Published on September 26th, 2018 | by Jake Richardson0
More Than $1 Billion Provided By Connecticut Green Bank For Clean Energy Projects
September 26th, 2018 by Jake Richardson
The Connecticut Green Bank was established in 2011, and since then has been working to accelerate the deployment of clean energy. It has funded over $1 billion dollars in clean energy investments around the state of Connecticut. The bank’s investments have resulted in an increase in private investments as well. To explain in much greater detail how their investment process works, the following bank employees answered questions for CleanTechnica: Bert Hunter, Executive Vice President and Chief Investment Officer, Mackey Dykes, Vice President, Commercial, Industrial and Institutional Programs, Kerry O’Neill, CEO of Inclusive Prosperity Capital, Anthony Clark, Associate Director, Commercial, Industrial and Institutional Programs, and Matt Macunas, Legislative Liaison and Senior Marketing Manager.
Bert Hunter: The keys to successful “project” investing are fairly standard: use technology that is reasonably established, choose developers you can count on, with end users that have a solid use case, and with a business case that has reasonable risk profile and sufficient cash to provide adequate cash flow to repay lenders and that offer returns commensurate with the risks the project owner is taking.
Beyond the basics, as a Green Bank we have two basic channels to clean energy investment: the first is project-based and the other is programmatic. With the project-based approach, we are seeking to more firmly establish a technology or a technology-based use case so that its adoption can be mainstreamed both on the end use side as well as with financing. When we approach clean energy programmatically, we are generally taking an established technology, for example solar PV, and then seek to work with either innovative channels to market or creative financing approaches, or both, to overcome barriers to scale.
An example of the project approach would be our investments using fuel cell technology. Connecticut is home to two major manufacturers of fuel cells. While fuel cells have been around for a considerable time, there is some hesitancy by a number of lenders to fully embrace this technology. This concern is misplaced in our view. We have direct experience in fuel cell projects of considerable size that are not only reliable, but also benefit our grid with resilient baseload power. This is where a Green Bank like ours helps to de-risk these investments and make them more attractive to a broader group of lenders which will reduce the cost of capital and expand the adoption of this technology.
With rooftop solar, it is commonly believed that this technology has reached scale – and in a number of states across the country that’s true. But we noticed that entire groups, notably low-income homeowners, are by and large being overlooked. Whether it is because they might live in smaller homes or more urban settings, or suffer from the misperception that low-income means poor credit, there was an increasing disparity of adoption we could not ignore. We ran an RFP with an enhanced incentive for installers willing to sell – programmatically at scale – to this market. This is the how we launched our partnership with PosiGen of Louisiana. PosiGen brought to Connecticut their proven community-based marketing approach that embraces these underserved communities – while the Green Bank addressed a gap in their capital stack with its own funds and capital from new lenders. PosiGen is a phenomenal success for us and helped us reach “solar parity” – which means whether you’re affluent, or not, you are equally likely to have rooftop solar for your home in Connecticut.
What are some examples of local clean energy investment successes?
Bert Hunter, Mackey Dykes, Kerry O’Neill:
- Metal Finishing Technologies to save $1.9 million in energy costs
- Daughters of Mary to save $1.3 million in energy costs
- East Meadow Condominiums
- Connecticut Green Bank Receives 2018 State Leadership in Clean Energy Award for Connecticut “Solar for All” Program.
Are you investing in energy storage too?
Anthony Clark: We are aggressively pursuing opportunities to invest in battery energy storage, particularly when paired with solar PV. The combination can deliver economic, energy, and operational benefits greater than either alone can provide. Adding battery energy storage can allow a facility to shave costly peak energy demands and be more resilient. A battery can also power modest electric loads and allow continued operation of a solar PV system if and when the grid goes down. When paired with and charged by solar PV, a battery is eligible for the 30% federal investment tax credit.
The Green Bank is leveraging its success in deploying both residential- and commercial-scale solar to help kickstart the market for solar and energy storage. On the commercial front, that success helped the Connecticut Green Bank secure in 2017 a $3M program-related investment by the Kresge Foundation through their Kresge Community Finance program. With Kresge support, we are working to accelerate deployment of solar and battery energy storage systems, with a special interest in serving low- and moderate-income communities in urban and coastal Connecticut. This very low-interest capital combined with a modest grant from the Kresge Foundation has helped spur interest and improve the economics of projects during this still early stage of storage deployment in Connecticut. We are
currently pursuing solar and energy storage opportunities for a range of non-profit and commercial facilities including adult and child day care centers, skilled nursing and retirement facilities, community centers and grocery stores.
On the residential front, the Green Bank just received board approval to offer a pilot incentive to residential customers who install battery storage with their solar systems. This incentive will be available exclusively for customers participating in a utility-run pilot program that evaluates the effectiveness of distributed energy resources in mitigating the need for a distribution capacity upgrade on two electric circuits in southwest Connecticut. By offering the incentive through the pilot program the incentive encourages the use of solar plus storage installations to provide grid reliability and peak load reduction benefits where these benefits are specifically needed to help prevent utility infrastructure upgrades. The incentive level was set to be comparable to the current residential solar PV incentive offering and sufficiently improve the economics to encourage adoption.
Do you have a preference for hydroelectric, solar power, or wind power, or is your strategy to use all
of the above?
Bert Hunter: Connecticut policies (RPS, net (and virtual net) metering, long-term contracts for solar RECs, a residential solar investment program, etc.) have resulted in deployment of considerable solar PV across residential, commercial-scale and grid-scale projects. The Green Bank’s financing programs (the first residential solar loan without a lien on the property, our commercial solar PPA fund which has probably deployed more solar PV to non-profits and faith-based institutions than anyone in the country (certainly New England)) have propelled this market even further – with the first programmatic approach in the country to securing solar PPAs with Commercial PACE. That said, we have completed over a megawatt of hydroelectric and have more projects in development as Connecticut has abundant rivers and impoundments that are excellent candidates for this technology. We noted in another question our attraction to fuel cell projects. And while we have developed some grid-scale wind in the state, in the main our on-shore wind resource is not sufficiently attractive for large-scale development. As for offshore wind – there would appear to be a sufficient number of developers and financiers to explore and develop these opportunities without our assistance, but we continue to follow this market.
Are you investing in EVs at the moment?
Matt Macunas: The Green Bank is investing in EVs in several ways. First, we dedicate staff capacity to running outreach to promote EVs through public and stakeholder education. EV charging stations are financeable through both our residential and commercial sector lending programs. We have been a sponsor (or co-promoter) for Nissan’s $10,000 manufacturer discount on the Leaf in 2017 and are about to promote a $5,000 offer on 2019 models. Also, the Green Bank was a founding partner of a coalition that developed a newly approved, international methodology to help emissions reduction valuation in the transportation sector, allowing for increased private investment in EV infrastructure; in 2019 the Green Bank plans to aggregate the flows of carbon credits from CT-based EV chargers, sell the credits to the voluntary market, and rebate the proceeds.
Do you work with utilities currently or no?
Bert Hunter, Mackey Dykes, Kerry O’Neill: The Green Bank works with our utility partners across all our sectors and considers incentive dollars to be the “first money” in a deal. In the C&I sector, CGB works the utilities on several fronts. The utilities administer the commercial solar incentive program for the state, the ZREC program. CGB works with the utilities to bring these incentives into our projects for projects that CGB both finances and owns.
CGB’s primary C&I financing product is CPACE. CGB coordinates with the utilities to bring this financing tool to projects that need it. CPACE projects also take advantage of the utilities energy efficiency incentive programs.
CGB is currently working with the utilities to secure private financing for their Small Business Energy Advantage program, a small business energy efficiency program that offers on-bill financing. Through this partnership, the utilities and CGB will save millions of dollars by sourcing cheaper capital for the program as well as expand the pool of available capital for lending.
In the residential sector, the Green Bank coordinates its financing programs for single family and multifamily with the utilities, aligning incentives and programmatic approaches, cross promoting each other’s programs, and working together on contractor and consumer outreach. Also see above the storage response on our joint work on a utility-led pilot. For instance, in its anchor single family loan program, the Smart-E Loan, measures that are eligible to be financed are aligned with the efficiency standards for measures that receiving incentives from the utility-administered efficiency programs. The Green Bank is also co-sponsor with the state’s Department of Public Health on a statewide Green and Healthy Homes Research Project to unlock sustainable funding for health and safety upgrades (which are a barrier to energy efficiency upgrades in 25% of homes) and the utilities are partners on this key initiative.
Are you investing in energy efficiency and if so, in what kind of projects?
Bert Hunter, Mackey Dykes, Kerry O’Neill: In the C&I sector, CGB is investing in energy efficiency through its CPACE program. CPACE offers long-term, low and fixed-rate financing for all building improvements that save energy. Through CPACE, CGB has invested in everything from lighting, VFDs and HVAC equipment to windows and more efficient elevators.
In the residential sector, each of the Green Bank’s financing programs support energy efficiency and in the case of its multifamily suite of programs and the Smart-E Loan program, EE represents the majority of investment to date (although solar is present in both programs as well). In the Smart-E Loan program for homeowners, over 40 measures can be financed. For EE, this is everything from insulation, to high-efficiency HVAC equipment to windows, to holistic home performance upgrades. In the Solar for All program with PosiGen, which targets low-to-moderate income homeowners, an affordable solar lease is paired with energy efficiency for every customer (light weatherization including air/duct sealing, lighting, water efficiency), and an add-on package is offered for deeper efficiency measures. 74% of customers take this add-on package, since it yields significant savings on customers energy bills. In the Green Bank’s Residential Solar Investment Program, all customers receiving an incentive for solar PV must have an energy efficiency assessment performed, predominantly through the utility-administered Home Energy Solutions (HES) program – HES provides installation of basic weatherization and energy- saving measures and recommendations for deeper energy-saving measures.
Why is it important to have a green bank in a state?
Bert Hunter: State green banks are institutions that facilitate capital at scale to enable states to fulfill their clean energy goals. They bring expertise, focus and an approach to risk that can be more flexible than institutional capital which is often constrained by deep-rooted credit policies and regulatory oversight. State green banks provide public capital that can mitigate certain project risks to a point where private capital is willing to invest in these markets. This leverage effect can lead to the rapid expansion of clean energy markets. As governmental or quasi-governmental institutions, they are in a unique position to convene developers, private lenders and investors, and other stakeholders so as to develop programs and products that can deployed at scale. And because they assure that capital is returned over time, with reasonable returns, Green Banks help states to use their limited resources more efficiently. Finally, because investor returns are not the only consideration for Green Banks, they can address underserved portions of the market, such as low-income, so everyone has the opportunity to participate in the clean energy economy.
Has your investing resulted in the creation of new jobs?
Matt Macunas: The Green Bank sits at the center of a clean energy ecosystem that combined has created 38,000 new jobs in Connecticut as a result of growth in energy efficiency and renewable energy project development. Green Bank investment has produced between 14,000 and 15,000 job-years of economic activity since 2011 predominantly through solar PV deployment. Every public dollar we receive has leveraged roughly 6 dollars of private investment activity, producing a much greater economic impact than public investment alone could accomplish.