Green Banks: Driving Clean Energy Investments and Saving Families Money

Originally published on the Environmental and Energy Study Institute website.

On the Big Island of Hawaii, Ashley Nakamura had her heart set on solar panels for her home to help lower her energy bills. Electricity in Hawaii costs three times more than in the Lower 48 because the state relies on petroleum that needs to be shipped in from the mainland. But then she learned that she did not qualify for financing from her credit union.


Map data provided by the Energy Information Administration

Many American families like the Nakamura's face a common barrier to many clean energy upgrades: a lack of access to affordable capital. But there are solutions to help homeowners overcome this barrier. For example, and luckily for Ashley, Hawaii established a green bank—the Hawaii Green Infrastructure Authority (HGIA)—in 2013 to help families realize the money-saving benefits of clean energy and help the state meet its climate goals. Since 2014, HGIA has facilitated over $110 million in clean energy projects, with 78 percent going to low- and moderate-income households. These projects have lowered Hawaii’s dependence on fossil fuels and saved families money on their energy bills by expanding access to clean energy.

In 2019, with EESI’s help, HGIA established the Hawaii Green Energy Money $aver (GEM$) on-bill financing program, which helps unlock financing for solar projects for low- and moderate-income residential households as well as commercial building owners and tenants, and non-profit organizations. GEM$ removes barriers to own clean energy by accepting alternative underwriting criteria; for example, eligibility can be determined using on-time bill payment history for the prior 12 months instead of using credit scores.

Ashley's solar energy system was financed through GEM$ after she met the program’s income requirements. Additionally, her modeled solar energy system demonstrated a 10 percent or more net energy savings on her utility bill, another program requirement. Post-installation, Ashley saw $62 in net energy savings on her monthly utility bill (equivalent to a 10.1 percent reduction) and she expects to save $12,240 on her utility bill during the 20-year financing period. On top of that, she qualifies for an additional $19,831 in federal and state tax credits.

Because solar panels have a 30-year lifetime, she will continue to save money after the system is paid off, absent any electric rate increases. With more disposable income, Nakamura can afford more daily necessities all while reducing her carbon emissions.


Rooftop solar in Hawaii. Photo courtesy of Shell Vacations Hospitality.

Green banks like HGIA leverage private capital to provide flexible and affordable long-term loans to fill market gaps and improve accessibility, including by deploying innovative tools like inclusive on-bill financing programs. Today, more than 20 green banks are operating in the United States and providing targeted investments in rural areas, low- and moderate-income communities, and communities of color to advance equitable climate change solutions.

The Connecticut Green Bank was created in 2012 through legislative action to help the state meet its renewable energy goals. Since its inception, the Connecticut Green Bank has funded more than $1 billion in clean energy investments.

“Connecticut Green Bank’s model involves moving away from providing grants to fund clean energy projects, and instead use the limited public funds towards financing programs and direct lending,” said Bryan Garcia, president and chief executive of the Connecticut Green Bank. “This way, the green bank is building a clean energy asset portfolio and generating income [through principal and interest rates payments], rather than spending the money away through rebates.”

The Connecticut Green Bank invested more than $120 million in clean energy projects by leveraging $10 million provided by the 2009 American Recovery and Reinvestment Act. One program, the Smart-E loan program, involved a partnership with local credit unions to create a loan-loss reserve fund to provide low-interest loans for energy efficiency and clean energy upgrades. With $700,000 in initial capital, the Smart-E program has leveraged $80 million in clean energy investments through 4,500 projects.

“My goal is not to compete with traditional banks, but rather to use my resources—as a green bank—to better use the traditional bank’s capital to invest in clean energy while meeting Connecticut’s climate goals, in a way that improves what I can do with my capital,” Garcia said.

The Connecticut Green Bank developed new programs based on its recognition of gaps left unfilled by traditional financing providers.

“In 2015, we realized that all homeowners in Connecticut did not have access to the benefits of the clean energy economy,” Garcia said.

To increase solar energy investments for low- and moderate-income households and communities of color, the Connecticut Green Bank partnered with the solar leasing firm, PosiGen, to provide capital investment. That resulted in the Solar for All program, which has been successful in achieving solar parity based on income and race.

Green banks are uniquely positioned to leverage limited public funds and mobilize private capital to scale up clean energy investments and energize the green economy. With their capacity to aggregate capital and provide long-term and low-cost financing for small-scale projects, such as energy efficiency and distributed solar, green banks are essential in the transition to a clean energy economy. By installing solar panels, families like Ashley Nakamura’s have access to the full range of benefits from clean energy, including lower energy bills, a smaller impact on the environment, and greater resilience. Inclusive financing programs such as GEM$ in Hawaii and Solar for All in Connecticut help families cut energy costs and save money.