Anatomy of the Deal – NYSERDA Energy Efficiency Bonds

The New York State Energy Research and Development Authority (NYSERDA) recently issued bonds through a highly innovative structure to finance and refinance loans under the Green Jobs-Green New York (GJGNY) program. GJGNY is a statewide program that supports energy efficiency improvements for residential, small businesses, not-for-profits, and multi-family buildings. The bonds are AAA-rated and guaranteed by the New York State Environmental Facilities Corporation, which manages the largest Clean Water State Revolving Fund (SRF) program in the U.S.

This bond issuance marks a monumental accomplishment for the clean energy and bond finance industries. What is so significant is that the U.S. Environmental Protection Agency (EPA) has concurred that New York’s energy efficiency projects qualify for financial assistance from the SRF program under Section 603(c)(2) of the Clean Water Act and the federal guidelines governing the SRF. For the first time in the country, SRF dollars have been used as credit enhancement for clean energy and efficiency bonds – a national precedent that could prove to be widely replicable in other states. More generally, it is a model for addressing complex barriers to  implementing affordable, community-scale residential energy efficiency programs.