Last week, New York State Governor Andrew M. Cuomo’s office announced the first transactions of the New York Green Bank (“NY Green Bank”).  Among those transactions is a four-megawatt solar project by BQ Energy’s Steel Sun, LLC on the former site of the Bethlehem Steel Plant in Lackawanna, N.Y. 

The NY Green Bank is a financial institution that lends at market rates and is funded by ratepayer fees on utility bills that are specifically allotted towards renewable energy and energy efficiency projects in New York State.  The goal of the NY Green Bank is to facilitate financing for projects that have not traditionally received private sector financing due to market barriers such as federal policy uncertainty and a lack of performance data.  Using the Green Bank model, the goal of the State’s $1 billion initiative is to successfully demonstrate that projects of this nature are easily replicable and profitable investments for the private sector.

The Steel Sun, LLC project is located on a New York State Brownfield Cleanup Program site.  The project will consist of over 13,000 solar panels on 22.6 acres of land. First Niagara Bank and M&T Bank are currently negotiating financing for the project.  According to the Wall Street Journal, this is the first transaction of this kind for First Niagara Bank in New York State.  The NY Green Bank will provide certain guarantees to these lenders for construction and tax-equity financing.  These guarantees are meant to improve financing markets for such smaller-scale commercial solar projects by demonstrating that such projects can be successful for regional and community banks, and are easily replicable.  Both BQ and First Niagara Bank are clients of Phillips Lytle, and we have advised both on different aspects of this project.

BQ Energy’s Managing Director, Paul Curran, has said of the NY Green Bank, “Utility-scale solar energy projects, including those on brownfields, are actually low risk in nature.  However, the projects are new to even the strongest global commercial and New York-based regional banks.  NY Green Bank has been a facilitator for this financing, bringing expertise in both the technology and risk management, allowing all parties to get comfortable with the transaction.”

These initial transactions are expected to total $800 million in investments, with $600 million coming from private banks and the remaining $200 million from the NY Green Bank.  According to the Natural Resources Defense Council Blog, the carbon dioxide reduction resulting from these investments is equivalent to taking 120,000 cars off the road or planting 15 million trees annually.