How NY Green Bank Is Advancing Clean Energy 

Demonstrating Viable Financing Solutions Is Moving the Market on Clean Energy Investments

While the cost of renewable energy continues to fall, additional investment is needed to scale the deployment of existing technologies and develop innovative solutions to accelerate New York’s clean energy transition. Since 2013, NY Green Bank has helped mobilize public and private capital toward clean energy projects, ranging from renewable energy production and storage to building decarbonization and clean transportation.

Across this diverse portfolio, NY Green Bank investments are creating replicable financing solutions that overcome market barriers and funding gaps for new and emerging clean energy business models and technologies.

Andrew Kessler, President of NY Green Bank, joins us to discuss the organization’s mission to transform clean energy financing, previous successes, and investment priorities for the future. He has served as NY Green Bank’s President since February 2021, after serving as the Managing Director and Co-Head of Investment Portfolio Management for two years.

What Purpose Does NY Green Bank Serve?

NY Green Bank is a state-sponsored investment fund that started in 2013 with $1 billion in public capital, and our mission is to animate private sector capital and bring that funding into clean energy markets in New York State to advance the clean energy transition across all sectors of the economy. 

How Has NY Green Bank’s Mission Evolved Since Its Inception?

What we've done since our founding is put capital to work across several different asset classes, from solar to wind and energy storage to clean transportation and building electrification. Since inception, we’ve closed over $2 billion of capital and turned the fund over entirely once. Our capital has enabled over $7 billion of clean energy infrastructure in New York State to be built.

Our earlier transactions predominantly involved solar, and NY Green Bank was instrumental in helping grow community solar and set a precedent for the private sector to finance these projects.

Now, NY Green Bank is diversifying its investments across clean energy sectors, including clean transportation, building decarbonization, and energy storage. The recent launch of the Community Decarbonization Fund underscores our focus on ensuring the benefits of clean energy investment are reaching New York’s disadvantaged communities. 

Where Might New York Residents See the Impacts of New York Green Investments in Their Communities?

I think New Yorkers can see the impact that we've had over the years in a number of different use cases. One of our earliest clean transportation investments was in the original owners of Citi Bike – something that New York City residents see every day as we walk around. We’ve since exited that investment, which is normal, as Citi Bike grew and received additional private investment.

Another area that New Yorkers might see NY Green Bank investments is in a home environment. We’ve provided funding to Sealed, which is a residential-based company that has been focused on delivering home energy efficiency and electrification solutions. Thus, homes across New York State have effectively been upgraded and electrified with NY Green Bank capital indirectly through a loan that was made to Sealed.

We’ve also been involved in a variety of different financing interventions related to community solar. From pre-development work to construction and term lending, we may well have been a part of the funding and capital stack for community solar projects you see in your area or subscribe to.  NY Green Bank has also been involved in transactions with leading rooftop solar providers in the country, and we may have been involved in funding the array on the roof of your home or where you work.

Moving forward, I think we’ll see increasing touch points, both on the residential side indirectly as well as the commercial and wholesale side, that are focused on further animating the energy storage market. While the impacts of these investments may be less visible, New Yorkers can expect greater grid stability as a result.

What Have Been Some of NY Green Bank’s Greatest Successes?

One major success is a sector-specific intervention: community solar. When New York State started to introduce community solar back in 2017 and 2018, it was a new model at the time. It was a different way of building solar assets, where the revenue streams were associated with subscribers rather than relying on long-term contracts, such as power purchase agreements. 

The lending community was naturally hesitant to dive right into that market opportunity, since it was untested and unproven. New York had just rolled out VDER (Value of Distributed Energy Resources), the mechanism to compensate energy generated by clean energy projects (also known as distributed energy resources) like solar. All of this was very new and that’s exactly how I think NY Green Bank can create a lot of value: as a first mover to create funding mechanisms, products, and structures that are replicable, scalable, and that can be standardized and eventually adopted by the private sector. 

And that's exactly what happened with community solar. Now, about six years later, New York is the most robust community solar market in the United States. This is really a testament to the market animation that we were central to creating, as well as the important programmatic support mechanisms that NYSERDA created to generate the cash flows necessary to support community solar as a business model in New York State.

Today, we're seeing active participation from some of the largest community solar sponsors and developers across the country. We're seeing active lenders from across the globe, and not just larger U.S. money center banks, but international players, too. Back in 2017 or 2018, it would have been unheard of for those actors to be participating in community solar in New York State.

What Are NY Green Bank’s Top Priorities and Goals in the Coming Year?

NY Green Bank has several ambitious goals that we're executing on right now.

In terms of sector priorities, building electrification, both in relation to affordable housing use cases and in general, is a very big focus of ours.  Our building stock in New York State must be electrified to reduce harmful emissions from this sector and we're working hard with other lenders to address those funding gaps. To advance these efforts, we’re committed to investing $100 million for building decarbonization projects in disadvantaged communities, plus $150 million for green affordable housing by 2025.

Clean transportation is another very significant area of focus – both on the charging side and on the vehicle side. Obviously, it's a little bit of a chicken and egg scenario. We can't expect there to be fully electrified fleets, whether it's residential vehicles or commercial vehicles or school buses, without the charging infrastructure in place. NY Green Bank has a $100 million investment goal to support New York’s transition to zero-emission vehicles.

And obviously, it's hard to make the economics work by building out the infrastructure if you don't have the vehicles themselves utilizing that asset. Working on both sides of that, through creative funding mechanisms, is a very significant goal of NY Green Bank. For example, we closed an $8.5 million transaction last year with Inspiration Mobility to help electrify vehicles that are operating in New York City right now.

Lastly, as more and more renewable energy systems come online, the need to be able to efficiently manage that variability with energy storage infrastructure is going to be very important to New York State. NY Green Bank has a goal of investing at least $200 million in storage-related projects by the end of 2025. To achieve this, we’re heavily focused on working with our counterparts at NYSERDA to create replicable and scalable structures that can attract the private sector to fund that infrastructure going forward. 

How Is NY Green Bank Leveraging Federal and Inflation Reduction Act Funding?

It’s important for us to make sure that New York State is benefiting from the historic funding that's being made available by the federal government, in particular. A critical portion of the Inflation Reduction Act (IRA) was the Greenhouse Gas Reduction Fund, which is a $27 billion funding pathway made up of three separate competitions, all which NYSERDA and NY Green Bank participated in and applied for.

The $7 billion for Solar for All competition was very successful, with New York receiving almost $250 million. Another was the National Clean Investment Fund (NCIF) competition, which was the $14 billion funding pathway of the Greenhouse Gas Reduction Fund (GGRF). New York was a winner alongside the lead applicant, Coalition for Green Capital (CGC), for a $5 billion award. We’re now actively working with CGC, our other sub awardees, and the Environmental Protection Agency (EPA) to finalize NY Green Bank’s portion of the award.

And what does that all mean? It means bringing capital to New York State to continue to fund the critical infrastructure necessary for accelerating the clean energy transition. It’s ensuring that NY Green Bank retains the liquidity to continue to meet the demand for capital to finance areas where market animation is required.

These federal opportunities also provide capital across the entire ecosystem in New York State. The Comprehensive Capital Analysis and Review (CCAR) is a funding pathway that is really meant for community lenders, community development financing institutions (CDFIs) and credit unions that are located throughout New York State to access that capital to advance clean energy investing in their local communities.