New York Green Bank Begins Transactions By ENERKNOL RESEARCH

NY Green Bank’s initial transactions will produce more than $800M in investments supporting clean energy projects that would annually avoid 575,000 tons of carbon emissions.

On October 22, 2014, New York Governor Andrew M. Cuomo announced the NY Green Bank’s first seven transactions, which – supported and agreed to in principle – will produce more than $800M in investments. Projects supported by the initial transactions are expected to reduce annual carbon emissions by approximately 575,000 tons. The initial transaction parties include Ameresco, Bank of America Merrill Lynch, BQ Energy, Citi, Deutsche Bank, First Eastern Investment Group, First Niagara Bank, GreenCity Power, M&T Bank, Renewable Funding, Sustainable Development Capital, and Tulum Management. Transaction terms are being finalized and aim to be closed by year-end.

The NY Green Bank is a public-private partnership to support clean energy projects that cannot access private sector financing due to market barriers, such as federal policy uncertainty, insufficient performance data, and lack of publicly-traded capital markets, which impede private capital flow. It alleviates market barriers by providing financial products to private-sector lenders in the form of credit enhancement, loan loss reserves, and loan bundling.

The New York State Energy Research and Development Authority (NYSERDA) stated that the initial transactions reflect the diversity of NY Green Bank’s existing project pipeline with regard to clean energy technology types, geographic distribution, and energy efficiency investments. It highlighted that the transaction announcement demonstrates NY Green Bank’s ability to overcome market barriers that include:

• Lack of demonstrated scale for institutional investor involvement in certain cases
• Transaction complexity intensified by lack of precedent transactions and standardization
• Lending constraints due to bank regulatory environment
• Concentration of project finance and/or structured finance experience in institutions that may not be the most logical financiers for small-to-medium scale projects

According to NYSERDA, NY Green Bank’s innovative market-based approach to address financing barriers and facilitate private capital access makes it the first-of-its-kind institution to boost the state’s clean energy economy. The NY Green Bank benefits ratepayers as its operations are similar to a commercial entity, with investments repaid at market rates. It also demonstrates the value of new financial arrangements and reduces risk, facilitating similar transactions on a more regular basis without direct public funding.