Last week, the New Jersey Board of Public Utilities (BPU) approved an agreement with the New Jersey Economic Development Authority (EDA) to establish and operate an Energy Resilience Bank in the state. The BPU approved a plan to direct over $200 million in federal aid to the bank. The Energy Resilience Bank (ERB) will focus on the development of distributed energy resources at critical facilities throughout the state, aiming to minimize the impacts of widespread power outages like the one Hurricane Sandy caused.
The ERB will be focused on providing capital, both low-interest loans and grants, to critical facilities that offer the greatest resilience benefits, including water and wastewater treatment plants and hospitals. Subsequent funding will be directed toward other critical facilities, such as transportation, emergency response and schools that can function as shelters in case of emergency. While other states, including New York and Connecticut, have recently launched green banks, the ERB will be the first to focus on resiliency.
The launch of the ERB followed a National Renewable Energy Laboratory study that found that distributed generation and microgrids are integral to energy resiliency. Distributed generation and microgrids have the potential to ‘island’ electricity at critical facilities with on-site generation, retaining power during bulk-power system blackouts. These technologies provide additional benefits such as increasing efficiency by cutting transmission losses and incentivizing clean energy deployment.
New York launched its Green Bank in December with an initial capitalization of $210 million. The New York model focuses on private-sector investment proposals and aims to support financing for local energy efficiency and clean-energy projects that larger financial institutions typically overlook. New York’s Green Bank envisions support such as credit enhancements, co-investing with the private sector in a loan fund for clean energy, loan warehousing/short-term project aggregation and similar arrangements. Connecticut launched the first green bank in the country in 2012, and, according to their 2013 report, roughly ten dollars was invested by private sources for every one dollar of ratepayer funds invested. It remains to be seen whether New Jersey will similarly leverage private investment in its model.