10. Federal Green Banking Initiatives March Forward
Appointment of Jigar Shah to Lead DOE Loan Program Signals Shift Toward Community-Based Clean Energy
By Jon Abe, Chief Executive Officer
In the tenth installment of our Banking on Solar series, we look at how the awakening of the Department of Energy’s Loan Program and a national green bank might accelerate new lending for community-based solar. To start at the beginning of the series, read Banking on Solar.
“We’re ready to finance renewable energy so no worker or community is left behind.”
The Biden-Harris Administration continues to demonstrate its commitment to a community-based and more equitable clean energy future by awakening the dormant $40 Billion U.S. Department of Energy (DOE) Loan Program and setting the stage for an even better funded national green bank.
Earlier in March, Jigar Shah, was appointed Executive Director of the $40 Billion U.S. DOE Loan Program. Shah kickstarted community-based solar finance in the form of the Solar Power Purchase Agreement (PPA) almost 20 years ago. He has been innovating and honing his craft ever since, while retaining a focus on financing distributed clean energy resources.
In addition, U.S. Representative Frank Pallone, Chairman of the House Energy & Commerce Committee, introduced the CLEAN Future Act which would provide $100 billion to start the Clean Energy Accelerator, a national green bank. As envisioned, a $100 billion national green bank would leverage $400+ billion in private sector investments for clean energy projects with a strong community-based tilt. The national green bank would prioritize investment in all communities, with 40% allocated to the disadvantaged.
Where would Jigar Shah, newly appointed Executive Director of the U.S. DOE Loan Program, invest a $1 million to make the most impact on climate change? When The Energy Gang podcast asked this question, Shah highlighted Sunwealth’s work as an example of how to get the “most bang” for your climate impact buck. Listen to his full answer, starting at minute 35:37 of the podcast.
These initiatives bode well for the accelerated growth of community-based clean energy investment and the growing role of Community Banks.
The $40 Billion U.S. DOE Loan Program has been basically hibernating for the last four years or more. There is no better leader than Shah to revive it. He is a proven leader who has the ability to prudently allocate this capital across a range of community-based projects and new innovations.
For those of you familiar with regional state green banks, the DOE Loan Program has historically followed the green bank model, with a diversity of programs similar to the MassCEC Solar Loan Program (interest rate buydown) or New York Green Bank credit enhancements. Under Shah’s leadership, it is expected that an enhanced $40 billion portfolio of loan guarantees, interest rate buydowns and other investing support tools with incentives will roll out over the second half of the year. The new programs will likely favor clean energy projects and programs that are community-based and share benefits with a diversity of community stakeholders (see Sunwealth 2020 Impact Report for some project and program examples).
Our solar canopy on the parking lot of City Point in Waltham provides lease income for owner Boston Properties, while providing clean power and energy savings to income-eligible residents of Greater Boston through a community shared solar agreement.
While the CLEAN Future Act is “just a bill,” infrastructure investment remains a relatively bipartisan issue, and the Biden-Harris Administration continues to seek ways to ensure that a fair share of the investment goes to workforce development and clean energy projects in red states. There is growing support and momentum for the national green bank whether it’s part of the current bill or part of a future infrastructure bill. Sunwealth will keep you posted as this plays out.
Regardless of the fate of the national green bank, the gates are opening soon with the relaunch of the U.S. DOE Loan Program. Community Banks, especially those with existing clean energy portfolios and expertise, will be positioned to capture Loan Program and national green bank incentives to support new clean energy lending and investment.
Want to learn more about investing in community-based solar? Reach out to Darreck Mitchell at darreck@sunwealth.com.
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Jon Abe is Chief Executive Officer at Sunwealth. He has over 20 years of experience developing, building and managing solar and distributed energy resources and working with community banks to finance the growing solar economy. Jon also is proud to help green and electrify his community as a member of the Belmont Light Advisory Board.