New York's Green Bank program provides a source of financing for renewable energy projects that might not otherwise attract private capital. The program represents an attempt to transition away from the use of direct subsidies to encourage green energy projects.
New York Gov. Andrew M. Cuomo says the $210 million in initial funding for the NY Green Bank represents a new market-oriented approach to accelerate clean energy deployment and create jobs. The money combines $165 million redirected from other programs and approved by the New York Public Service Commission (PSC) and $45 million from the Regional Greenhouse Gas Initiative.
The announcement comes on the heels of the PSC's approval of an additional $108 million in funding over the next two years for residential and commercial solar energy projects under Cuomo's NY-Sun initiative.
With the PSC approval, the NY Green Bank is expected to open for business and offer its first financial products in early 2014. Cuomo proposed the creation of a $1 billion Green Bank in his 2013 State of the State address as the financial engine to help mobilize private investment in clean energy projects.
"New York's Green Bank will target existing market barriers which currently prevent the widespread deployment of clean energy," says Richard Kauffman, chairman of energy and finance for New York State." Given these obstacles in financing, merely setting up a competitive market that offers the promise of choice offers only that: a promise unrealized if projects cannot obtain financing. The Green Bank is just one component of the state's new chapter on energy policy that focuses on enabling self-sustaining private markets and reducing dependence on subsidies."
According to the governor, the NY Green Bank will partner with private-sector institutions by providing financial products such as credit enhancement, loan loss reserves and loan bundling to support securitization and build secondary markets. The governor adds that these products will support economically viable clean energy projects that cannot currently access financing due to market barriers, such as federal policy uncertainty, insufficient performance data and the lack of publicly traded capital markets for clean energy.
As part of its oversight function, the PSC will work with the NY Green Bank to ensure financial offerings meet the investment criteria and will review and monitor quarterly progress reports.