Wednesday, April 19, 2017

IBank Issues Record California Green Muni Bond

$450 Million for Water Projects

The California Infrastructure and Economic Development Bank (IBank) recently issued the largest green municipal bond ever offered in California.  The $450 million bond will assist the State Water Resources Control Board in providing low-cost financing for critical water projects throughout California through its Clean Water State Revolving Fund.  The previous record issuance was a similar bond issued by the IBank in 2016 for $410 million.

With this recent issuance, the total California has topped $2.5 billion in green muni bond issuances since they were first offered in 2014 (see chart below).

According to the IBank staff report for the recent bond,

"The purpose of this financing is to enable communities to comply with the State’s regulations and mandates under the Porter-Cologne Act and the federal Clean Water Act, which aims at improving water quality, protecting the environment and public health and making the best use of limited water supplies. The 2017 Bonds will be marketed and sold as Green Bonds to provide the opportunity to investors to invest directly in bonds that support environmentally beneficial projects."
"The State Water Board will issue the 2017 Bonds as “Green Bonds” since the projects’ meet the standards of the Federal and State Clean Water Acts." 

The IBank issue will likely help California reach a record volume of green muni bonds in 2017, breaking the 2016 record of over $1.3 billion in muni bond issuances.  New green bonds are in the works from a variety of state and local agencies for transit, water, green building and other projects.

California Green Muni Bond Issuances
IssuerDate*AmountGeneral Purposes
State of California10/7/2014$300,000,000Mass Transit, Clean Water, Energy Efficiency
San Francisco Public Utilities Commission5/20/2015$32,025,000Renewable Energy
City of Los Angeles6/4/2015$188,755,000Wastewater, Digester, Water Purification
East Bay Municipal Utility District6/17/2015$74,335,000Clean Drinking Water, Conservation, Flood Protection, Renewable Energy, Biodiversity
City of Los Angeles6/30/2015$100,835,000Wastewater, Water Purification, Digester
San Diego Unified School District1/5/2016$100,000,000Energy Efficient Buildings, Renewable Energy
IBank4/28/2016$410,735,000Clean Water, Water Pollution Control
San Francisco Public Utilities Commission5/24/2016$240,000,000Clean water, wastewater
San Diego County Water Authority6/23/2016$98,945,000Water Efficiency
Midpeninsula Open Space District9/22/2016$57,410,000Open Space Acquisition, related
Port of Los Angeles10/13/2016$35,205,000Open space, habitat, green building
City of Napa10/20/2016$12,500,000Recycling and materials recovery facility
Los Angeles County Sanitation District11/16/2016$170,265,000Reclaimed water projects, sewage system Improvements
San Francisco Public Utilities Commission12/14/2016$259,350,000Clean water projects (Climate Bond Certified)
IBank3/23/2017$450,000,000Clean Water, Water Pollution Control
2015 Subtotal$395,950,000
2016 Subtotal$1,384,410,000
2017 Subtotal to March$450,000,000
* Dated per MSRB
Total All Issuances$2,530,360,000(prepared/updated by Michael Paparian 4/19/2017)

Tuesday, February 21, 2017

California Funds Clean Energy Innovators

California clean energy and other clean-tech entrepreneurs benefit from a state that supports and promotes innovative new businesses.  California is the world leader for clean-tech and the state works hard to maintain this position.

The latest program to support early-stage clean energy entrepreneurs launched recently.

The California Sustainable Energy Entrepreneur Development (CalSEED) initiative will provide $24 million in grants over five years to support innovators working on very early stage clean energy concepts. Awardees can receive up to $150,000 for proof of concept activities. The awardees will also have an opportunity to pitch at a business plan competition for an additional $450,000 in follow-on funding to continue demonstrating the potential merits of their technology.

Clean Tech Leadership Rankings 2010-2016
Source:  CleanEdge U.S. Clean Tech Leadership Index

Funding for CalSEED comes from the California Energy Commission.   The first round of award applications is currently being evaluated.  The program will continue with additional funding rounds in coming years.

“This initiative will help entrepreneurs move their projects from an idea to the marketplace,” said Energy Commission Chair Robert Weisenmiller, “thereby helping to advance California’s transition to a clean energy future.”

CalSEED applicants can include individuals, businesses, non-profits and academic institutions
Source: CalSEED

The CalSEED program is managed by the California Clean Energy Fund, a private equity and venture capital firm specializing in early stage and startup companies.

“This level of funding is not typically available for pre-prototype or pre-revenue ideas,” said Deepa Lounsbury, CalSEED program manager. “By filling this critical gap and providing access to unprecedented professional development resources, we believe the program will help catalyze a new era of clean energy technologies.”

Joshua Croft of the Energy Commission staff gave an overview of the program when the Energy Commission approved the overall funding in 2016:  "The CalSEED Initiative will help develop California's next generation of clean energy entrepreneurs providing SEED funding as well as mentoring, technical consulting and business development services to support energy entrepreneurs and research teams in their quest to develop breakthrough solutions."

Croft described four goals of CalSEED:
  • First, to establish the technical merits and commercial potential of promising early stage energy  technology concepts that provide the greatest benefits to electric ratepayers in the IOU (Investor Owned Utility) service territories. 
  • Second, attract private sector interest and capital to clean energy innovations supported through the CalSEED Initiative. 
  • Third, encourage broad and diverse participation in the CalSEED Initiative from entrepreneurs and researchers throughout California. 
  • Fourth, ensure a fair, simplified, streamlined, and transparent process for identifying entrepreneurs and researchers through SEED support from the CalSEED Initiative.

The CalSEED application process is described in detail on their website

According to CalSEED, the program brings together entrepreneurial training organizations, nonprofits, companies, universities and an ecosystem of clean energy incubators who will provide technical expertise, mentoring, networking and business development support to applicants receiving funding.  New energy technologies require millions of dollars to reach commercialization. CalSEED will position entrepreneurs to demonstrate the potential merits of their technology and CalSEED’s network of professional development resources will prepare the entrepreneurs identify and take the correct steps to attract future private investment.

CalSEED builds on other early stage funding programs California has supported.  "(CalSEED) is going to help create the next generation of success stories," said Energy Commissioner David Hochschild.  "They're not all going to be success stories and .. as a state we have to  be comfortable with some level of risk. I think we are all comfortable with that, because at the end of the day you don't make gains without taking some bold bets. And I  think we've shown that this is paying off.  I mean, just looking at how many of the clean energy success stories are in the State have their roots in early funding from the Energy Commission."

CalSEED is managed by the California Clean Energy Fund and includes
many partners.  Source:  CalSEED

In addition to being managed by CalCEF, CalSEED works in partnership with a variety of entities, including Lawrence Berkeley Lab, Greenlining Institute, GrantFarm and the others shown in the above graphic.

CalSEED funding comes from the Energy Commission’s Electric Program Investment Charge (EPIC) Program, which invests about $120 million annually for innovative clean energy technologies and approaches and that benefit the ratepayers of California’s three largest electric investor-owned utilities.

The application package for CalSEED funding can be found here.

Friday, January 6, 2017

California Green Muni Bonds Top $1.3 Billion in 2016

Record Year; 3 Year Total Over $2 Billion

California government agencies are showing increasing leadership in the green financing marketplace.

In 2016, California agencies issued over $1.38 billion in labelled green bonds, or nearly a $1 billion over the 2015 total.

In the three years since the State Treasurer's Office issued the first California green bond, there have been over $2 billion in government issued green bonds in the state.

Green bonds are used to finance projects with environmentally positive attributes.  Some of the projects, such as renewable energy or energy efficiency projects, may contribute positively to climate solutions.  Others may assist with climate adaptation.  Green bonds are often used to finance projects that provide the infrastructure that will be needed in a world responding to climate change, including mass transit and clean water.

Many investors are looking for assistance in evaluating the attributes of a green bond, such as the worthiness of the underlying projects, transparency, disclosure and other factors.  The two major certification schemes for green bonds are the Green Bond Principles and Climate Bond Standards.  In addition, ratings agencies S&P and Moodys and others have developed evaluation tools.

The Climate Bond Standards validate the environmental integrity of the bond, assuring that the projects funded have positive environmental benefits and are consistent with current practices.  The Standards are sector-specific and are developed with input from experts and stakeholders.  The Climate Bonds Standards process is overseen by an Advisory Board that includes the California State Treasurer (John Chiang) and a representative of  CalSTRS - the California State Teachers Retirement System (Cathy DiSalvo).

The Green Bond Principles are more focused on the attributes of the bond, including transparency, reporting and disclosure.  The principles are intended to assist financial markets and investors in assuring the integrity of green bonds and green bond transactions.  The Principles are overseen by the International Capital Markets Association, with advice from a range of stakeholders including CalSTRS.

The Climate Bonds Standards and Green Bond Principles are complementary and it is possible to be certified to both.

The Standards are seen as providing more robust environmental requirements.  A recent bond issued by the San Francisco Public Utilities Commission for water projects was the first to use the new Climate Bond Standard for Water.

The trends in California are consistent with growth in the green bond market internationally.  According to the Climate Bonds Initiative, over $81 billion in green bonds were issued worldwide in 2016, about double the amount issued in 2015.

Preliminary 2016 data showed $81 billion in Green Bond issuances.

The largest government agency green bond issuers in California in 2017 were the San Francisco Public Utilities Commission ($500 million for clean water projects), California Infrastructure Bank ($410 million for clean water),  Los Angeles County Sanitation District ($170 million for reclaimed water and sewage system improvements), and the San Diego Unified School District ($100 million for green building projects.

Below is the latest CalGreenFinance summary of California government agency issued green bonds:

Government agencies weren't the only entities issuing green bonds 2016.  Among private companies, Apple Computer issued a $1.5 billion green bond for green building and other environmental related projects.  

California based Renovate America has issued nine green bonds totalling nearly $2 billion for financing related to energy retrofits. Their most recent issuance in September totalled $264 million to assist with over 9,000 home retrofits in 36 California counties and attracted investors from around the world.  "We are grateful to all of our existing and new investors across the globe who are making it possible for Americans to finance home improvements that enhance local infrastructure, create jobs and that conserve water, save energy, and reduce our carbon footprint," said Renovate America Head of Investor Relations Nicole Montecalvo.

California Treasurer John Chiang is expected to be increasingly involved in green bond markets in 2017 following intensive work by his office in analyzing the marketplace (see CalGreenFinance story from January 2016:  Green Bonds: California Treasurer Chiang Explores Expanded Role).

2017 is expected to be another record year for green bonds worldwide.  California state and local agencies as well as California-based companies will continue to be significant participants in this marketplace.