The Connecticut Green Bank (CGB) recently closed on its biggest solar project financed to date—a 995 kW rooftop solar array was installed at Lesro Industries, a local manufacturer. This deal exemplifies the value of the Green Bank model.
The CGB sits at the center of the clean energy finance market in Connecticut, and is tremendously flexible in how it operates. In the Lesro deal, the CGB and its private partners deployed capital to finance the solar project, and the CGB became the “third-party owner” of the project. This allowed Lesro to avoid paying any upfront cost for the solar panels, and save money every month by paying for the clean, cheaper-than-grid solar electricity produced by CGB-owned panels on its roof.
The CGB also administers Connecticut’s successful Property Assessed Clean Energy (PACE) program. This program allowed the CGB to secure the stream of money-saving electricity payments with a PACE lien on the property. The PACE structure provides greater security for investors—this is crucial for increasing the flow of private capital into PACE deals.
Finally, the CGB agrees to buy all the Renewable Energy Credits (RECs) generated by the solar project, allowing Lesro to capture their monetary value and recognize savings immediately. This is also helpful for the utilities in the state—the CGB sells a steady stream of RECs at predictable prices to utility buyers.
By playing these roles of REC aggregator, third-party owner, and PACE financer and administrator in the Lesro deal and many deals all across the state, the CGB drives more clean energy deals in Connecticut and hastens the development of a mature clean energy market in the state.
As CGB gets more deals done, market participants (such as commercial lenders, contractors, appraisers, property-owners, etc.) get more experience with financing clean energy projects, investors’ perception of risk decreases as ability and willingness to underwrite more similar deals increases. As a result, clean energy project capital for property owners will be more accessible and cheaper.
Connecticut has proven the value of the Green Bank model many times over, and we look forward to seeing more Green Banks in more states enjoying similar success!