People and companies with renewable energy ideas, such as installing solar panels, sometimes have trouble finding the money to do their projects.
The state of Washington has created a funding source, a "Green Bank," so to speak, and Eli Lieberman is helping to create it.
This interviewed has been lightly edited for length and clarity.
Eli Lieberman: The Washington state Green Bank is an independent 501(c)3 nonprofit financial institution that was stood up by the Washington state Department of Commerce in late 2023. The idea comes from a long line of green banks across the United States. It's a movement that started in the ARRA days, in 2009, the American Recovery and Reinvestment Act. This was a time during the financial crisis when there wasn't a lot of lending going on and markets had sort of stalled and the Department of Energy was sort of trying to think, how can we increase more investment in renewable energy and clean energy? But using public sector dollars in a very efficient way. So how can we get those private markets moving again that had stalled up in the financial crisis. So out of that came the initial green banks like the New York Green Bank, the Connecticut Green Bank, and Michigan Saves, where I used to work. The idea is, how do you take public sector dollars and use them to leverage private sector investment? So you're really looking to make the public sector dollars, like, work harder.
The Connecticut Green Bank, for example, has a seven to one leverage ratio. So for every dollar the state of Connecticut gives the Connecticut Green Bank, there's seven dollars in private sector investment, so it's a really successful model. They've deployed billions of dollars across the country. So it's exciting that we have one here now in Washington.
DN: What are the projects you're looking to loan money to?
EL: Really any sort of clean energy project you could think of. Solar energy, battery storage, electric vehicles. Not necessarily for a homeowner, but for a small business that's looking to convert its fleet, the infrastructure associated with installing to power those electric vehicles.
I think a big one for us will be building energy efficiency. The state has a clean buildings performance standard. So over the years, buildings across the state, I believe, over 50,000 square feet will need to start being more efficient and that's something that we can help finance.
DN: Would you finance the whole cost of a building or a fleet? Or is it a percentage? Do you have a match that you require?
EL: That's a great question. We just received our initial appropriation from the legislature, so the capitalization of the bank, $25 million, which is really exciting, and the key performance metric that the legislature has put on us is that idea of leverage. So three-to-one leverage for our commercial portfolio. That means that we never really want to be the lead lender in any given project. We're really trying to unlock private sector capital, so it's the question of a project where it just needs a little bit of a credit enhancement for us, or maybe it needs a slightly blended interest rate that's a little bit lower. So yeah, we're really looking to increase that amount of private sector capital.
DN: The fact that you're out there, do you anticipate that might turn out to be kind of an incentive for the private sector to come in and loan money?
EL: Yeah, it really works. It helps so many different stakeholders. It helps the end user, the business, or the homeowner lower their utility bills because they're able to either get solar or a more energy efficient home. It helps contractors because often in residential financing or in business financing, the project itself pencils really well, but they might not be able to get the financing for it because it's like a new business. Say your business has only been around for a year or two, because they don't have that many audited financial statements, a lender might not feel comfortable lending for this new heat pump for that business, even though it's going to save them money.
So we're able to come in in those examples and say we'll look at this from like a project finance perspective, and we see that, over the years, energy costs are going up. This project is going to lower the utility bills for this organization. That's going to result in savings. That savings can cover debt, so we feel comfortable getting involved in this. We could then, in that scenario, maybe guarantee part of the loan.
So now the lender will go, oh, okay. Well, our credit committee goes, we're not super comfortable. They don't have a long operating history, but now we have this guarantee from the green bank. So we can get to a yes.
DN: So what's the loan process like? It's government financed, so automatically you start thinking about red tape and all the hoops you got to jump through. Is it going to be like that or is it going to be more like the private sector?
EL: No, we need to work at the speed of the market. I think that's one reason why when the Department of Commerce created us that it set it up as an independent 501(c)3 non-profit so that we would have the ability to work with a local lender like Heritage Bank here in Spokane and they're going to need to move at the speed that the developers move at. So if we can't parity that, then we're not very useful.
DN: So how broad is the definition of green in "Green Bank?" There's solar. We've talked about energy efficiency in buildings. Do we also talk about wind? Do we talk about geothermal? What's not included in green?
EL: You know, that's a really great question. Our primary goals are to lower utility costs, make the state more affordable, and also to lower carbon emissions. So we are a touch technology agnostic. We're not going to be totally evangelist that it has to be all electric. Like if there is a more efficient gas version of something that will lower emissions, we are OK with that.
DN: The Washington State "Green Bank," soon to be known as Washington Builds, isn’t yet loaning money for projects, but hopes to later this year.
