Annapolis, MD- Legislators are considering a bill this session intended to drive greater overall investment in clean energy and energy efficiency projects across the state. House Bill 705 and Senate Bill 726 have been introduced by the policymakers who envision the creation of a $30 million public investment fund targeted to attract a more significant commitment of private sector capital into the market sector. The Maryland Clean Energy Center (MCEC), an instrumentality of the state previously set up for this purpose, would manage the fund with related financing programs. Revenue the state has received from the Regional Greenhouse Gas Reduction carbon allowance auction proceeds, currently in reserve but unappropriated, are directed to seed a dedicated investment fund in the pending bill.
This policy initiative is based on the results of a two year study completed by MCEC in December of 2015, responding to a directive from the General Assembly in 2013. The study report, funded by the Town Creek Foundation, calls for the investment over a five year period to attract four times that amount in capital and drive the market for energy improvements, and recognizes that MCEC has already leveraged over $40 million in private capital through current financing programs for residential and commercial energy projects.
According to Jeff Schub Executive Director of the Coalition for Green Capital, a national expert who worked on the study with Maryland stakeholders, “Between now and 2022, Maryland needs to invest $5.7 billion in renewable energy to reach the current legally mandated Renewable Portfolio Standard (RPS). There are also $2.6 billion of cost-effective energy efficiency projects in the state. All of these investment opportunities require upfront capital.” Schub cites successful green bank models in other states including Connecticut, New York, and California that Maryland can replicate.
Anton Cohen, a partner and co-head of the Renewable Energy practice at CohnReznick LLP, an accounting, tax and advisory firm with industry expertise, led the study process along with a group of key stakeholders for the Maryland Clean Energy Center. “The MCEC Board recognizes there is massive need for financing to support efforts to implement energy solutions that enable rate-payers access to affordable, reliable and clean energy, but public funding alone cannot address the need.” said Cohen.
The report, finds that $449 million of public funds are invested annually in clean energy in Maryland, collected from various sources but finds that the majority of those funds are used as one time grants. “We concluded that an investment of a portion of those funds into financing programs, used to leverage a greater share of private investment would be a more efficient use of public resources and might allow us to address certain financing gaps that we found currently exist for small business, low to moderate income residential and small municipal market sectors,” said Cohen, adding “there is also a need to facilitate access to capital for emerging technologies across the clean tech sector.”
Katherine Magruder, Executive Director for the Maryland Clean Energy Center looks for the proposed green bank to bring financing solutions for business owners and operators to be able to reduce their energy spend and improve their competitiveness. She said, “Our Maryland Property Assessed Clean Energy financing program was launched this year based on the model Connecticut has deployed with great results.” She also sees the potential for economic development in terms of job retention and creation as a benefit of increased financing. “Energy improvement contracting jobs are by their nature located in state. If we increase market demand for related services, we grow our economy.”
This year the General Assembly is also considering initiatives to ramp up the state Renewable Portfolio Standard to 25% by 2020, from the current 20 % by 2022 and a bill to increase the current Greenhouse Gas Reduction goal from 25% by 2020 to 40 percent by 2030. With that in mind, business leaders have expressed the importance of coupling financing as the means to achieve those more aggressive goals. George Ashton Chairman of the Maryland Clean Energy Center and CFO of SOL Systems, a respected energy project financing firm stated, “This is the time for Maryland to make strategic investments which include a commitment to a leveraged funding initiative that will ultimately retain and create jobs in the state, and put money back in the pockets of ratepayers from cost savings.”
Legislation is accessible on line at:
The study report can be obtained online at:
About the Maryland Clean Energy Center:
The Maryland Clean Energy Center (MCEC) is a not-for-profit corporate instrumentality of the state of Maryland, founded in 2008 through an act of the Maryland General Assembly. MCEC’s mission is to increase clean energy jobs, technical innovations, business development, and consumer adoption of clean energy products and services. MCEC is focused on helping consumers, supporting businesses and informing policy makers.
MCEC currently operates a variety of a programming including: loans for energy efficiency improvements and installations (commercial and residential), consumer education, and networking for clean energy professionals.