Superstorm Sandy was a wakeup call. It further exposed New Jersey’s and our country’s vulnerability to extreme weather events linked to climate change, alerting us to the hard reality that our central power grid is outdated and vulnerable.
New Jersey, as well as other badly hit areas, turned their attention to enhancing the electric grid’s resilience. The federal government, New Jersey, and the state’s electric utilities have invested heavily in hardening the grid and promoting clean energy technologies – such as renewable energy, microgrids, and energy storage – to upgrade to a smarter, more flexible energy system that can withstand the effects of future storms and keep people safe and warm when they need it most.
New Jersey’s resiliency efforts are impressive, but it’s become resoundingly clear that limited public funds alone will never be enough to build the state’s clean energy future. Private capital investment is key to establishing the large-scale, clean energy markets needed to ultimately save customers money, increase grid resiliency, and slash harmful pollution.
To spur private investment, New Jersey set up an Energy Resilience Bank to finance clean energy and resiliency projects. The Energy Resilience Bank launched with $210 million of federal funds to finance resilient energy systems operating the state’s critical infrastructure, such as water and wastewater treatment facilities, hospitals and long-term care facilities.
Financing resilience is a priority in New Jersey. In November, the Christie Administration, Environmental Defense Fund, and the New Jersey Institute of Technology hosted the Resilience Finance Symposium, bringing together over 120 public and private sector participants from across the state and country to explore innovative ways New Jersey and beyond are financing resilient energy systems.
The New Jersey Energy Resilience Bank, the New York Green Bank, and the Connecticut Green Bank were on hand to share strategies and successes, while New Jersey companies spoke about their projects and barriers to growth. The state’s transportation authority, New Jersey Transit, discussed plans to use $410 million in federal funds to develop a microgrid, which can generate electricity on-site or nearby where it’s consumed and keep trains running in the event of a power outage.
New Jersey’s focus on critical facility infrastructure upgrades in the wake of Sandy made perfect sense. Moving forward, however, the state should begin laying the groundwork to leverage available public funds to access private capital. This will expand the market for clean energy technologies and improve grid resilience.
New Jersey might follow Connecticut’s lead, for instance, whose green bank was able to turn every dollar in system benefits charges (a small surcharge on customers’ electricity bills used to finance energy efficiency and clean energy programs) into three dollars of private capital. The state then used this extra funding to help finance Connecticut’s successful Commercial Property-Assessed Clean Energy (C-PACE) program, which allows business owners to pay for energy efficiency and renewable energy upgrades on their property tax bills.
Growing momentum for private capital engagement in the clean energy sector was also evident in New York at a recent International Green Bank summit, hosted by the New York Green Bank, which brought together green bank stakeholders from around the world. The New York Green Bank recently announced its first set of deals, using $200 million of public funds to catalyze $600 million in investment from prominent Wall Street banks like Bank of America Merrill Lynch and Deutsche Bank.
New Jersey’s Energy Resilience Bank is already off to a great start by allocating $65 million for water and wastewater treatment plants, for which the bank is accepting applications. In coming months, the Energy Resilience Bank will distribute grants and low-interest loans to help finance clean energy technologies that can operate independently from the power grid like solar power with battery storage.
The Energy Resilience Bank could enhance its financing capacity by fully harnessing the potential of private capital, enabling it to expand its range of products and types of projects. Ideally, the bank would merely bridge the financing gap that exists due to market barriers by providing attractive interest rates or other incentives. This would allow the private sector step in and do what it does best, resulting in a self-sustaining clean-tech market with minimal support from public funds. New Jersey has taken innovative steps to address grid vulnerability and resiliency. Next on the agenda is ensuring the state has adequate resources to get the job done, and accessing private capital is the most effective way to do it.