5. Highlights from the Massachusetts Bankers Association’s 2020 Renewable Energy Summit
Good for Business and Good for Community
Solar Investing is “A Win for All Involved”
By Darreck Mitchell, Director of Capital Markets
In the fifth installment of our Banking on Solar series, we provide a quick recap of some of the topics covered at the Massachusetts Bankers Association’s 2020 Virtual Renewable Energy Summit in December 2020. To start at the beginning of the series, read Banking on Solar.
The Massachusetts Bankers Association’s Annual Renewable Energy Summit provides members with an opportunity to learn more about the latest in renewable energy lending and investing in the Commonwealth.
Solar Tax Equity Investing Takes Center Stage
At this year’s virtual summit, Sunwealth CFO Omar Blayton joined Cape Cod 5 Co-President Bert Talerman and Eastern Bank Community Development Lender Penny Billington Hunt for a discussion of the Banks’ success in using solar lending and tax credits not only to strengthen their communities, but also to grow the Bank’s bottom lines. Here are highlights of that discussion:
Hunt described Eastern Bank’s entry into solar tax credit investing, or solar tax equity, as a natural extension of the Bank’s experience with other tax credits that help drive community development, and as a way to complement Eastern Bank’s solar debt portfolio, noting,
“From a mission standpoint, we’ve always been proud of the fact that we do new and innovative things, not just what’s easy. We want to pursue lines of business and new opportunities that bring a new level of reward. From an economic impact (perspective), the returns on solar tax equity are stronger than LIHTC, which makes it an attractive opportunity (to offset) a bank’s tax liability.”
Talerman agreed, stating,
“We started out as a lender and financed energy efficient upgrades for our business customers – the HEAT loan program has been very good to us. At one point, we purchased a pool of consumer solar loans, and more recently developed our own customer solar loan program. We used LIHTC, understood the mechanics, and it made logical sense to move into solar tax credit investing.”
“(At Cape Cod 5), we have a very collaborative approach. I’m primarily a credit guy and won’t profess to being able to calculate all the intricate rates of return on the solar tax credit, but when presented it makes a ton of sense. Working closely with our Finance Team and our Executive Management Team, we’ve found that it comes back to achieving goals that are good for society as a whole and generating an appropriate investment return. We’re in the business of managing a balance sheet, managing our tax liability, and trying to achieve an appropriate return. This is something that’s worked nicely for us.”
“In this very low rate, low yield environment, asset mix and asset allocation has become more important than ever. Being able to manage your tax liability to achieve something good and generate return is key for all our businesses. As bankers, we all tend to have a fair amount of tax liability to work with. Given the short-term nature of the return (on solar tax equity), there aren’t too many places where you can find a low double-digit return like that. When you layer together a whole bunch of things that are good for the business, and achieve strategic objectives, it’s a win for all involved!”
Other highlights from this year’s Renewable Energy Summit:
Massachusetts Doubles SMART Program – Supporting Another $3B+ of Local Solar Investment
Kelsey Reed, Program Manager at MassCEC, provided an update on the Massachusetts Solar Loan program, set to expire this year. The successful program has contributed to the installation of over 100,000 solar systems across the Commonwealth, enough to power close to 500,000 homes and create over 10,000 jobs. Massachusetts now ranks 8th in the nation for cumulative solar installed.
Reed also provided an update on the SMART program, expanded this year from 1600MW to 3200MW, adding 8 additional blocks which include land use, small commercial projects, and lower eligibility for projects in LMI communities.
MassSave Makes Residential Energy Efficiency Lending Even Easier
Julia Dineen, Product Manager at CLEAResult, provided an update on the MassSave program and other residential financing mechanisms that help homeowners, renters, and business make informed decisions when it comes to efficient energy use. In response to the pandemic, CLEAResult has shifted from in-person home energy assessments to virtual meetings with customers. They still offer the same services, including access to the HEAT loan program, which began in 2006 and has offered residents a cost-effective way to install high efficiency equipment at an affordable rate. This program offers lenders an opportunity to receive interest payments in a lump sum and provides them with an option to diversify their lending capabilities to enhance outreach.
C-PACE Starts to Ramp Up in Massachusetts
Wendy O’Malley, VP and PACE Program Manager at MassDevelopment Finance Agency, provided an update on C-PACE, a new financing program created to fund energy improvements on C&I buildings, multifamily properties, and buildings owned by nonprofits. Key elements include the opportunity to finance long-term projects up to 20 years with a mandate that all energy cost savings must exceed the cost of improvements. The program is currently authorized in 35 municipalities across the state – offering an additional option for banks to diversify their lending portfolio.
For more information on the Massachusetts Bankers Association, please visit the MBA website.
Read the next post in our Banking on Solar series: Top Biden Picks Yellen, Deese and Regan Will Strengthen Environment for Solar Tax Equity Investments.
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Want to learn more about solar tax equity investing? Reach out to Darreck Mitchell at darreck@sunwealth.com.
Darreck Mitchell is Director of Capital Markets at Sunwealth. He has over a decade of experience in financial services, sales management, and asset management distribution. When he’s not helping investors put their money to work, he can be found spending time with his wife and two young daughters.