This Florida Bank is Going Green with Its Financing

Meredith Rutland Bauer

Barb Shepherd, president of Conrad Realty, and her board of directors wanted to make their business more sustainable. Installing solar panels on their historic Florida building seemed like a natural step in that direction. Unfortunately, it was also prohibitively expensive to purchase those panels outright.

So Shepherd turned to First GREEN Bank in Lake County, Florida, which offers consumers and businesses low-interest loans for environmentally friendly development projects. While First GREEN is the only bank in Florida that specializes in this kind of lending, similar “green banks” have been established in New Jersey, New York, Rhode Island, and elsewhere across the U.S.

These financiers might fund anything from energy-efficient insulation to a power-generating biogas digester to the construction work required for a business to become LEED-certified. But like Shepherd, most of First GREEN Bank’s customers are interested in solar energy for their workplace or home.

“Very few people can afford to front the cost of solar equipment,” says First GREEN Bank founder Kenneth LaRoe, even with current rebates and declining prices. In 2016, the average price for solar panels in Tampa was $3 a watt, according to solar panel quote start-up EnergySage. The average residential solar panel installation is about 5 kilowatts, or $15,000 for Tampa residents before rebates. While it’s much less expensive than it was 10 years ago, those figures can still be enough to scare interested homeowners and small businesses away from renewable energy.

But LaRoe says the way payments on green loans are structured “makes it possible for anybody with decent credit to move into solar.” And solar loan customers generally expect to makeup those costs in reduced energy bill. Shepherd says since the panels went online last summer, her real estate business has saved about as much in electricity bills as she’s paying on the loan.

Low-interest lending isn’t a great business model for every institution, says LaRoe. It requires building out a strong customer base, because with lower interest, banks make less profit from each loan. (This is why some green banks like LaRoe’s also offer services like ordinary, higher-interest loans, which generate profits that fund green loans.) To attract the number of customers he needs, LaRoe says he tries to reduce customer risk as much as possible by offering 100-percent financing on projects like solar panels. While full financing requires the lender to lay out more money upfront, the strategy has paid off for First GREEN: Shepherd says that total coverage made deciding to install solar panels easy.

But as a private business, First GREEN is in the minority among these institutions. Most of America’s green banks are set up by local or state governments to make energy efficiency and renewables more financially accessible to residents. These public-private partnerships use taxes and other municipal funding to attract money from private investors, thereby maximizing the amount of green loans the bank can offer. The Connecticut Green Bank, which was established by the state’s General Assembly in 2011 as a quasi-public agency, says it has generated more than 13,000 jobs and prevented millions of metric tons of CO2 emissions. And in 2014, New York opened the country’s largest green bank, which marshaled over $900 million in financing for clean energy projects last year.

Despite this success on the state level, so far efforts to create a national green bank have failed. Two active bills introduced in the Senate and House this summer seek to establish a $10 billion green bank for national renewable financing. Both bills are currently in committees.

U.S. Rep. Chris Murphy, D-Conn., a sponsor of the bill working its way through the Senate, said in a statement that a national green bank would fund regional, state, and municipal green banks. Those local banks would then fund green-energy and energy-efficient projects. A similar version of the bill failed to pass Congress in 2016 and 2014.

“Green banks are creating jobs and helping the environment,” Murphy said in a statement. “Connecticut [Green Bank] led the way … and since then, it has attracted $1 billion for clean energy investments.” Acknowledging the current political fight to recognize climate change as a serious threat, Murphy added, “We can choose to push back by investing in cleaner ways to power our world. Our Green Bank Act is a good first step.”

Connecticut Green Bank President and CEO Bryan Garcia says financing environmentally friendly projects is as important as developing new technologies that address the same goals. But cultivating political will is a major challenge he says, especially under President Donald Trump’s administration, which up to this point has seemed skeptical of green finance projects. For example, Garcia points to the United Nations’ Green Climate Fund, a green-energy grant program for developing nations established under the Paris Agreement. Soon after its introduction, Trump dismissed the fund as “yet another scheme to redistribute wealth out of the United States.” Trump has also proposed budget cuts to the State Energy Program, which gives individual states money to fund green energy projects and spur innovation.

Given the federal government’s overall reluctance to act against climate change, locally funded green energy projects are becoming increasingly important. But even at the local and state levels, public support for environmental measures like green financing is tenuous at best. For instance, Florida Governor Rick Scott is a noted climate change skeptic, having instructed state employees not to use the term “climate change” in official reports.

This is where the private market has a real opportunity to make a difference. According to the Florida Solar Industries Association, the Sunshine State is now ranked 13th nationally for solar capacity. And LaRoe’s business is set to finance two million watts of power for 2017, despite the fact that residents of Lake County, where the bank is based, supported climate change deniers Scott and Trump in their respective elections.

LaRoe says promoting green tech isn’t just a way to tap into a growing economic niche. It’s also a matter of survival for his state. Florida’s vast coastal regions make it particularly susceptible to the impacts of climate change and LaRoe fears that stronger storms and higher sea levels could wipe out his home as he knows it. Hurricane Irma, which battered Florida earlier this month, resulted in the largest evacuation in the state’s history, widespread flooding and property destruction, and at least 24 deaths. Scientists have linked the increased frequency of particularly fierce storms like Irma to the effects of climate change, which can increase rainfall and make for much more powerful storm surges.

To combat this threat, LaRoe says he’d love to expand into financing other kinds of much-needed infrastructure that addresses the dangers of climate change, like sea walls to mitigate storm surges. In fact, LaRoe says he’s in early talks with preservation groups in South Florida that are exploring sea wall projects.

But even somewhere like Florida, where the tolls of climate change are daily realities to all but the state’s highest elected official, there are bright spots: the mayor of Orlando, for example, has committed to getting his city to 100 percent clean energy and invited LaRoe to headquarter his bank in the city. “We live in the Sunshine State,” says LaRoe, “there should be solar on every rooftop.”