Investment Strategy

NY Green Bank represents a new approach in the clean energy marketplace. We are market-focused and market-responsive, eliciting input on needs for particular products and transaction structures directly from the marketplace. We focus on financial solutions to unleash more private capital in, and scaled deployment of, clean energy within New York State. NY Green Bank operates on the near-frontier of current clean energy capital markets, focusing on areas where there is market interest but limited capital availability due to specific financing gaps and barriers. NY Green Bank participation can include the role of credit enhancement provider (e.g., a reserve account or a junior interest), lender (e.g., senior, mezzanine or subordinated), or warehouse provider (with the likelihood of being taken out by private sector third parties). We work with entities already achieving success in clean energy, but whose progress is constrained by the lack of available financing.

Eligible Technologies

We invest in proven technologies and have identified and published illustrative guidelines for eligible investment types based on technology. We may consider supporting financing arrangements for projects using technologies beyond the scope of this list where there is demonstrated potential for increased deployment of clean energy and/or a potential for greenhouse gas reductions in New York State.

Investment Criteria

At a minimum, NY Green Bank transactions must meet the following criteria:

  1. Involve financial participation by one or more private sector financial parties;
  2. Be in the wholesale (not retail) markets;
  3. Be economically and technically feasible and provide financial returns to NY Green Bank sufficient to meet internal requirements;
  4. Demonstrate potential for energy savings and/or GHG reductions in support of New York’s clean energy policies;
  5. Satisfy additionality requirements, including the following elements:
    • Explain how/why the proposed transaction would not occur but for NY Green Bank participation;
    • Demonstrate how the transaction contributes to market transformation in terms of:
      • Scale;
      • Improved private sector participation;
      • Level of awareness and confidence in clean energy investments;
      • Other aspects of market transformation;
    • Demonstrate how private sector capital providers will step in and assume NY Green Bank’s role, as the market becomes increasingly comfortable with the transaction type and structure; and
  6. Involve sufficient client “skin in the game”.

Irrespective of the type of client, underlying project or financial product being considered, credit quality is paramount in NY Green Bank’s evaluation, structuring and negotiation of its potential investments.

Investment Parameters

What NY Green Bank Does What NY Green Bank Does NOT Do
  • Analyzes, accepts, and prices credit and project risks in a similar manner to the private markets, but takes a view on liquidity risk and premia that may be more flexible than commercial markets (where a solid case for market development and/or NY Green Bank take-out exist)
  • Provides a bridge to a sustainable and efficient private sector clean energy financing market, including:
    • Supporting development of liquidity in markets
    • Being creative in supporting creditworthy transactions
    • Developing and incubating new structures
    • Supporting standardization and aggregation for distribution
  • Is guided in its product offerings and types of clients by the market and what the market needs
  • Addresses the market barriers and inefficiencies impeding the growth of clean energy financing
  • Collaborate, rather than compete, with financial institutions and other private sector entities, leveraging both private sector capital and institutional capabilities
  • Focuses on projects using proven technologies that are economically viable but in respect of which financing barriers exist
  • Works with counterparties possessing demonstrated abilities to deliver a pipeline of projects
  • Facilitates the development of clean energy capital markets
  • Enhances market confidence in clean energy investing by compiling and publishing aggregated/anonymized loan payment and project performance data on NY Green Bank financed clean energy transactions where possible
  • Maintains the flexibility needed to adapt to movements in the markets and to focus on a constantly evolving frontier where NY Green Bank’s investment can help to unlock new sectors of clean energy finance
  • Take deposits
  • Provide loans directly to consumers (wholesale market only)
  • Support transactions without private capital involvement at closing (or reasonably anticipated in the case of warehouse/aggregation facilities)
  • Take unproven technology risks
  • Take development risks
  • Pursue one-off transactions without the ability to replicate or scale
  • Provide subsidized capital or grants
  • Fund manufacturing facilities
  • Fund assets or projects located outside New York State
  • Be the sole long-term credit/capital party to a transaction
  • Be anchor capital in long term financings (i.e., other private capital partners must be part of a proposed transaction or project)
  • Provide stand-alone advisory services

Financing Arrangements

NY Green Bank makes investments into eligible technologies consistent with its investment criteria. As a prerequisite to NY Green Bank participation, transactions must include private sector financial parties and capital. Participation by the private sector financial entity (or entities) can be structured in various ways, including as debt and/or equity financing or as the expected takeout of a NY Green Bank-sponsored warehouse facility at the agreed aggregation level. NY Green Bank considers various transaction sizes and participation levels although generally expects investments to be within the range of $5.0 million to $50.0 million.