Author: Gary Decker

By Alison Bennett, S&P Global

Some industry leaders are advocating for billions of dollars in new federal funding for green banks to go toward a national nonprofit institution that could jump-start the clean energy market and help state and local banks.

A green bank is a public, quasi-public or nonprofit institution that uses public funds to attract private investment in clean energy funds. More than 20 such banks now exist at the state and local level in the U.S. The Inflation Reduction Act, signed by President Joe Biden on Aug. 16, provides a total of $27 billion for green banks through the Greenhouse Gas Reduction Fund.

Debate remains about whether that funding should be directed toward individual green banks or should be used to create a national bank that could leverage capital and create financial products to generate more money for green banks nationwide. The Coalition for Green Capital and the American Green Bank Consortium, as well as some lawmakers, are pushing for the latter option, saying that direct grants would not be enough to help the industry provide funding across the board.

Of the total $27 billion, $7 billion will go to states, municipalities, tribal governments and eligible recipients to enable low-income and disadvantaged communities to deploy or benefit from zero-emission technologies or other types of emission reduction activities. The other $20 billion is earmarked for eligible nonprofits to provide funding assistance to green projects through direct and indirect investments — money that will be administered by the Environmental Protection Agency.

The DC Green Bank, part of the District of Columbia’s government, said any money is welcome.

“This really is a game-changer for us in terms of scale,” DC Green Bank CEO Eli Hopson said in an interview. “On a citywide scale, we are going to transform residents’ lives. With this volume, we can standardize products and work with private capital markets. It really is a transformation.”

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By Keith Loria, Commercial Observer

A joint venture between DC Green Bank and Rainplan has closed on an initial $2 million of financing to increase access and affordability for projects across Washington, D.C., designed to manage heavy rainfall, prevent flooding and filter storm runoff.

The loan will deliver financial support for 14 residential projects and 10 commercial projects in the area. The loan will also fund stormwater support for scalable projects, including those in surrounding green mobility hubs, houses of worship, local businesses and residential communities, with a focus on Wards 5, 7 and 8.

Each of the stormwater projects will incorporate green infrastructure to mitigate the negative impacts of water runoff and enhance neighborhood streetscapes. It’s projected that an estimated 100,000 gallons of water will be captured and filtered for each rainstorm.

“We have found that many residential property owners in the D.C. area are concerned about basement flooding after storms and erosion of their landscaping from their property,” Kara Young, an expert at Rainplan, told CO. “As an example, if they install a rain garden or use bio-retention like planting trees, it will soak up the necessary rain and keep it from flowing or flowing into property foundations.”

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DC Green Bank and Rainplan announced today the closing of an initial $2,000,000 deal to increase access and affordability for stormwater management infrastructure across the District. The loan agreement is groundbreaking in its commitment to deliver financing for both commercial and residential projects as well as its approach to diverse and scalable projects, including surrounding green mobility hubs, houses of worship, local businesses, and residential communities, with an emphasis on Wards 5, 7, and 8. All of the stormwater projects will take place in the District’s MS4 (Municipal Separate Storm Sewer System) service area, incorporating green infrastructure to mitigate negative water runoff impacts and enhance neighborhood streetscapes.

“Traditionally stormwater investments have been singular commercial projects impacting one District area. What is unique about this deal is that it promotes equitable access to financing regardless of project location or size,” says Jenny Janis, the Ecosystem Lead of Rainplan. “The $2M loan is critical to enabling green infrastructure participation across all wards.”

Cooper Martin, the Incentive Program Administrator at Rainplan, said of the project, “We are proud to work with DC Green Bank to support our stormwater portfolio. It is vital that we work with partners that understand the complexity and potential of this work and are willing to invest in innovative approaches. We look forward to delivering new stormwater projects across the District – prioritizing communities that are all-too-often left behind – and helping to build a more resilient city for all.”

DC Green Bank’s four core investment areas are solar, green and energy efficient buildings, clean transportation, and stormwater green infrastructure. Eli Hopson, CEO of DC Green Bank, said of the investment, “By supporting stormwater projects DC Green Bank helps to protect people, property, and our environment from adverse impacts of climate change, create good jobs, and provide valuable services to entire communities. Rainplan’s innovative digital platform puts information at your fingertips to pursue projects in an affordable way.” This is DC Green Bank’s second investment in an emerging stormwater infrastructure project pipeline in the District.

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The fight against climate change will need big investments in infrastructure like solar and wind farms, transmission grids and low-carbon industry. But it also needs many more small-scale investments for hundreds of millions of homes and businesses — and that kind of work is best done locally.

So say green-bank proponents like Reed Hundt, the former U.S. Federal Communications Commission chair under the Clinton administration. As co-founder and CEO of the Coalition for Green Capital, Hundt has spent the past 13 years working to expand the role of green banks, entities that use public funds to supply low-cost, long-term financing for projects that would otherwise struggle to get it.

Since the first green bank was launched in Connecticut in 2011, 23 have sprung up across 17 states, drawing in further private-sector lending for carbon-reducing projects such as rooftop solar, efficiency retrofits and electric heat-pump installations. Last week’s passage of the Inflation Reduction Act brought the next step in that campaign: the creation of a $27 billion Greenhouse Gas Reduction Fund, or in other words, a national green bank.

The fund will be set up by the U.S. Environmental Protection Agency as a stand-alone entity; it’s required to begin disbursing funds within 180 days of the law’s passage. It will primarily work through state and local green banks, directing $20 billion to fund ongoing lending, loan-loss reserves and other activities. Of that amount, $8 billion is set aside for low-income and disadvantaged communities. These communities will also be the focus of the fund’s remaining $7 billion in financial assistance available for states, municipalities and tribal governments.

Eli Hopson, CEO of the DC Green Bank in Washington, D.C. — the first city-based entity of its kind in the U.S. — added that green banks can lower the risk profile of relatively novel forms of lending for private-sector banks, as entities like NY Green Bank have done for community-solar projects and affordable-housing efficiency and electrification projects.

“For a commercial banker, these projects take as much work as a $10 million project or a $100 million project,” he said. ​“For them to learn the new market of solar credits, get comfortable with the technology — that’s a big investment of time and resources.”

Jessica Pitts, co-founder and principal of Flywheel Development, a Washington, D.C.–based sustainable development company that’s working with DC Green Bank on installing community solar in the Fairfax Village community, noted that ​“the challenge with financing is the relative newness of the solar market compared to other business ventures, like restaurants or apartment buildings, that traditional banks are comfortable with financing.”

“One of the roles the green bank has served in working with us is legitimizing solar as an asset class or business enterprise that can be financed and should be financed, that it’s viable and makes sense,” she said.

DC Green Bank is also working with PosiGen on its low-income solar programs, which have already landed enough customers to exhaust its existing $7 million loan facility, CEO Hopson said. While these loans are still in their early days, other green banks with longer track records ​“report back to us that they have fewer challenges with loans in low-income communities than they do with more mainline business projects they fund,” he said. One potential reason is that, while businesses may ​“use bankruptcy as a tool that can be deployed from time to time,” low-income community residents and groups ​“are just committed to making it work.”

DC Green Bank is seeking additional funding from the national green bank to double the size of its low-income solar program to $15 million, Hopson said. That’s one of a host of projects that are part of the Coalition for Green Capital’s $21 billion backlog estimate.

“From a national perspective, $27 billion invested in sustainable finance goes a long way toward drawing in the leverage from private institutions to say, ​‘This is a real commitment,’” he said.

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By Kazi Stastna, CBC News

You’ve heard of the gold rush? Get ready for the green rush. With close to $370 billion US ($475 billion Cdn) on the table, the race will soon be on south of the border to secure some of the clean-energy cash expected to flow out of the Inflation Reduction Act which Democrats hope to pass this coming week.

“Green banks” are one way that the Biden administration intends to distribute the billions of dollars that are meant to accelerate the adoption of solar, wind, geothermal and other forms of renewable energy.

They are quasi-public entities that aim to attract private investment to small-scale green energy projects, such as residential solar installations, energy-efficient building retrofits and various forms of electrification.

Part of what green banks say they bring to the table is staff with the technical know-how to assess the viability of projects. That was something that attracted the D.C. solar contractor Flywheel Development when it went through D.C. Green Bank to finance a solar roof on a rental building in a low-income neighbourhood in the city’s northwest.

“Their base level of knowledge is just so much higher,” said Flywheel’s co-founder Jessica Pitts. “Lenders that we’ve approached have had much less institutional knowledge in terms of the basics of how do you even fund solar … what are your sources of income and how does it even work?”

The project cost about $132,500, with the green bank kicking in $80,000, the company $26,000 and a city renewable energy program providing the rest. A private lender and the green bank will co-finance the long-term loan that enables Flywheel to oversee the project for the length of the 15-year contract it has with the city and the property owner.

The roof will produce an average of 25,000 kilowatt hours per year, enough to supply six households. In this case, the households it’s supplying are not actually in the building. The electricity generated is fed into the city’s grid and allocated to low- and moderate-income residents through a program called Solar for All that covers half their utility bill.

Flywheel makes its money back by selling the electricity to the city and through solar energy credits, which sell for about $365 to $435 per megawatt hour in D.C., where utilities have to generate 10 per cent of their power from local solar sources by 2041.

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