Hartford Business Journal

14 Hartford Business Journal • September 7, 2015 www.HartfordBusiness.com generation of clean energy financing. Its pro- grams — attracting interest from places as far away as Australia, Malaysia and Ukraine — go beyond the traditional government sub- sidy model by leveraging limited public funds to privately finance clean energy projects. "Connecticut being the first to be estab- lished and saying, 'See, this concept works,' is a great example to other green banks looking to set up in their own states," said Alfred Grif- fin, president of the New York Green Bank, which was created in 2014. "It takes it from a theoretical concept to getting it done." The Connecticut Green Bank reached another milestone in August when it became the first green bank to crowdsource solar loans, partnering with a California firm to sell $1 million in loans to investors who could buy in for as little as $25. The bank is work- ing on other initiatives too: It's developing a new program to provide solar to low-income residents, revamping its popular commercial property clean energy financing, and prepar- ing to issue green bonds, said Garcia. An idea, enacted When Gov. Dannel P. Malloy first took office in 2011, he called upon Yale law and environ- mental professor Dan Esty to take charge of the soon-to-be-created Department of Energy & Environmental Protection, which Malloy wanted to use to set statewide energy policy. Esty was intrigued, in part, because he had a lot energy policy theories and wanted to test them in practice, including concepts like renewable energy credits, using prop- erty values to support clean-energy projects, and — most significantly to the Green Bank — reducing direct government spending on projects like solar installs by using public funds to spur private investment. "We needed to push the clean energy enve- lope further and faster … and we had to show these ideas worked," Esty said. The quasi-public Connecticut Green Bank — originally called the Clean Energy Finance & Investment Authority and later renamed in 2014 — was formed out of the bones of the Connecticut Clean Energy Fund, which pri- marily used government subsidies to finance renewable projects. Garcia was tapped as the organization's founding CEO in 2011. From the start, his chief objective was to woo private invest- ment for the clean energy industry. Program heads were told not to worry about crafting perfect policy and instead focus on signing deals for their programs. When, for example, the concept of allow- ing building owners to finance clean energy improvements by placing a voluntary assess- ment on their property tax bill was put into practice in the first quarter 2013 — called the Commercial Property Assessed Clean Ener- gy program (C-PACE) — the Green Bank had the first project in place by April of that year, which was a solar installation at a Norwalk shopping center. The team scored its second project, at the Bushnell Performing Arts Cen- ter, in June 2013 and accumulated a $20 mil- lion project backlog within a year. To attract private investment, the Green Bank then bundled those loans and secured $24 million in funding from California-based Clean Fund, which was the first time ever a private financial institution purchased clean energy loans. Meanwhile, by developing new programs for residential solar installations — including partnering with one installer to serve entire cities and towns under the Solarize Connect- icut program — the Green Bank decreased government spending on solar projects by 70 percent while increasing solar-array demand by 20 percent, Garcia said. In its first four years, the Green Bank sup- ported the creation of 120 megawatts of clean energy projects, compared to the 40 mega- watts its predecessor, the Connecticut Clean Energy Fund (CCEF), generated in 11 years. The Green Bank's leverage ratio is also significantly higher, Garcia said. For every $1 CCEF spent in public funds, it got $1 in private investment. The Green Bank's ratio has been $5 in private investment for every $1 in gov- ernment funding, and Garcia hopes to grow that ratio to 10:1 this fiscal year. "Small states can make a big difference, too. We might never have the amount of proj- ects that big states like California have, but our example of leadership will help other states and countries make an impact on the clean energy world," Garcia said. An idea, replicated Other states are now following Connecti- cut's clean energy financing model. In 2014, New York set up the U.S.'s second green bank; California and Rhode Island soon fol- lowed suit. Maryland started implementing the concept this year and has Connecticut's former C-PACE administrator, Jessica Bailey, advising its programming. Nevada and Michigan are considering setting up green banks and New Jersey Gov. Chris Christie called Garcia about using some green-bank concepts as the Garden State refocuses its energy policy following Superstorm Sandy. The U.S. Department of State has sent representatives to Connecticut to learn how the idea could be implemented in other countries, and Garcia said he has a delegation from Ukraine coming to visit later this year. The green bank model is catching on interna- tionally, said Reed Hundt, CEO of the New York City-based Coalition for Green Capital, which advises governments on how to fund clean ener- gy. Australia and the United Kingdom have estab- lished the first green banks in other nations. "Our phone is ringing off the hook, and I don't know how to deal with all the demand," Hundt said. "The growth rate in Connecticut is spectacular, and people are taking notice." Hundt said his organization is working with governments in Virginia, Vermont, Washington, D.C., a cohort of southeastern states, and even Germany and Malaysia on green-bank financing. More goal-oriented ideas The Connecticut Green Bank's crowd- sourced solar loans, announced in August, grew out of a desire to reach a lower class of investors, Garcia said. The organization traditionally worked with regional banks and national investors but wanted to pro- vide investment opportunities to people who could only afford to bet as little as $25-$100. The Green Bank's latest idea is to provide a way for low-income residents to install residen- tial solar panels. It has partnered with Louisi- ana solar installer PosiGen to develop a product with affordable public and private financing. The Green Bank also will make some changes to its C-PACE program later this year, designed to attract more private inves- tors to commercial projects. "What we are showing other states is you can increase demand while at the same time decrease the subsidy," Garcia said. n from page 1 Green Bank leveraging more private funds Dan Esty, law and environ- mental professor, Yale Jessica Bailey, former administrator, C-PACE The quasi-government agency reduced the costs of solar by partnering with one installer to manage all Solarize Connecticut projects (above). The Green Bank scored its first C-PACE project in 2013 at this Norwalk shopping center (top right). The Green Bank provided a $2 million loan to help finance a proposed food composting facility in Southington (bottom right). Bloomfield installer C-TEC Solar was one of the companies that partnered with the Green Bank for Solarize Connecticut, to offer lower installation prices in exchange for doing all the projects in one community. P H O T O | H B J F I L E P H O T O S | H B J F I L E

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