Could green bank in Nevada encourage clean-energy sector?

By Daniel Rothberg

Friday, June 17, 2016 | 2 a.m.

Despite costs declining over the past decade, installing a clean-energy system or retrofitting for energy efficiency remains prohibitively expensive for many consumers and small businesses across the state. And that fact has led some legislators to consider a pioneering fix.

An energy committee this morning will hear the results of a study examining the viability of a Nevada green bank, a quasi-public tool for issuing loans and bonds to help fund renewable-energy projects harnessing everything from wind and solar to geothermal potential. The model comes from green banks adopted in six states, including Connecticut, New York, Hawaii, California, New Jersey and Rhode Island. While setups vary, these banks share one goal: to be a self-sustaining resource spurring investment in renewables by homeowners and companies struggling to pay for it.

Moves to apply the concept here are still in their infancy, with many questions left for legislators to answer. The study, requested by the Legislature and compiled by the nonprofit, Washington, D.C.-based green-bank incubator Coalition for Green Capital, concedes as much. Legislators, it says, would have to decide on the bank's structure and the specifics of funding mechanisms — taxpayer dollars, bonding authority, funding built into electricity bills — as well as how to avoid constitutional restrictions on lending to private companies.

But Nevada is ripe for such a development as it actively explores how to reenergize its renewable sector, and repair a tarnished reputation following a Public Utilities Commission decision in December that increased bills for solar customers and prompted major rooftop-solar companies to halt sales here.

Stephen Silberkraus, a Republican assemblyman who chairs the interim legislative committee on energy, said a green bank could be part of a larger effort to re-create a robust rooftop-solar market in Nevada.

“Finding something that can allow for the industry to continue to move forward in a sustainable way … is going to be vital. This very well may be a piece of that,” Silberkraus said before Friday's meeting, adding that he wouldn't be surprised if the idea were broached during the 2017 legislative session.

As part of the study, which was presented to a subcommittee of the governor’s New Energy Industry Task Force on Thursday, the nonprofit conducted about 50 interviews with key energy constituencies. They identified a $26 billion market for clean-energy investment in Nevada, but found that renewable projects are often not completed because of financing challenges, lack of credit history and a lack of information. A green bank, the report argues, could address all of these problems.

“What the green banks do is help to mitigate the inequities about who can afford to incorporate renewable energy in their power scheme,” said Pat Spearman, a Democratic state senator who started a four-month leadership program with the National Renewable Energy Laboratory this week.

For larger ventures, like a commercial solar array or a wind project, a green bank could bolster a developer's credit — reducing the risk assumed by private investors — or offer additional investment with a private partner. The hope is that this financing would create jobs, reduce greenhouse-gas emissions and protect taxpayers by functioning as a self-sustaining fund that would require payback with interest. It's similar to a more traditional commercial bank except that green banks could set lower interest rates and offer loans to a broader pool of projects.

Jeffrey Schub, who runs the Coalition for Green Capital and oversaw the study, said he could see the viability of a green bank in Nevada, at a time when funding for NV Energy’s renewable grants is nearly gone, rebates for some energy efficient appliances are being phased out and reimbursements for selling excess solar power to NV Energy will continue to drop in the wake of the PUC's decision.

“That all points to a need for some solution for homeowners and businesses to get clean energy,” he said.

The key is to ensure that loan payments to a green bank remain lower than the amount homeowners would save on their utility bills by purchasing a clean-energy system or retrofitting for efficiency. “Or else,” Schub said, “why would a customer do it?”

These loans could be especially beneficial for homeowners or companies who can't get solar panels from companies like SolarCity and Sunrun because of a low credit score or lack of credit history. And Schub insists the terms aren't as risky as you might think. He says the best proxy for whether consumers can repay an energy loan is whether they pay their utility bill.

Nevada is among six states currently exploring the green-bank idea. The Connecticut Green Bank, which launched in 2011 and is considered by many to have a model financial-assistance program, had approved about 16,000 residential solar projects as of March.

But green banks have been criticized for being slow starters. One year in and New York’s $1 billion green bank, as of last fall, had appropriated about $50 million for wind, energy efficiency and solar projects but had not distributed any funds, according to Politico. Hawaii’s $150 million green bank has had a similarly slow start due to challenges attracting financial partners and disruption by regulatory changes to the solar market.

Nancy Pfund, whose San Francisco-based DBL Partners invests in clean energy, said most of the companies her firm invests in, like SolarCity, are too large for green-bank funding, though at least one company she works with has benefited. But Pfund stressed that a green bank has to be part of a larger strategy around clean-energy development.

"No amount of money from a green bank is going to make the kind of difference (needed) without attention to smart policies that encourage clean-energy innovation," Pfund said, citing Nevada's changes to rooftop-solar rates. "You can’t send a signal out of one side of your mouth and then one signal out of another side."