Recent NY Green Bank Deals Show Value of Flexible Financing

Last week, the New York Green Bank announced it will provide $25 million in working capital to Sunrun, one of the nation’s leading residential solar companies. The NY Green Bank estimates this will accelerate the construction of 5,000 solar projects in New York. The deal comes on the heels of the announcement last month that the New York Green Bank will also provide Sunrun with a separate $25 million project financing loan.

By offering a portfolio of solutions, Green Banks are able to tackle multiple market barriers to clean energy growth. In the case of Sunrun, these deals separately address two critical areas for a company that is looking to scale rapidly: the most recent deal provides Sunrun with needed short-term liquidity, while the project financing deal enables Sunrun to ramp up longer-term borrowing as it grows its project pipeline. Together, these two deals will help Sunrun manage its growth, which means more clean energy in New York and elsewhere. Barriers to clean energy growth often vary by company or technology. In energy efficiency, for example, common barriers include limited financing options and limited consumer awareness. As a result, a Green Bank might provide both low-interest loans for residential retrofits and also conduct marketing outreach to contractors and homeowners to stimulate demand for retrofits. The flexibility to offer multiple solutions in the same market is a unique feature of Green Banks compared to more traditional public grants or loan programs.

As is typical with Green Bank transactions, both Sunrun deals included significant participation from the private sector. The New York Green Bank’s $25 million project financing loan, for example, was part of a broader $340 million round led by private lenders. In our conversations with private lenders, we continue to hear a hunger for new investment opportunities, especially as interest rates remain exceptionally low. As a result, private lenders say they are very interested in participating in the kind of high-quality, clean energy deals brought about by Green Banks. This suggests we can continue to expect Green Banks to leverage a significant amount of private sector dollars, increasing overall investment in Green Bank geographies.

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