Connecticut’s Clean Energy Finance and Investment Authority — the first state green bank anywhere — got a major shout-out from the Brookings Institution, the nearly 100-year-old left-leaning Washington-based think tank.
In a paper called “State Clean Energy Finance Banks: New Investment Facilities for Clean Energy Deployment,” CEFIA is cited as one of three potential models for states that are looking for ways to finance clean energy projects, especially in the face dwindling funding streams.
But there’s a bit of a head-scratcher in this — while industry, banking and government folks think CEFIA is a great idea — we don’t actually know yet if it’s going to work.
“Connecticut’s model has not been fully evaluated, but it’s promising,” said Mark Muro, a senior fellow and policy director in the Metropolitan Policy Program at Brookings and one of the paper’s four authors.
“The paper is not necessarily recommending this particular model for 49 other states, we’re suggesting this as one promising set of adjustments to a state’s activities.”
CEFIA was formed by the major 2011 energy legislation that also formed the Department of Energy and Environmental Protection and a host of new programs. It’s essentially a second-generation version of the old Connecticut Clean Energy Fund. The Fund operated on a grant model, basically handing out money that came from electric ratepayer fees, until the money ran out. And it ran out frequently.
So CEFIA was designed to take that same money, but to then devise ways to leverage, invest, loan and otherwise make more money from it so it lasts way longer, or preferably generates enough to be self-sustaining. But the run-up has been slow and results are not available yet. Even so, the authors note that several states are already looking at replicating CEFIA.
Not coincidentally, two of the authors come from the Coalition for Green Capital, an organization that helps organizations like CEFIA develop financing ideas. And one of them — Reed Hundt — sits on CEFIA’s board.
The other, Ken Berlin, is the executive vice president of the Coalition for Green Capital. And he spent five months in the first half of 2011 working with Connecticut officials to craft the legislation to form CEFIA. He also disputes that other states, many of whom he is already working with, need CEFIA outcomes first.
“The concept of doing loans like this not an untested model. There are a lot of finance authorities around the county who do various kinds of transactions,” he said. But one of the big questions, he added is how independent they should be. “Figuring out how to make these banks operate independently and not politically.”
CEFIA, now in its second year, is beginning to bring programs on line. Two of the most recent are pilots: Solarize Connecticut and Campus Efficiency Now.
Solarize Connecticut operates from the premise that the more homeowners who install solar systems, the cheaper they become. Solarize began in the last month or so in four communities — Westport, Fairfield, Durham and Portland. It relies on marketing and outreach by those communities to get residents on board.
CEFIA’s existing residential solar funding pool is used to subsidize part of the cost. The owner pays the rest. What that “rest” is depends on the size of the system and how many systems are out there. More systems, lower per kilowatt cost.
“It’s not a bad use of the money,” said CEFIA spokesman David Goldberg. “The idea is that it’s going to drive down costs, so theoretically it’s a better use of ratepayer dollars.”
Campus Efficiency Now is loan program for energy efficiency upgrades at five Connecticut Conference of Independent Colleges schools: Connecticut College, University of New Haven, University of Hartford, Mitchell College and the University of Saint Joseph. It’s run through GreenerU, which has administered similar programs in Massachusetts.
“GreenerU brought this opportunity to us,” Goldberg said. “We’ve got the financing. CCIC, you’ve got the schools that have the need. GreenerU, you have this program.”
CEFIA will loan up to $1 million, which the schools will repay through the savings they achieve through the efficiency measures.