Virginia Localities Can Now Fund Clean Energy Projects With Green Banks
Green banks obtain money from a number of governmental and private sources to make investments in clean energy projects.
Investments made by green banks support not only clean energy projects, but also local economies and high quality jobs for American workers.
Localities in Virginia now have the option to establish local green banks, which can fund energy efficiency projects, electric vehicle charging infrastructure, and other clean energy projects.
A new mechanism for funding clean energy projects such as renewable energy sources, energy efficiency projects, and electric vehicle charging infrastructure is now available in Virginia. The General Assembly approved a law during the most recent session permitting localities to establish green banks, which are entities that receive funding from a variety of governmental and private sources in order to lend money in support of clean energy projects. Green banks facilitate private investment in energy developments that meet public goals for healthier, cleaner communities, greater investment in local economies, and stronger jobs. The law authorizing the establishment of green banks in Virginia went into effect on July 1.
Though the concept has been around for only a little over a decade, green banks have been instrumental in jump-starting clean energy projects throughout the United States and around the world. The process is simple: green banks receive a small amount of public funds, which are used to make an initial investment in a new project. This initial investment is then used to attract private capital, which the bank then leverages to facilitate the completion of the project. A return on the investment comes once the project is up and running.
One of the most successful green banks in the United States, the Connecticut Green Bank, has invested nearly $2 billion in clean energy projects throughout the state since its inception just ten years ago. The Connecticut Green Bank is funded via fees on Connecticut electric bills and funds obtained via sales of carbon allowances through the Regional Greenhouse Gas Initiative (which Virginia is now part of), as well as federal grants and private philanthropy. In addition to creating jobs and spurring local economies, the Connecticut Green Bank has already helped to develop over 400 MW of clean energy capacity for consumers and businesses in the state; today, 5% of the electricity consumed in Connecticut is powered by renewable sources thanks in part to investments made by the green bank.
While a statewide green bank like the one in Connecticut won’t be set up in Virginia under the recently passed legislation, localities will have the option to establish green banks to launch clean energy projects in their own communities. This model has proven to be effective, as a number of localities in other states have seen millions invested via green banks. In Montgomery County, Maryland, a local green bank which receives capital through the county and with funds from a corporate merger invested $2.5 million in clean energy projects in 2020 alone. Those investments helped deliver clean energy to over 500 households throughout the county.
Under the new Virginia law, localities now have the option to pass an ordinance creating a green bank. The green banks will be able to finance renewable energy projects and infrastructure, energy efficiency projects, alternative fuels for electricity generation, electric vehicle charging infrastructure, and smart grid technology. Localities establishing green banks will be able to decide whether the green bank will be a public entity, quasi-public entity, depositing bank, or a nonprofit entity.
Though the law has been in place for only a month, at least a couple of localities are signaling interest in setting up a green bank.Fairfax County and Arlington County have both begun to explore ways in which green banks can be implemented in their respective localities. With a new method of funding clean energy projects available, Virginians now have more options than ever before for adopting clean energy in their communities and all the jobs and economic benefits that come with it.