These cases, which will be published over the next few months, illuminate the inner mechanics of how green banks and their products are developed.
Given changes in federal policy, local and state governments in the United States are taking the lead – once again – to demonstrate that the calling of “think globally, act locally” is front and center in communities across this country.
One of the chief approaches emerging in the clean-energy space is the green-bank movement. From states like Connecticut, New Jersey, New York, and Rhode Island to local governments like Montgomery County in Maryland, efforts to use limited public resources to leverage and mobilize private investment in the clean-energy economy are taking root. And many more states and local governments are developing their own green banks.
To shed some light on these actions, Yale Center for Business and the Environment worked with the Coalition for Green Capital to produce case studies for our upcoming playbook on green banks. These cases share insights from the frontlines of the movement.
Sharing the lessons learned from these examples through the Clean Energy Finance Forum audience and eventually through a professional education program will help efforts to scale up clean-energy financing and deployment.
Through the course, student teams assessed seven case studies of various renewable-energy and energy-efficiency products and market segments, including:
- Rhode Island Infrastructure Bank’s Efficient Buildings Fund supports the deployment of clean energy in municipal buildings by aggregating projects. Thus far, it has resulted in more than $17 million in clean-energy upgrades across 17 projects in six municipalities. That has yielded $20 million in net-cash-flow savings.
- Connecticut Residential Solar Program uses the tools of environmental markets and finance to support the in-state deployment of 300 MW of residential solar PV. This will help Connecticut meet its renewable portfolio standard (RPS) through long-term contracts for renewable-energy credits (RECs). It will also create over $530 million of local economic development.
- Australian Clean Energy Finance Corporation’s Environmental Upgrade Agreements serve to support an Environmental Upgrade Agreement (EUA) modeled after property-assessed clean energy (PACE) in the United States. They will also provide $40 million AUS in financing for clean-energy improvements that will be repaid via a surcharge on local property taxes.
- New York Green Bank’s Partnership with Sealed supports an innovative residential energy-efficiency product called “Home Advance” through a $5-million loan intended to scale residential energy-efficiency financing. This allows Sealed to pay for and manage 400 household-efficiency upgrades. It then becomes a billing intermediary.
- Roanoke Upgrade to $ave Program supports residential energy-efficiency improvements through an on-bill “Pay As You Save” (PAYS®) mechanism that is saving households 50 percent on their electricity bills. The program is making $6 million of funds available. This allows North Carolina to meet its Renewable Energy and Energy Efficiency Portfolio Standard (REPS).
- Connecticut Green Bank’s Commercial Solar Lease was designed to support local contractors with a third-party ownership financing solution for residential solar PV. This results in a $44-million public-private partnership through a tax-equity investor and a local-lenders' syndicate. The financing reaches nearly 1,200 households and deploys over 9 MW.
- Virginia SAVES Qualified Energy Conservation Bonds fund institutional projects aimed at reducing energy consumption and supporting green-community programs. This takes place through $55 million in capital provided through the state’s Qualified Energy Conservation Bonds (QECBs) allocation. This lowers interest rates and saves nearly $30 million in five projects that are supported through $21 million in financing to date.
Each of these case studies provides a thorough overview of the situation faced by the implementing organization – from addressing public policies to assessing the market potential. Then, the case studies explore the problems that are being solved.
The case studies then lay out the various product structures that were pursued to resolve the problem. These can include anything from capital structures to key product design elements. Each of these examples generate new insights from which to glean best practices. The resulting market impacts are often explored as well.
Yale Center for Business and the Environment will share the Rhode Island Infrastructure Bank’s Efficient Buildings Fund case study with the readers of Clean Energy Finance Forum. This case study addresses the situation of the state’s desire to reduce the energy costs of public buildings and the complication of lack of financial bandwidth at the local level. It also describes the solution in which the infrastructure bank is aggregating and financing multiple building projects at once to reach a scale sufficient to lower financing costs. Each subsequent issue will bring forth another case study for readers to comment on, learn from, and – if possible – replicate.
We welcome further suggestions of useful case studies for students to look into that demonstrate how public-private partnerships can scale-up clean-energy deployment. To suggest ideas, use our "Submit a Story Idea" link. As the green-bank movement continues to grow, we look forward to creating a professional-education program to provide implementers with useful examples they might decide to use as foundational elements for new banks, programs and legislation.