‘Bipartisan support’ likely to underpin US Green Bank proposal

www.environmental-finance.com
22 October

The prospects for a US federal bank to help finance renewable energy – as proposed in Congressional climate legislation – look rosy given bipartisan support and the ongoing difficulty of securing financing in the private markets, supporters have said. A bill passed by the US House of Representatives in June would establish the Clean Energy Deployment Administration, a government-owned, non-profit bank that would fill a market void by helping to finance clean energy projects. A Senate energy and natural resources committee bill adopted that month featured a similar proposal and is expected to be integrated into climate legislation emerging in the Senate environment and public works committee.

Legislators on both sides of Capitol Hill recognise the ongoing difficulties in securing financing for renewable energy, said Todd Filsinger, the Denver-based head of PA Consulting Group's energy capital markets division and co-chair of the Coalition for the Green Bank. "The green bank is probably the most bipartisan part of the bill," he told Environmental Finance on the sidelines of the coalition's "Financing our Renewable Energy Future" event on Tuesday, in New York. The exact nature of the bank – including its structure and funding, among other things – are still be worked out in Congressional negotiations.

The House bill envisions an agency separate from the Department of Energy (DOE) with a governance structure that includes the participation of members of the finance sector, said Reed Hundt, a principal at business consulting firm REH Advisors and co-chair of the coalition. But the Senate proposal would require the agency's head to report to the energy secretary, similar to how other DOE-affiliated entities currently function, he told Environmental Finance.

The aim of the green bank would be to lower the financing costs of promising renewable technologies to achieve grid parity more quickly, fund projects that cannot secure financing in the private markets and roll out and expedite clean energy projects on a broader scale. In the most simplistic model, the green bank would provide loan guarantees for projects that have debt and equity financing, Hundt said. "If the bank were to crowd out private debt, that would be a mistake," he said. "If it were to seek to make profits where they could be made by someone else, that would be a mistake."