This is one of a series of posts on Governor Andrew M. Cuomo’s New York State Green New Deal. As part of his 2019 Justice Agenda he included a “nation-leading clean energy and jobs agenda that will put the state on a path to carbon neutrality across all sectors of New York’s economy”.
Not surprisingly there are no details other than the announcement, no mention of potential costs and no explanation how all this will affect any of the many impacts that he claims are caused by climate change. There is a proposal to provide the plan to make New York carbon neutral and I will blog on the plans as they become available. In the meantime this post discusses the language used to describe the New York Green Bank and plans for it as part of the New York Green New Deal.
In the following sections I list the text from the announcement and my indented comments follow.
Proposal. Expand NY Green Bank and Catalyze at Least $1 Billion in Private Capital
In 2013, Governor Cuomo announced NY Green Bank, a $1 billion investment fund designed to accelerate clean energy deployment. Since then, NY Green Bank has become globally recognized as a leading sustainable infrastructure investor, committing nearly $640 million and mobilizing nearly $1.75 billion in private capital for clean energy projects across the state.
Building on NY Green Bank’s successful and self-sustaining track record, Governor Cuomo announced in the fall of 2017 that NY Green Bank would raise at least $1 billion of private capital and expand its clean energy investing activities nationally. To deliver on that commitment and further support the Green New Deal, Governor Cuomo is now calling for the development of terms for a public-private partnership to effectuate NY Green Bank’s third-party capital raise and national expansion.
The New York Green Bank mission is “To accelerate clean energy deployment in New York State by working in collaboration with the private sector to transform financing markets”. The approach is described as NY Green Bank’s innovative business model increases the availability of capital for projects deploying proven clean energy technologies across New York State through:
Leveraging private sector capital to support and expand clean energy financing markets;
Animating and growing capital markets reducing the need for government support; and
Motivating faster and more extensive deployment of clean energy assets, contributing to economic development, greater energy choices, reduced environmental impacts and more green energy advantages for every public dollar spent.
According to the New York Green Bank 2016 Business Plan “The $1.0 billion NY Green Bank was established to attract private sector capital to accelerate clean energy deployment in New York State.” As a key component of New York’s Clean Energy Fund, NY Green Bank is structured to be self-sustaining in that it must ultimately cover its own costs of operation.
According to the Q3 2018 quarterly metric report as of September 30, 2018, Green Bank investments supported clean energy projects with a total project cost of between $1.44 and $1.68 billion in aggregate, based on an overall portfolio size of $581.9 million. “NY Green Bank’s investments to date drive estimated gross lifetime GHG reductions of between 7.2 and 9.2 million metric tons, equivalent to removing between 69,500 and 88,300 cars from the road for a period of 24 years.
The discussion of the investment portfolio in the Q3 2018 quarterly metric report illustrates how this is supposed to work. In the quarter ended September 30, 2018 the Green Bank closed three transactions: Delaware River Solar, BlueRock Energy Solar and New York City Energy Efficiency Corporation. The Green Bank entered into an agreement with Delaware River Solar to provide a $7.0 million bridge loan to finance the interconnection expenses of their community distributed generation projects in New York State. In July 2018, NYGB committed an additional $55.0 million to participate in a term loan to finance the capital costs of DRS’s Community DG portfolio of projects. These transactions are initially expected to support the deployment of up to 70.0 megawatts of solar photovoltaic in NYS. The Green Bank provided a $775,000 term loan (the “Term Loan”) to a subsidiary of BlueRock Energy Solar, Inc., a NY-based solar developer and full-service energy solutions provider. The Term Loan will be used to finance the acquisition of community distributed generation solar projects in NY State and for other corporate purposes. Finally, the Green Bank committed up to $2.0 million to participate in a construction-to-term loan for Ecosave Inc. to finance the installation of energy efficiency improvements at a senior care facility in New York State (“NYS”). As a co-lender with the New York City Energy Efficiency Corporation (“NYCEEC”), NYGB’s participation in this transaction supports at least 12,230 MWh of electricity savings, and 38,170 MMBtu of fuel savings to the customer. The transaction also establishes greater performance history for energy efficiency projects with small-to-medium-sized, unrated commercial customers. In short, then the Green Bank provides another source of money to expedite the implementation of renewable projects.
The more I dug into this the more questions and concerns I found. Consider four solar projects in the past four quarterly metric reports (table 1 solar projects in nys green bank quarterly metric reports). For those four projects the Green Bank has provided $123,875,000 for term loans. The energy generated and GHG emissions reduced show just how difficult it will be for New York to meet its ambitious goals. The first year high estimate projects that the $123,875,000 will provide 110 MW of capacity, generate 182,767 MWh per year and will reduce GHG emissions by 95,950 tons. In order to reach the 100% clean power goal by 2040 the plan doubles distributed solar deployment to 6,000 megawatts by 2025, up from 3,000 megawatts by 2023. If the Green Bank were to finance the deployment of 3,000 MW at the rate observed they would need over $2 billion. In 2015 NYS electric generation sector emissions were 32,000 tons. If the Green Bank was to finance the replacement of solar at the rate observed they would need over $41 billion. Clearly the Green Bank is going to have to catalyze a heck of a lot more than $1 billion to really help implement the NYS Green New Deal goals.
I also note that the quarterly metric reports took emission reduction and energy generated credit for providing bridge loans for solar interconnections. That is inappropriate because those benefits should be credited to the project developers. If the Green Bank takes credit it too there is double counting.
Finally the web page notes that there are 28 staff with the following titles: President, Chief Operating Officer, four Managing Directors, six Directors, four Vice Presidents, one Senior Associate, five Associates, five Analysts and one Office Manager. I think top heavy management is an appropriate description of this structure. Also note that in 2018 salaries and expenses were 36% of the operating revenues. Personally, I think this is yet another indication that the Green New Deal is more about political power and patronage than anything else.