Dunsky Assesses NY Green Bank’s Impact in Transforming Clean Energy Markets

Challenge: Help NY Green Bank understand and evaluate how its investments are helping to transform clean energy financing markets and make recommendations to further scale its impact.

Solution: Dunsky, with its partner Evergreen Economics, leveraged our combined experience in designing and evaluating clean energy financing mechanisms to develop an approach to measuring the Bank’s impact.

Impact: The assessment and recommendations provide NY Green Bank with new insights to support informed decision-making as it continues to attract private capital to accelerate the state’s energy transition.

Project Context

NY Green Bank is a state-sponsored investment fund that operates as a division of the New York State Energy Research and Development Authority (NYSERDA).  With its $1 billion initial capitalization, NY Green Bank is the largest Green Bank in the United States. As of December 2023, it had made over $2.1 billion in cumulative investments and mobilized a further $7.0 billion in private-sector lending for community solar, energy efficiency and other clean energy markets.

To conduct the evaluation, our team worked with NY Green Bank to further elaborate its market transformation theory of change.  From this, we defined seven market indicators of how NY Green Bank is helping to transform and mature clean energy markets in the state. Our team then assembled market data using a mix of surveys, interviews, case studies and secondary sources to detect changes in the indicators stemming from NY Green Bank activities. The final report provides results for each indicator, analyzed against three metrics: Evidence of Change, NY Green Bank Influence and Data Robustness.

Our Findings: NY Green Bank is Successfully Mobilizing Private-Sector Financing in Key Markets

Our evaluation found compelling evidence that NY Green Bank’s portfolio of investments is playing a meaningful role in transforming several clean energy markets.

It has done this by improving the business case for clean energy investments, attracting private capital in a meaningful way, and aggregating and scaling investments to grow NY Green Bank’s impact.

More specifically, NY Green Bank’s success is rooted in developing solutions that address barriers to financing experienced in many clean energy markets, thus demonstrating opportunities to the wider market and establishing terms that are attractive to private investors.

Some of these innovative approaches include:

• Playing an early-mover role: to establish strong track records in smaller markets, NY Green Bank’s early support signals financial viability that allowed these markets to grow.  This is particularly evident in its early support for community solar, where NY Green Bank accepted the risk associated with variable returns under NY state’s value-based compensation for distributed solar generation, leading the way for New York to become a national leader in community solar investments.
• Adapting its financing products: to help projects get started, NY Green Bank offers solutions that are tuned to the specific market need, such as bridge loans and construction financing.
• Varying deal sizes: taking on smaller deal sizes to test new solutions and prove markets.
• Tailoring financial offers: suiting the needs of each investment including, in some cases, by offering flexible and or low-cost capital.
• Greater risk tolerance: showing willingness to take on higher risk investments with lower grades to address funding gaps.

Conclusion: A Model for Leveraging Public Funds

Our evaluation finds that NY Green Bank has successfully leveraged public funds to attract a significant amount of private capital and transform certain clean energy markets in the state. By supporting innovative financing models that help shelter building owners, energy developers and financiers from excess risk or balance sheet constraints, NY Green Bank has spurred clean energy markets that will support the State’s climate and economic goals.

Dunsky’s evaluation approach provides a standard yardstick for measuring progress, and our experience in designing innovative financing mechanisms can support governments, public investment bodies, and private actors to get the most value from their investments in the energy transition.  As part of this longitudinal evaluation measuring market transformation, Dunsky will be assisting NYSERDA and NY Green Bank to update the findings through another evaluation round in 2024.