HB 170 proposes to create an Energy Independence Program and Fund administered by the Alaska Industrial Development and Export Authority. This bill, and its Senate companion, SB 123, would be Alaska’s first attempt at forming a Green Bank. In general terms, a Green Bank is a public, quasi-public or non-profit entity explicitly established to facilitate private investment into domestic low-carbon, climate-resilient infrastructure. This type of entity exists across the globe, from Kenya to Connecticut, and is growing in popularity as governments grapple with rising demand for residential and commercial energy efficiency and a precipitous drop in the price of renewable energy.
The Alaska State Legislature has been scrambling to modernize energy efficiency and renewable energy programs in the shadow of the high-oil price days, which spawned significant state grant programs that have declined over the years. Commercial Property Assessed Clean Energy or CPACE and On-Bill Financing for energy improvements, as well as a tax credit for energy-efficient building, have all been signed into law over the past few years. If a state Green Bank is created, it could serve as a third-party administrator for CPACE and On-Bill Financing programs statewide, leading to significant cost reductions for home and business owners, carbon reduction, and improvements in property values statewide.
A Green Bank can help decrease barriers to direct lending for energy efficiency projects. “The Connecticut Green Bank incentivized local lenders in Connecticut to offer loans to finance multi-measure energy efficiency retrofits by creating a loan-loss reserve that would de-risk any such loans that were ultimately made. To benefit from the loan loss reserve, participating lenders had to agree to various conditions, and the terms of their loans had to fit within criteria specified by the Connecticut Green Bank.
As a result of the Connecticut Green Bank’s loan-loss reserve, 11 private lenders now offer unsecured personal Smart-E Loans for home energy retrofits in Connecticut. Homeowners can finance any combination of over 40 eligible efficiency measures, and can borrow up to $40k. The loans have variable terms between 5 and 12 years, and terms are chosen such that savings are greater than loan payments so the projects are cash flow positive for the homeowners. Interest rates are offered at attractive rates due to Connecticut Green Bank’s loan loss reserve, and homeowners pay a fixed monthly payment with no pre-payment penalty.”- From the Green Bank Network.
HB 170 saw a suite of amendments in the House Energy Committee, all of which made the bill better. The House Energy Committee Substitute bill tightened the scope of the improvements eligible under the Energy Independence Program. The amendments also created a more diverse advisory panel, ensured that at least 35% of the program benefits go toward rural communities, and improved the AIDEA board structure by requiring that the legislature have more of a role in board appointments. This new and improved version of HB 170 will help the Green Bank and will help AIDEA. AIDEA is beset by growing public opinion that it falls too far outside of any legislative (public) accountability and should be required to vet more of its large expenditures through the legislative appropriation process.
HB 170 will be heard next week in the House Labor and Commerce Committee.
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