In the days after Hurricane Sandy ripped through New York in the fall of 2012, blacking out most of Manhattan and leaving more than eight million people without power along the East Coast, the state's governor, Andrew Cuomo, decided that New York's power grid needed an upgrade.

He got in touch with Richard Kauffman, then a senior adviser in the U.S. Department of Energy, and told him that "our power sector is vinyl records in the age of the iPad," Kauffman, now the state's chairman of energy and finance, recalled. As Gov. Cuomo saw it, addressing the issue of resiliency — thrown into high relief by the superstorm — would also give New York a chance to improve energy affordability, reduce emissions and benefit from the development dollars involved in a switch to renewable energy.

Out of that conversation, and others like it, was born New York Green Bank, a $1 billion publicly funded company that helps commercial banks to finance alternative energy projects by providing additional capital, expertise and financing guarantees. As such, it is a key player in New York's plan to meet 50% of its electricity needs through renewable-energy sources, such as wind and solar, by 2030.

The green bank is an increasingly popular concept nationwide, with four states already having established such institutions or something similar and several other states considering how to go about it. Alternative energy projects often pose challenges for private lenders, which may lack the expertise necessary to vet such projects. Many projects are too small to interest the largest banks, while smaller institutions are not able to provide the full amount of capital.

In all of these situations, New York Green Bank­ — funded partly by surcharges on ratepayers' electric bills — stands ready to provide support. "Our objective is not to crowd out the private sector," Kauffman said. "Our objective is to partner with the private sector to fill in financing gaps."

Since opening its doors in February 2014, the Green Bank, which is part of the New York State Energy Research and Development Authority, has invested $158 million across 11 deals. Its latest deal, announced in early August, is a $37.5 million, five-year loan to Vivint Solar that will finance the installation of solar panels in thousands of New York homes. In total Vivint is receiving a $313 million financing package to do solar installations across the United States.

Other deals include funding a solar development on a landfill in Patterson, N.Y., and providing a guarantee for the construction of a four-megawatt solar farm on a contaminated site in Buffalo, N.Y. The Green Bank's partners have included Bank of America, Citigroup, Deutsche Bank and Investec.

New York expects the 11 projects in which the Green Bank has participated to reduce emissions of carbon dioxide by 3.5 million metric tons — the equivalent of taking 42,000 cars off the road for the next 18 years.

The Vivint Solar deal is especially important, because it meets a milestone requirement that triggers the release of the Green Bank's next $150 million of funding toward its $1 billion total.

The ability to deploy that capital effectively will depend on private lenders being aware of the Green Bank's existence. Its president, Alfred Griffin, formerly an executive at Citigroup, said his people have spent the past two years "constantly hitting the pavement and hitting the phones" to get the word out, and that they have been largely successful in doing so.

The message he tries to get across to commercial banks is that renewable energy "is a big opportunity," Griffin said. "If they're not taking a harder look at it, they should be. … We are here to help them."

In each deal the Green Bank usually provides only a fraction of the total capital, for instance 5% of the $200 million provided to Oakland, Calif.-based Solar Mosaic, which offers a no-money-down financing option for homeowners who want to have solar panels installed. "Our ultimate goal," said Griffin, "is to put our limited capital to work in a way that results in multiples of our capital being deployed in the state."

Reed Hundt, the founder and chief executive of the Coalition for Green Capital and a former Federal Communications Commission chairman, said the chief role of green banks is to serve as "party planners" — doing the legwork and organizing necessary so that developers and commercial banks can "get together and have a really good time."

But the party, Hundt added, "is BYOB — you've got to bring your own bucks."

New York and Connecticut were the first states to have publicly funded green banks, and they have been joined by Rhode Island. Several other states, including Pennsylvania, Nevada, Colorado, Hawaii and Maryland, are thinking about starting their own. Rather than waiting for the Maryland state legislature to set one up, Montgomery County, home to 1.1 million people, created its own green bank at the beginning of August.

California has done things a little differently, as it so often does, choosing to create a green-lending division for its Infrastructure and Economic Development Bank rather than setting up a brand-new institution. And while the District of Columbia has authorized the creation of a green bank, it has yet to be set up.

The impact of publicly funded green lending can be significant. Hundt, who sits on the board of Connecticut Green Bank, said that by the end of 2016 it will have caused $1 billion of investment in alternative energy projects in the state. About 10% of that capital will have come from the green bank itself, with the rest being provided by other investors, mainly commercial banks.

In the absence of this kind of ambitious investment in cleaner forms of energy, said Hundt, climate change will wreak havoc in the years to come: "The waters rise, species are decimated, violent weather savages the planet, crops don't grow. One bad thing after another."

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