Bettina Bergöö
Bettina Bergöö, energy efficiency and financing programs manager at Virginia’s Department of Mines, Minerals and Energy. Credit: Courtesy

Clean energy expert Bettina Bergöö is barely a month into her job at Virginia’s Department of Mines, Minerals and Energy. 

One of her newest duties as the agency’s energy efficiency and financing programs manager is helping localities navigate the setup of green banks. The state General Assembly voted to greenlight the innovative lending institutions earlier this year.

Green banks, which caught on in the United States about a decade ago, are designed to speed up and expand the reach of clean energy projects by leveraging limited public dollars to attract private capital.

Connecticut established the country’s first green bank in 2011. Since then, 14 other states and Washington, D.C., have followed suit. And more, including Virginia’s, are on the way.

In tandem at the federal level, the House of Representatives (H.R. 806) and the Senate (S. 283) have introduced legislation to create a national green bank. The measures call for infusing what’s called the Clean Energy & Sustainability Accelerator with $100 billion in seed money. The accelerator is touted as an independent, nonpartisan, nonprofit finance entity that will create jobs, support businesses, and build clean and resilient infrastructure.

Bergöö came to the state energy agency from the Natural Resources Defense Council, where she split her time between increasing investments in green infrastructure and expanding access to clean energy in affordable multifamily housing. While at a different job before that, she worked in India and East Africa conducting policy and financial analysis of the off-grid energy sector and incubating clean energy social enterprises. She has a master’s degree in public policy.

Green banks are heralded as a conduit for putting dollars in the hands of communities and individuals too often left behind by traditional lenders.

Bergöö praised Virginia’s legislature and leadership from the Gov. Ralph Northam administration for championing such access. Del. Kaye Kory, D-Falls Church, sponsored House Bill 1919, which becomes law July 1. That’s the same day DMME will officially shorten its name to the Department of Energy.

“I believe there is growing awareness of the disparity between those who have cash on hand or can qualify for financing to access clean energy, and the need to address that disparity,” she said.

Bergöö immersed herself in the topic at NRDC because the environmental nonprofit serves as co-secretariat of the Green Bank Network, a global knowledge-sharing platform. 

In this interview with the Energy News Network, she explains how local green banks in Virginia have the potential to boost investments in energy efficiency and renewable energy. This piece was lightly edited for clarity and length.  

Q: Several years ago, it didn’t appear Virginia had the appetite to tackle green banks on its own. What changed?

A: Several developments contributed. First, a shift in the composition of the General Assembly created an environment more receptive to clean energy initiatives. Second, bipartisan support for green banks is growing at the state level and nationwide.

Third, ensuring underserved communities are included in the energy transition is a priority of Gov. Northam’s administration and General Assembly leadership.  

Q: Can you explain how a green bank differs from a traditional bank most people picture?

A: That’s a good question. It’s a bit of a misnomer to use the word “bank” because most people think of a bank as a place that takes deposits and uses that money to make loans. 

Green banks don’t take deposits. Instead, they lend out the money they receive from government, philanthropy and other sources. The names of newly formed green banks such as the Colorado Clean Energy Fund and the North Carolina Clean Energy Fund are more reflective of what green banks do.

Q: How will DMME’s Division of Energy be involved with Virginia’s green banks? 

A: That’s what I’ve been figuring out. Our support for localities interested in setting up a green bank can include education on different structures and best practices via webinars, conversations and coordinated efforts with other states and national partners.

Potentially, we could offer seed funding to localities for a green bank startup. We definitely want to help position the commonwealth to compete for federal funding that might become available.

Q: As a follow-up on the federal front, the New York-based Coalition for Green Capital oversees a project called the American Green Bank Consortium. The coalition is pushing legislation in Congress to create a federal green bank. Would that be better than a state-by-state approach?

A: Some might see them as competing approaches. But green banks at the federal and local level make sense because the primary purpose of the national one would be to provide funding for state and local ones. The consortium knows from experience that securing funding to finance clean energy projects can be challenging.

The federal green bank, called the Clean Energy Accelerator, was included in President Biden’s American Jobs Plan. Separate bills in the U.S. House and U.S. Senate would create it. As proposed, it would provide grants to start up local and state green banks, and fund interstate transmission projects and other large infrastructure undertakings.

Q: Do green banks need to be set up as nonprofit in Virginia? Where and how do they raise capital?

A: The Virginia legislation leaves the structure up to the localities, with a nonprofit model as one of the options. 

Early green banks were set up as public or quasi-public entities. For instance, the Connecticut Green Bank has private and public individuals on its board of directors. The fully public New York Green Bank is within the New York State Energy Research and Development Agency. Both can raise capital from several public sources, including the state treasury, proceeds from emissions trading and allocations from surcharges on electric bills.

The nonprofit structure, which is a newer model, expands sources of capital and includes philanthropic funds. Access to private funding can be advantageous in an uncertain political environment.

Q: Green banks are designed to accelerate the transition to clean energy. Can you provide an example of how this would work with solar, wind and/or energy efficiency?

A: There are so many! The beauty of operating at the state, county or city level is that they can design products and services to address needs of the local market. 

A classic example is the Connecticut Green Bank’s Smart-E loan available to homeowners. The bank not only incentivizes private partner institutions to offer the clean energy loans but also agrees to cover a portion of the losses if the lender isn’t paid back. Partner lenders don’t require a down payment and also provide low interest rates and flexible terms because the green bank has taken on some of the investment risk.

By using its funds to reduce private lenders’ perceived risk, the Connecticut Green Bank has helped private partners develop capacity to carry out clean energy lending. At least 4,500 Smart-E loan projects have been completed statewide since 2014. Using public funds as additional security for a private lender becoming comfortable with clean energy lending is a very efficient use of these limited dollars.  

Another common approach is to co-invest alongside one or more private entities in a company or project. The New York Green Banks has done all of this to deploy solar, wind, energy efficiency and fuel cells statewide. To make private financiers more comfortable with these projects, green banks can take a subordinate role and agree to be paid back after private entities in case a borrower defaults.

Q: What might the relationship be between a green bank in Virginia and programs such as C-PACE, commercial property-assessed clean energy? 

A: This is very relevant to Virginia given that several localities have already established C-PACE programs and legislation last year authorized DMME to sponsor a statewide C-PACE program.

Green banks and C-PACE can be complementary, whether administered under the same roof or separately. In Connecticut, the green bank has always administered the state’s C-PACE program. New green banks in both the District of Columbia and Montgomery County, Maryland, subsumed already-existing C-PACE programs.

However, in New York, C-PACE is administered by a separate entity. In that situation, C-PACE and the green bank could invest in a commercial clean energy project together or they could work separately because they are meeting the needs of different customers.

C-PACE fills a niche for commercial customers and deals tend to be quite large, usually $100,000 or more. It’s possible for a green bank to coordinate a program that focuses on the residential sector and smaller commercial projects.

Q: Who is eligible to “borrow” from a green bank? 

A: In theory, anyone or any entity can borrow. With the Virginia legislation, it’s up to the locality who is eligible.

Green banks fall into two major buckets. The Connecticut Green Bank takes more of a programmatic approach, meaning it has different offerings for homeowners, commercial building owners and localities.

Other green banks, such as the one in New York, have more of an open proposal approach where an investment committee reviews proposals from commercial entities. That bank wouldn’t lend to a homeowner for an individual solar project. 

Q: Virginia’s law requires localities to establish ordinances to set up a green bank in their communities. Who is acting first?

A: Fairfax County, Arlington County and the Northern Virginia Regional Commission have indicated they are thinking about exploring the opportunity. One of the first steps involves conducting a market analysis of the existing clean energy landscape to identify financing gaps.

Of course, if you’re a smaller locality and don’t have the resources, conducting such an analysis is going to be a barrier. That’s an example of how dollars sourced from a national green bank directly or through DMME could be helpful.

Q: How can green banks help Virginia mitigate climate change beyond what current laws are intent on doing?

A: Achieving those climate goals will require a lot of clean energy and a lot of private investment. Green banks can help spur that investment by identifying and filling those financing gaps.

People with low incomes or low credit scores often can’t access capital to invest in energy efficiency, renewable energy or electric vehicles. Green banks can help reduce those financial barriers. The climate crisis will require all hands on deck.

Q: Can you cite an example of a green bank making a dent in accomplishing environmental justice for potential borrowers who are often left behind? 

A: It requires deliberate attention and commitment over time. One example is the nonprofit green bank in Michigan, called Michigan Saves, that provides financial and technical assistance to the owners of affordable multifamily housing. What’s important is that the green bank doesn’t see mold, asbestos, roof repairs and other health and safety concerns as reasons to reject financing for energy upgrades that lower utility bills and improve resident comfort.

Green bank financing needs to be flexible enough to cover remediation so deferred maintenance is not a roadblock. Taking the time to understand the problem and address it is where a green bank can make a difference.

I should note that the proposed federal Clean Energy Accelerator mandates directing 40% of investments into underserved communities. 

Q: What types of jobs can a green bank provide in a community that don’t already exist?

A: The simplest answer is that green banks help create the jobs that design, build, finance and operate clean energy projects. Generally, direct jobs such as energy auditors and solar installers, indirect jobs along the supply chain, and induced jobs supported by increased spending by all of those workers are the same jobs that any clean energy policy helps create. 

I should point out that green banks focus on smaller-scale clean energy projects. Not only are those harder to complete than large-scale projects, but they also tend to create more jobs per megawatt-hour installed. 

Analysis at the Connecticut Green Bank is actually quantifying the jobs created by its investments. Over the last nine years, their investments have supported the creation of more than 23,000 direct, indirect and induced job-years.

Q: How do green banks measure success?

A: This question gets at something important, which is, “What qualifies as success?” The metrics that green banks use are not standardized, so it makes direct comparisons hard. 

Most of them report on total capital deployed, carbon emissions avoided and the private capital to green bank capital ratio. But what they measure has evolved. Nowadays, they are also tracking health impacts, tax revenue generated for localities and to what extent they are reaching residents at different income levels. 

What has struck me about the green bank movement in the U.S. is how much innovation is happening. These are purpose-driven entities and green bankers care deeply about expanding clean energy access widely. Anything that works, particularly with underserved audiences, is being shared. That kind of spirit is a great thing to see.

Correction: Commercial Property Assessed Clean Energy financing usually deals with projects $100,000 or more. An earlier version of this story contained an incorrect figure.

Elizabeth is a longtime energy and environment reporter who has worked for InsideClimate News, Energy Intelligence and Crain Communications. Her groundbreaking dispatches for InsideClimate News from Kalamazoo, Michigan, “The Dilbit Disaster: Inside the Biggest Oil Spill You Never Heard Of” won a Pulitzer Prize for National Reporting in 2013. Her book, "Outpedaling 'The Big C': My Healing Cycle Across America" is available from Bancroft Press. Based in Washington, D.C., Elizabeth covers the state of Virginia.