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The Green Bank Programs Making Solar Financing More Accessible, Part 2

Posted by Gwen Brown on Jan 17, 2018 11:55:25 AM

The high upfront cost of solar PV systems has remained a major barrier to the growth of the solar industry. This is due in large part to the fact that it is difficult for customers to access loans and other financing for solar installations, compared to other big purchases like a car or house. However, green banks—a new type of financing institution created by governments to increase private sector investment in clean energy—are beginning to change this. In this two-part series, we explore green bank programs around the U.S.

We spoke to officials at green banks around the country to understand the programs local solar installers should know about. In Part 1 of this series, we explored east coast green banks, which currently include banks in Connecticut, New York, and Rhode Island. In this article, we delve into the programs of green banks on the west coast and in Hawaii, and examine recent indications that the green bank model is gaining traction and may be coming to other states soon.

Interested in a particular green bank? Choose a state to jump ahead to its green bank programs: Connecticut, New York, Rhode Island, California, Hawaii

Speaking about the role of green banks in making solar financing more accessible, Gwen Yamamoto Lau, Executive Director of the Hawaii Green Infrastructure Authority (the green bank of Hawaii), likened them to another type of institution: “About 27 years ago, community development financial institutions (CDFIs) were formed all over the United States to finance low-income housing tax credit projects, because at that time banks considered these projects too risky. CDFIs were formed to mitigate risks for commercial lenders. Today, banks are very comfortable lending to these projects and CDFIs can help incubate other near-bankable projects. Green banks can play a similar role in helping clean energy projects get to a point where conventional lenders are comfortable supporting them.”

California Lending for Energy and Environmental Needs (CLEEN) Center

Like Rhode Island, California operates a green bank as division of the state’s infrastructure bank (“IBank”). The California Lending for Energy and Environmental Needs (CLEEN) Center  provides financing for municipalities, universities, schools, and hospitals (“MUSH” borrowers) as part of the state’s efforts to reduce its climate impacts.

IBank explains that “In 2014, IBank Executive Director Teviea Barnes successfully launched IBank’s CLEEN Center, to help meet the State’s goals for greenhouse gas reduction by offering practical and sustainable financing solutions for public clean energy projects.” 

Of relevance to solar contractors is the Statewide Energy Efficiency Program (SWEEP), which provides loans for solar projects (as well as many other projects including energy and water conservation efforts). In the last year, IBank approved nearly $4 million in direct loans under the CLEEN Center.  Among these was a $2,870,000 loan to the Monterey County Housing Authority for rooftop and carport solar installations, as well as energy efficiency and HVAC upgrades.

Get Involved

California solar contractors who work on commercial and industrial scale solar may want to highlight this potential funding source when talking to MUSH customers. The CLEEN Center does not maintain a registry of approved contractors for SWEEP projects; however, technical assistance is available for solar and other contractors who are interested in providing services under the SWEEP program.

The California Lending for Energy and Environmental Needs (CLEEN) Center is a green bank housed within the California Infrastructure Bank (IBank). It offers loans for solar projects.

Hawaii Green Infrastructure Authority

Hawaii’s green bank, the Hawaii Green Infrastructure Authority (HGIA), focuses specifically on solar PV. Hawaii has the highest electricity prices in the nation and a state commitment to reach 100% renewable energy by 2045 , so HGIA’s mandate includes supporting the growth of solar energy and making it more accessible to underserved communities who can most benefit from energy savings. HGIA pursues these goals through a solar loan program (Green Energy Market Securitization, or GEMS), which facilitated $30 million of solar projects in Hawaii over the last year.

Green Energy Market Securitization (GEMS) Program

HGIA’s Green Energy Market Securitization (GEMS) Program offers both residential solar loans  and commercial solar loans , which serve small businesses, nonprofits, and multifamily rental projects. GEMS loans have a number of unique features to make them more accessible—especially to lower-income customers. First, the bank offers up to 20-year loans at a fixed interest rate. This is much longer than loans offered by most banks, allowing for lower monthly payments. Further, the bank has no pre-payment penalty and will consider customers with credit scores as low as 600 (traditional banks typically require at least a 640).

Additionally, while most banks consider a customer’s debt-to-income ratio when determining whether to approve a customer’s loan, HGIA does not. Instead, HGIA requires that projects result in a 20% savings for the customer (post-solar utility bills + loan payments must be 20% less than the customer’s pre-solar utility bills). This provides a good assurance that loans will be repaid, while making it possible to approve more customers.  

GEMS residential solar loans are directly financed by HGIA, while GEMS commercial loans are offered in partnership with conventional banks. For these commercial loans, HGIA co-lends alongside the customer’s bank of choice and its loan is subordinate to the bank loan (i.e., it has second priority for repayment). This mitigates risk for private lenders, allowing them to offer better rates than they normally might.

Commercial solar loans may be made directly to building owners to install and own a PV system.  Alternatively, for nonprofits or other organizations that can’t take advantage of solar energy tax credits, the loan can be made to a “project sponsor.” In this case an investor purchases and owns the PV system with a GEMS loan and sells the energy to the nonprofit via a long-term power purchase agreement.

A unique feature of this solar financing structure is that HGIA offers nonprofits the option to eventually take on the loan from the project sponsor (typically after year seven, when the project sponsor has utilized tax credits and depreciation benefits). This provides non-profits a mechanism to own their own PV systems and have free solar energy after the loan is repaid.

Hawaii Green Infrastructure Authority is the state's green bank. Its Green Energy Market Securitization (GEMS) Program offers both residential and commercial solar loans.

Possible Future Programs

HGIA is also seeking approval to offer on-bill financing for solar, which would allow customers to repay their solar loans through their utility bills. Executive Director Gwen Yamamoto Lau explains that “Having an on-bill financing option will really allow us to benefit the underserved—especially the low-income ratepayers and the renters, who have not previously been able to participate....  we receive calls from contractors and landlords on a regular basis asking about its status, because... this program will enable contractors to serve so many more homeowners and renters that they have not been able to serve before.” 

Get Involved

On its website, HGIA maintains a list of approved installers who can offer GEMS-financed projects. To enroll , contractors must attend a training, have appropriate licenses and insurance, and at least a “B” rating from the Better Business Bureau. There is a $100 application fee.

What Does the Future Hold for Green Banks?

Given the success of early green banks, and increasing leadership of states and cities in responding to climate change , this model is likely to play a growing role in driving clean energy market growth. Already a number of other states are exploring the creation of a green bank including Delaware, Virginia, Colorado, Missouri, Massachusetts, Washington DC, and, most recently, New Jersey .

Additionally, existing green banks are working to expand the model by sharing their insights. In 2017, the Connecticut Green Bank was awarded the Innovations in American Government Award by Harvard University. With the $100,000 prize and a matching amount of its own funds, the Bank has committed to creating a Green Bank Academy, to support other jurisdictions in replicating the green bank model.

“NY Green Bank will also work with other States and philanthropic entities to help establish local green banks in other states. In support of these new green banks, NY Green Bank may provide financing along with mid- and back-office services, due diligence, underwriting and general technical support,” says COO Caroline Angoorly.

In other exciting news, New York Governor Andrew Cuomo recently announced that NY Green Bank will explore options to raise at least an additional $1.0 billion in private sector funds, allowing it to consider investable projects that extend beyond the boundaries of New York state!


As a solar contractor, if there’s a green bank in your area it can present valuable opportunities to connect with new customers. If your state doesn’t have a green bank, keep an eye out for the expansion of green bank activities in your area. Or—if you’re interested in taking a more active role in advocating for the creation of a local green bank—organizations like the Coalition for Green Capital  and the Green Bank Network  offer resources and expertise.

Topics: Solar Finance, Green Bank, Green Bank Program Profiles

The Green Bank Programs Making Solar Financing More Accessible, Part 1

Posted by Gwen Brown on Jan 10, 2018 5:04:48 PM

The solar industry has come a long way since its early days when solar PV was a rare novelty. Robust markets have sprung up in many U.S. statesbut solar is still far from mainstream. As any solar contractor knows, solar installations remain out of reach for many interested customers due to the high upfront cost.

For other expensive purchases, like a car or house, financing is relatively accessible, putting these resources within reach for much of the population. But financing for solar is often hard to secure because many private lenders are unfamiliar with and hesitant to finance clean energy transactions. This lack of capital has been a major barrier to the growth of the industry. But that's starting to change in some states, through the work of green banks.

Green banks are a new type of finance institution established by governments to accelerate the growth of clean energy markets, as discussed in our overview article. For this series, we spoke with staff at green banks around the U.S. to determine what programs solar contractors in different states should be aware of and offer insight into the diversity of approaches green banks are applying to help solar markets grow.

Interested in a particular green bank? Choose a state to jump ahead to its green bank programs: Connecticut, New York, Rhode Island, California, Hawaii

A core characteristic shared by green banks is that they use limited public funds to drive greater private sector investment in clean energy projects. They do this by offering a variety of services that mitigate risk for private lenders to provide financing for solar and other clean energy projects, since these sectors are relatively new to most traditional banks. While green banks share a common purpose, the structure of their programsfrom the types of products they offer to the customers they servevaries depending the local context.

In this article, we dive into green banks on the east coast of the United States, highlighting the types of products they offer, and the programs solar installers should know about. In the second part of this series, we explore the programs of green banks on the west coast of the U.S. and in Hawaii.

Connecticut Green Bank

Established in 2011 by Connecticut Governor Dannel Malloy as the first green bank in the country, the Connecticut Green Bank has had dramatic success growing the state’s clean energy markets. It reports that for every dollar of public funds invested  at least $6 of private investment in clean energy have been deployed, totalling over $1 billion of cumulative investment in more than 20,000 clean energy projects. This has enabled  over 215 megawatts of clean energy, 2.6 million tons of avoided of emissions, and reductions of 20-30% in the cost of renewable energy in the state! It has also driven the creation of an estimated 13,000 clean energy jobs.

The bank offers two key solar financing programs of relevance to contractors operating in the Connecticut: its “Smart E-Loan” for residential customers, and its “C-PACE” program for commercial customers. By covering the upfront cost and offering low interest rates, these programs can make a solar purchase much more feasible for prospective customers.

“Smart-E” Loan Program

Through its Smart-E Loan program , the Bank partners with local banks and credit unions in the state to offer low-interest, no money down loans for homeowners to cover the cost of a solar installation (as well as other home energy upgrades).


Connecticut’s Commercial Property Assessed Clean Energy (C-PACE) program  offers loans to commercial property owners to cover 100% of the cost of installing solar or other clean energy technologies. Eligible projects must have a savings-to-investment ratio greater than onemeaning that bill savings exceed loan payments so customers save money immediately. This is made easier by the fact that the loans can be repaid over up to 20 years. Like other PACE loans, the loan is repaid as part of property taxes on the site and if the property is sold the loan transfers to the new owner, requiring no pay-off upon sale.

Get Involved

Connecticut Green Bank maintains a database of contractors that are approved to offer Smart-E  or C-PACE  projects. Registration is simple; contractors must attend a training, be properly licensed and insured, and have no negative Better Business Bureau ratings. Additionally, the C-PACE program is introducing badges that acknowledge a contractor’s level of experience  with the program, giving experienced contractors an edge in connecting with prospective C-PACE customers.   

Connecticut Green Bank offers programs to increase the accessibility of solar financing, including residential solar loans and C-PACE loans.

NY Green Bank

The green bank of New York state, NY Green Bank, was established in 2013 as the second in the nation. Its approach to growing clean energy markets differs from the programmatic approach of many other green banks. It does not have set programs, rather it operates an open RFP process  and has flexibility and discretion in the types of financial services it can offer depending on what strategy would be most advantageous in a particular case.

Explaining her institution’s role, Caroline Angoorly, Chief Operating Officer of NY Green Bank, notes: “NY Green Bank is positioned at the near-frontier of clean energy financing markets,” working to address market barriers and financing gaps in clean energy investment. “These types of gaps and barriers exist where clean energy financing structures diverge from traditional project financing approaches and may involve structures, parties, credits, technologies and transaction sizes which may be less well known or common.”

NY Green Bank focuses on multi-million dollar transactions  with businesses, such as solar developers and financiers, alongside private sector lenders. To be considered for funding, projects must have the potential to drive market transformation, in addition to reducing the state’s greenhouse gas emissions and providing a positive financial return for the bank.

Explaining how the bank evaluates potential transactions, Angoorly notes that projects must meet three minimum investment criteria:

  1. "Transactions will have expected financial returns such that revenues of NY Green Bank on a portfolio basis will exceed operating costs and expected portfolio losses – i.e., products are provided at market rates;
  2. Transactions will contribute to financial market transformation (e.g., multiples of capital mobilized to fund total project costs and potential to drive the type of volume, including scalability and replicability, that can materially and sustainably expand markets); and

  3. Transactions will have the potential for energy savings and/or clean energy generation that will contribute to greenhouse gas (GHG) emissions reductions in support of New York’s clean energy policies.”

As of the last fiscal quarter, NY Green Bank had committed over $440 million in clean energy investments in the state, including loans of $20 million to Vivint Solar to expand power purchase agreements (PPAs) in New York, $12 million to Cypress Creek Renewables to finance interconnection fees for up to 72 community solar projects, and $50 million to Solar Mosaic to offer solar loans.

Get Involved

Because NY Green Bank operates at a wholesale level, they do not offer retail-level solar financing with which small and medium-sized solar contractors can connect customers. However, large solar companies may want to consider applying for NY Green Bank funding  to expand their operations in New York state when they encounter gaps in the financing available from private lenders.


Rhode Island Infrastructure Bank

The Rhode Island Infrastructure Bank (RIIB) was created by expanding the responsibilities of an existing state institution, Rhode Island’s Clean Water Finance Agency, to include clean energy financing. As Michael Baer, Managing Director of the Rhode Island Infrastructure Bank, explains, “We have a broader mandate than typical green banks, such as those in New York or Connecticut; we provide structured financing to a handful of sectors.” In addition to its programs that fund clean energy projects like solar PV, RIIB financing supports projects for drinking water and wastewater treatment facilities, transportation infrastructure, and the restoration of brownfields (contaminated land).

RIIB offers two programs of relevance to solar contractors in Rhode Island: its Efficient Buildings Fund (EBF) and its Commercial Property Assessed Clean Energy (C-PACE) program.

Efficient Buildings Fund

The Efficient Buildings Fund  is a financing program for the purchase of solar PV and energy efficiency projects. The program provides long-term loans (up to 15 years) for municipalities and quasi-public entities, such as public housing, school districts, and public universities. In addition to the cost of a solar installation the loans can also cover related upgrades needed for the project, such as a new roof for an old building. Like Hawaii’s solar loan program, projects are required to result in at least a 20% reduction in utility bills for the property to be eligible for funding.

Because these tax-exempt public customers can’t take advantage of tax credits or accelerated depreciation that make solar more accessible to other types of customers, RIIB’s programs are designed to help put solar within their reach. Additionally, as Baer explained, municipalities are often disproportionately impacted by the high cost of energy in Rhode Island because they tend to have many old buildings. Solar contractors in conversations with prospective municipal customers may want to highlight this source of funding.


Like Connecticut’s Commercial PACE loan program (discussed above), Rhode Island’s C-PACE program  provides a means for owners of commercial buildings in participating municipalities  to install solar with no upfront payment and long-term repayment over up to 25 years through the building’s property taxes. (The program can also provide funding for other types of projects like energy efficiency and water conservation upgrades or electric vehicle charging stations.) Through this program, RIIB connects eligible projects with funding from private lenders, providing oversight and standardization so that lenders can be comfortable with the quality of the projects.

Get Involved

Any appropriately licensed solar contractor in Rhode Island can act as the contractor for an Efficient Buildings Fund project. To become an approved contractor for C-PACE projects , companies can submit an application , which includes demonstration of appropriate licensing and references. Companies must also complete a training before being listed in the program’s contractor directory.


Green banks provide important opportunities for solar contractors to serve new customers who might not be able to consider a solar installation without financing options. If there is a green bank where you work, it’s a good idea to get familiar with its programs. In Part 2 of this series, we detail additional green bank programs in California and Hawaii. We also examine indications that the green bank model is just getting started—including important announcements from Connecticut Green Bank and NY Green Bank about their efforts to support other states interested in launching their own green banks!

Topics: Solar Finance, Green Bank, Green Bank Program Profiles

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