Ed. note: This is cross-posted on Energy.gov. See the original post here.
Just last week, President Obama and leaders from 20 other countries announced that they will double their governments’ investments in clean energy R&D over the next five years through Mission Innovation, while a parallel effort, the Breakthrough Energy Coalition, an example of a new type of private sector investment, will mobilize private capital in the same countries to complement the public sector investments. The combined effort of Mission Innovation and the Breakthrough Energy Coalition is the largest example of the public sector leveraging its investments by partnering with private capital to drive innovation and clean energy deployment, but these public-private partnerships are happening at the state and local level as well.
Today, as the first global Green Bank Network was announced at an event hosted in Paris by the OECD and Bloomberg Philanthropies, U.S. Energy Secretary Ernest Moniz released an Energy Department report that examines innovative financing mechanisms adopted by eight states— California, Connecticut, Florida, Hawaii, New Jersey, New York, Ohio, and Oregon—to spur investments in clean energy, energy efficiency and resilient infrastructure. The report, “Energy Investment Partnerships: How State and Local Governments Are Engaging Private Capital to Drive Clean Energy Investments,” illustrates how states and entities are driving clean energy deployment by leveraging private capital. Energy Investment Partnerships (EIPs)—sometimes called Green Banks—are newly emerging public-private partnerships with the authority to raise capital through a variety of means and can align clean energy finance initiatives and traditional development finance tools to maximize the impact of public funds in accelerating clean energy deployment and economic development.
By leveraging private dollars, EIPs generate an impact well beyond what would be possible with public funds alone, and as a result of their innovative efforts, two of the founding members of the Green Bank Network, the Connecticut Green Bank and the New York Green Bank, are profiled in the new DOE report. Through issuing bonds, authorities in Connecticut and New York have sold clean energy loan portfolios on the secondary market. Florida’s nonprofit Solar and Energy Loan Fund (SELF) in St. Lucie County has leveraged private dollars into clean energy loans for low and moderate income (LMI) individuals by working with private banks’ Community Reinvestment Act (CRA) divisions and the Community Development Finance Institution (CDFI).
These innovative financing mechanisms are critical for mobilizing the public and private capital necessary to transition to a low carbon economy. By developing public-private partnerships and bringing the right mix of partners, authorities, and strategies to the table, each state, region, municipality, and market can create a unique—but effective—vehicle to support clean energy finance and deployment.
Today’s announcements build on actions the Administration has taken earlier this year to support EIPs. In June 2015, the White House hosted a Roundtable on Green and Clean Energy Banks. And in August 2015, President Obama announced that DOE’s Loan Programs Office had issued new guidance clarifying that distributed energy projects could be eligible under the Title XVII Loan Guarantee Program, and that state-affiliated financial entities, including EIPs, could submit applications for such projects.
To continue this momentum, DOE will provide a four-part educational webinar series and resources in the first four months of 2016 to further assist entities as they work to increase and accelerate investment in renewable energy and energy efficiency. The series will cover how to get started, market assessments, access to capital and how to leverage existing financial tools, and how to measure the impact of an EIP.
Stay tuned to DOE’s Energy Investment Partnerships webpage for more information on resources for governments considering establishing these innovative mechanisms to drive clean energy investment.
Melanie A. Kenderdine is the Director of the Office of Energy Policy and Systems Analysis at the U.S. Department of Energy.