A new state-sponsored bank in New Jersey soon will provide grants and loans for making the state's critical infrastructure more resilient to power outages from extreme weather events.
The Energy Resilience Bank, the first of its kind in the country, will support distributed energy resources and other technologies that can generate and store power near facilities that need it. That way, critical facilities such as hospitals could run even if the rest of the power grid goes down, potentially saving lives and money.
The bank, which has been in the works for several months, moved one step closer to operation when it released Aug. 22 a draft program eligibility guide and a draft funding guide for its first set of resilient energy projects at water and wastewater treatment plants. The bank expects to open for business soon after those guides are finalized in September.
It is being funded in part by a $200 million federal disaster recovery grant allocated to New Jersey after Superstorm Sandy, which caused widespread electrical outages in the state and others in the Northeast. The bank will stretch those federal dollars by also tapping private sector capital.
In the aftermath of Sandy, energy resilience is in high demand in New Jersey.
When New Jersey Gov. Chris Christie's (R) administration announced in 2013 that it would use $25 million in Federal Emergency Management Agency assistance to support resilient energy projects across the state, the response from local governments was overwhelming, with more than $469 million in requests.
“This is a huge challenge if we're going to create resilient power applications in many, many critical facilities—fire, police, hospitals, food banks, housing—that's going to require a lot of money,” said Lew Milford, president of the Clean Energy Group, a renewable energy advocacy organization.
To help fill the gap between funding demand and available resources, New Jersey's Energy Resilience Bank wants to leverage private sector capital.
“What's interesting and important about something like the New Jersey bank is that if we can begin to tap capital markets to finance resilient power projects, then we might be able to really begin to meet the challenge,” Milford told Bloomberg BNA. “That's what this is really all about.”
Green Bank Trend.
New Jersey's Energy Resilience Bank has been compared to government-created financial institutions in other states, called green banks, which are focused on driving private investment toward creating cheaper, cleaner and more reliable energy.
The nation's first green bank was established in Connecticut in 2011. Since then, similar banks have been set up in Hawaii and New York, and more banks are on the way in other states.
The New Jersey bank looks similar to these green banks, but it has a narrower focus for its project financing. New Jersey also has avoided the green bank label, likely because of the politics behind it for the state's Republican governor.
“The reality for us is it's not critical that it's called a green bank,” said Jeffrey Schub, vice president of the Coalition for Green Capital, which provides consulting services for green banks.
“It's much more important that they implement the principles that align with other states in the region, especially New York and Connecticut: supporting clean energy and doing it in a way that's fiscally sustainable for the state and makes consumers better off,” he said.
More information on New Jersey's Energy Resilience Bank is available at http://www.state.nj.us/bpu/commercial/erb/.
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