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November 2014 Featured Article

Featured Article

What a Proposed Energy Resilience Bank Could Mean for New Jersey’s Municipalities
Triad Associates

As the State is proposing to create the New Jersey Energy Resilience Bank (ERB) to encourage new innovation and promote energy resilience, opportunity for municipalities to gain better control over their own energy needs is one potential outcome. Establishing the ERB could help realize the development of distributed generation projects, microgrids and other resilient technology designs at critical facilities throughout New Jersey.

Additionally, the ERB could provide technical and financial support, including grants and low-interest loans, to critical facilities to realize energy resilience projects or enhancements to existing energy infrastructure. The ERB can be initially funded with CDBG-DR funds, but additional state support could be leveraged on an ongoing basis.  ERB low interest loans would enable the participation of third party developers and encourage outside capital to also fund these projects.  As a provider of a loan loss reserve, the ERB could seek financing from the private sector to ensure that the seed funding has an expansive multiplier effect.

Eligible parties to receive ERB funding will include: Water and wastewater facilities, public and not-for-profit (NFP) organizations or small business, for profit businesses (SB-FPB), hospitals, state/county colleges and universities, public long-term care facilities, state and correctional institutions and public housing community shelters.  By providing financial assistance in a variety of forms, including direct loans, loan guarantees, early stage grants and loan loss reserve coverage for private lenders, the ERB could also use grants, principal forgiveness and other direct investment to further encourage the deployment of resilient energy technologies.

Creating a new funding source that cannot only promote resilience but also increase more efficient sources of energy like fuel cells, combined heat and power, and updated solar systems.  As an added benefit, these types of upgrades can reduce monthly energy costs, emissions and rate volatility. The start-up costs have remained the key challenge in pursuing these goals. Providing these sources of energy as back-up sources in case of disaster have also proven cost prohibited. Many facilities today continue to pursue less expensive diesel-powered generators, which may not have an assured supply when needed. The ERB will have to address this expense gap in order to promote the installation of resilience enhancements to its critical facilities.

The key next steps for ERB will be to fully establish its products, processes and procedures.  Next, to open the ERB for applications following approval from U.S. Department of Housing and Urban Development.  And finally, to begin co-development of projects with early customers and begin closing its bank deals.

Published November 2014.

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