The likelihood that a federal Clean Energy Accelerator will be introduced by the Biden administration as a stimulus solution is growing. The solar and storage industries should be paying attention because the arrival of this type of financing mechanism could provide a massive boost.
Ushering in a Clean Energy Accelerator through the infrastructure bill, which is likely to arrive in January, also would set the incoming administration on a path towards meeting one of its key goals – achieving a carbon pollution-free power sector by 2035.
“A [Clean Energy Accelerator] could be a massive stimulus for the solar industry. If you do some rough back of the envelope math that means that solar and wind are going to have to grow from a 12% market share to a 75% market share in 15 years,” said Jeffrey Schub, executive director of the Coalition for Green Capital, a nonprofit that incubates and supports local green banks.
In addition to accelerating financing, green banks can help create jobs, build sustainable affordable housing, lower energy costs and adapt communities to withstand impacts from climate change.
Clean Energy Accelerator
A Clean Energy Accelerator lines up with what the Biden administration is trying to achieve – job creation, reduced emissions and equity, Schub said, pointing out that economic recovery, racial justice and climate change are three of the four topics highlighted on the Biden/Harris transition website. Confronting the Covid-19 pandemic is the incoming administration’s other top priority.
In its World Energy Outlook, released last month, the International Energy Association noted that solar PV is now consistently cheaper than new coal- or gas-fired power plants in most countries and that solar projects now offer some of the lowest cost electricity ever seen.
“I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022,” Dr. Fatih Birol, the International Energy Association’s executive director said. “[And] if governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge,” she added.
According to Schub, from a purely practical point of view, the Clean Energy Accelerator is a tool for dispatching aid to small businesses that can benefit from a transition to clean energy. House and Senate Republicans might be less likely to resist the idea because of its jobs and small business focus, he noted.
The Clean Energy Accelerator, as envisioned in legislation introduced earlier this year and late last year, pairs each public dollar with multiple private dollars to expand clean energy’s reach in the US.
Using this model, a state-chartered green bank could receive federal dollars and pair them with private capital to fund state and local initiatives that involve supporting renewable power, building efficiency, grid infrastructure, industrial decarbonization, clean transportation, climate-resilient infrastructure, etc… Because the public money invested is repaid over time, it can be redeployed.
“The leverage piece and running through non-governmental non-profit is important, but jobs and businesses are number one [priority],” Schub said.
Currently, 15 state and local green banks exist in the U.S. and about a dozen other states and cities are actively exploring launching one.
Against this backdrop, the Green Finance Institute, the Natural Resources Defense Council (NRDC) and the Rocky Mountain Institute are publishing a State of Green Banks Report later this month. Through the report, which will include a review of green banks worldwide, the partners aim to inform the development of a Green Bank Design Platform that they hope entities will be able to use to establish green banks.
“As an organization, we are working furiously right now to try to engage [state and local entities] to get them ready,” Schub said. It would be unacceptable if states that already have active green banks, like Connecticut, are ready to go and receive Clean Energy Accelerator money, while other state and local entities are not, he added.
Earlier this year, nearly 100 organizations voiced support for the Clean Energy Jobs Fund, which included a Clean Energy Accelerator in both its House and Senate versions. Letters of support for the Accelerator came from state green banks, start-ups, clean tech investors, utilities, energy industry trade groups, including the Solar Energy Industries Association and Energy Storage Association, and several environmental organizations, including the NRDC, the Sierra Club, Environmental Defense Fund, the Union of Concerned Scientists and Appalachian Voices.
ClimateWorks Foundation is providing the funding for the Green Bank Design Platform’s development and for the partners’ green banks review.
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