New Jersey’s $40 billion investment opportunity that no one is talking about

What is a leading opportunity for states to create energy security, job growth and economic development with their public dollars?

The answer? A public financing institution that can engage effectively with private sector players to meet them on their own terms – addressing real barriers and providing the right types of capital needed to make clean energy projects investable.

Take Connecticut for example. In 2011, the state established the nation’s first state green bank, the Connecticut Green Bank (CGB). Over the last six years, CGB has used $174.6 million of ratepayer funds to attract $914.8 million of private investment in clean energy for a total investment of $1.1 billion. These investments have supported the deployment of 234.4 MW of renewable energy, created thousands of jobs, and reduced an estimated 3.7 million tons of CO2 emissions over the life of the projects.

Jake Hiller, Sustainable Finance Manager, EDF+Business

Connecticut’s early success was hard for its neighbors to ignore. New York established its own green bank, New York Green Bank (NYGB), in 2014 as a product of Governor Cuomo’s Reforming the Energy Vision (REV) strategy. NYGB has invested more than $345 million in clean energy across New York State since inception, investments that support clean energy projects with total project costs between $1.0 and $1.4 billion. These projects are expected to reduce lifetime GHG emissions by up to 6.4 million metric tons – the equivalent of taking 70,000 cars off the road for 20 years. NYGB is also a full year ahead of schedule on its path to self-sufficiency, generating net income for the first time in 2017.

In each instance, the state institution was highly strategic – targeting investments where private funders have been slow to make investments, while bypassing projects where the private sector is already actively engaged. This mobilized private capital in the clean energy space that was looking for risk mitigation in the form of an anchor investor, contributed to energy resiliency in the state, and supported job growth and overall, economic development – a clear win on many fronts for limited public dollars.

Dakota Gangi, Sustainable Finance & Impact Investing Manager, EDF+Business

EDF’s new report, “Financing New Jersey’s Clean Energy Economy: Pathways for Leadership,” is targeted to help New Jersey take advantage of its clean energy opportunities, including an estimated $40 billion in potential solar investment. But it is a great resource for any state thinking about strategic ways to deploy limited public dollars to accelerate the deployment of renewable energy, energy efficiency, and clean transportation solutions. The report provides an up-to-date analysis comparing three targeted, institutional approaches based on their ease of creation, fit for purpose and range of abilities:

  1. Creating a green investment mandate within a new public State Bank.
  2. Expanding the existing NJ Environmental Infrastructure Trust (EIT).
  3. Developing a new, stand-alone Green Bank, an institution dedicated to financing clean energy and green infrastructure in partnership with private lenders.

While each approach has its trade-offs, they are all designed to work within New Jersey’s unique state context. For another city, state or region interested in exploring similar institutional approaches, we recommend the following questions to better frame your thinking:

  1. What are the barriers limiting private investment in local clean technology companies and projects? (e.g., prohibitive cost of capital, uncertain energy policy or investment landscape, etc.)
  2. How could a dedicated financing institution or facility help to overcome these barriers? (e.g., more affordable financing, targeted engagement with clean technology sector, etc.)
  3. What institutions could be leveraged or created to play this role? (e.g., revolving loan funds; energy, environment, or infrastructure institutions; etc.)

Finding the answers to these questions requires thoughtful engagement with the private sector and relevant stakeholders in your state, but making this effort will go a long way toward ensuring the success of your chosen approach. When thoughtfully designed, public financing institutions can be effective tools for getting private capital off the sidelines and into the game, accelerating the deployment of clean technologies, catalyzing local economic activity, and supporting new job creation across America.


Follow Jake Hiller on Twitter at @jake_hiller.


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