As a market-focused and market-responsive organization, NY Green Bank has not developed a pre-existing slate of specific products to sell to the marketplace. Instead, we continuously elicit feedback directly from market participants, ensuring that any products or transaction structures will unleash more private capital in, and scale deployment of, clean energy within New York State. This inherently dynamic approach requires us to remain responsive and nimble in addressing evolving market gaps and barriers.
While NY Green Bank products continuously evolve alongside clean energy financing markets as certain gaps and barriers are addressed while others remain or newly emerge, we initially offer four broad categories of capital solutions: credit enhancements, warehousing/aggregation (short-term facilities), asset lending and investments (long-term facilities) and composite products.
- Credit Enhancements: Credit enhancements can be structured to absorb a portion of losses that may be incurred in project-specific loans or leases and alleviate some of the default risks associated with clean energy loans or leases in return for a risk-appropriate fee.
- Warehousing/Aggregation (Short-Term): Many creditworthy clean energy projects are unable to attract the kind of financial interest needed from the commercial markets due to their relatively small size (e.g., in comparison to utility-scale projects). To address this financing gap, NY Green Bank works in collaboration with an aggregator – tasked with building a portfolio of qualifying clean energy projects – while NY Green Bank serves as a portfolio lender or provider of a "warehouse facility", with the intention of realizing its investment in the portfolio through sale to commercial market participants as new asset classes and liquidity are created. A warehouse facility is a type of financing product where funds are advanced to a borrower to facilitate the completion over time of a series of qualifying projects that together aggregate into a sizable portfolio with respect to which there may be greater interest and long term investment alternatives in the commercial markets than might otherwise be available to finance each individual project. During the period (which could be a number of years) over which a particular portfolio of projects is being built or aggregated, the underlying facility is considered to be a "warehouse" in the figurative sense that it is the "place" where each developed and developing project is "held" as the larger portfolio of projects is built during the facility term.
- Asset Loans & Investments (Long-Term): Asset loans and investments are made along with other private sector capital providers, and involve the provision of longer-term products. These can be advanced to projects through senior, mezzanine or subordinated debt facilities and/or in certain cases, equity.
- Composite Products: Complex structured investments involve NY Green Bank potentially playing multiple roles in a single transaction. For example, a NY Green Bank investment could include subordinated debt, an equity investment and a loan loss reserve, all combined to create a tax equity fund to attract senior debt and tax equity investments by one or more private sector entities.
NY Green Bank operates as a self-sustaining entity and we price our products to properly reflect risk positions in the capital structure and pricing for comparable transactions, as well as internal portfolio return needs. In so doing, NY Green Bank serves as both a prudent fiduciary of ratepayer funds and as an agent for greater private investment in the clean energy sector. In particular, NY Green Bank takes into account current market rates as well as commercial expectations of rates at a point when the market for the relevant investment is expected to be more liquid.
Our Evolving Portfolio
As clean energy markets in New York State continue to evolve, opportunities will likely arise for NY Green Bank to play additional roles (e.g. asset and fund management). We retain sufficient strategic flexibility to pivot in the marketplace as and when needed to adopt new roles and develop additional offerings – all in response to demand expressed by commercial markets.