Building Bridges to Capital
CGC builds financing and funding partnerships with foundation, impact investors, lenders, institutional investors, development banks, climate funds and others seeking to deploy their capital into clean energy and climate-related activity to earn attractive returns while making an impact.
CGC partners with new and existing green banks around the world to source capital for institutions and projects, and to secure the funds necessary to operate at scale.
If you are a capital provider interested in ways to get involved in the world of green banks, please contact CGC.
Why Deploy Capital With Green Banks
Green banks serve as vital intermediaries to connect capital with hard-to-access projects in their local markets. Green banks have the local expertise and relationships necessary to identify, develop and shape viable project investment opportunities outside of those typically available to investors. Green banks also dedicate the time and resources to vet and structure transactions that are otherwise too complex or new to support investment.
Investing in partnership with green banks doesn’t mean accepting a lower rate of return. Private capital may take a smaller share of a project when co-investing with a green bank, but the return would be determined at market rates.
Drawing In vs. Crowding Out Capital
Green banks aim to expand the pie of viable clean energy projects for investment. This benefits consumers, investors, developers, and the environment.
Competing with private capital on projects likely to be constructed with or without green bank involvement would be an inefficient use of funds. Simply replacing private capital with green bank capital would not accelerate the pace of clean energy deployment. Green banks therefore seek out geographies and project types that are under-served by private capital.
Some established green banks (such as the New York Green Bank) even explicitly describe criteria for making sure their investments are additional to what would otherwise be expected to take place without their involvement.
Opportunities for Capital
A few examples help illustrate the ways that diverse investor types can each engage with green banks to bring projects to realization.
In partnership with the Housing Development Fund and the Connecticut Green Bank, the MacArthur Foundation provided a $5 million program related investment for the Connecticut Green Bank targeting three programs:
- A revolving pre-development energy loan fund to cover the costs of energy opportunity assessments, audits, and project scope definitions.
- A loan pool to finance the remediation of health and safety measures.
- Term financing to bridge gaps and provide a lower weighted average cost of capital for viable projects.
Bank of America Merrill Lynch in 2017 co-financed the installation of a combined heat and power system at the Hebrew Home for the Aged at Riverdale, alongside the New York Green Bank. At the time the transaction was arranged, it was projected save the Hebrew Home an estimated $1.6 million annually by replacing current infrastructure with cleaner, more efficient alternatives.
Australia’s Clean Energy Finance Corporation (CEFC) has made recent commitments of over $200 million to Macquarie Group, aimed at energy efficiency and emissions reduction projects aimed airports, rail transit, water infrastructure, and more. $100 million of this investment is specifically aimed at agriculture, marking the CEFC’s first equity investment in this sector.
Multilateral Climate Funds
In 2019 the Green Climate Fund (GCF) made its first-ever loan to a green bank, capitalizing the newly-established Climate Finance Facility in Southern Africa with $56 million. The GCF is providing concessional debt capital, which the Climate Finance Facility will use to mobilize additional private investment from local commercial banks and asset managers.
Six different local credit unions have partnered with Michigan’s green bank, Michigan Saves, to offer residential home energy loans. These local credit unions gain access to a pipeline of customers through Michigan Saves, and loan guarantees to reduce credit risks. Customers receive favorable loan terms which bring home energy improvements into reach.