As previously reported on Conduit Street, the Maryland Clean Energy Center is preparing a report for the Maryland General Assembly on the establishment of a “green” bank in Maryland to assist with renewable energy and energy efficiency projects. A September 25 Governing article reported that New Jersey has established a green bank to make the state’s energy grid more resilient to disasters and disruptions.
Through revolving loans and grants, the bank will support projects that include installing microgrids, distributed generation (where electricity is generated from multiple small energy sources such as fuel cells or solar panels), smart grid technology and energy storage. Initially, the bank will be funded using $200 million from New Jersey’s Community Development Block Grant-Disaster Recovery allocation from the U.S. Department of Housing and Urban Development (HUD). When that runs out, says Greg Reinert, director of communications for the New Jersey Board of Public Utilities, the state will allocate funds. The ultimate goal, though, is to bring in private capital.
The article also discussed the history and purpose of green banks, noting that Connecticut was the first state to open a green bank in 2011.
The purpose of green banks is simple: Mitigate risk to attract private investors. One way green banks do this is by providing lenders insurance against default. So if a project fails and a borrower doesn’t repay a loan, a private lender won’t lose its entire investment.