August 13, 2014
New Jersey Creates Energy Resilience Bank
by Robert Kropp
The state-run bank will use disaster relief funds issued following Superstorm Sandy to help finance
energy resilience by increasing the number of distributed energy resources.
The Third National Climate Assessment, published in May by the US Global Change Research
Program, affirmed that extreme weather events such as Superstorm Sandy in 2012 are already on the
increase due to climate change. While scientists are cautious about attributing single weather
events to climate change, a 2013 report by the National Oceanic and Atmospheric Administration
(NOAA) concluded, “climate-change related increases in sea level have nearly doubled today’s annual
probability of a Sandy-level flood recurrence as compared to 1950.”
Northeastern US, which bore much of the brunt of Sandy's devastation, is therefore more likely to
experience an increase in extreme weather events in the form of hurricanes; as as the effects of
Sandy indicated, the infrastructure of most if not all of the states in the path of hurricanes is
unprepared to deal with such events. The way in which electrical power is distributed—through
centralized grids—makes the region far more vulnerable to massive power outages.
Jersey alone, more than two million households lost power during Sandy, many of them for extended
periods of time. Recognizing that centralized grids are insufficient for dealing with such extreme
weather events, the state announced recently
that it has taken steps to establish the nation's first Energy Resilience Bank (ERB).
“Utilizing $200 million through New Jersey’s second Community Development Block Grant-Disaster
Recovery (CDBG-DR) allocation, the ERB will support the development of distributed energy resources
at critical facilities throughout the state,” a press release stated.
The ERB will provide
funding in the forms of low-interest loans and grants “to critical facilities that offer the
greatest resilience benefits for the State.” The first priority of the ERB will be providing
distributed energy solutions to water and wastewater treatment plants.
Due to power
outages in water and wastewater treatment plants during the storm, millions of gallons of raw
sewage were dumped directly into the state's waterways.
“Distributed energy resources,
including combined heat and power (CHP), fuel cells (FC) and off-grid solar inverters with battery
storage, allowed some critical facilities, such as hospitals, wastewater treatment plants and
universities, to remain operational while the electric grid was down,” the state reported. “The
launch of the ERB will enable many more such facilities to remain operational during future
outages. In addition to providing resilience, the benefits of distributed energy resources also
include lower and stable energy costs, a cleaner environment through reduced emissions, and
increased overall efficiency.”
“New Jersey has created a model to finance resilient power
projects, to protect against power outages during severe weather events,” Lewis Milford, President
of Clean Energy Group (CEG), wrote. “The ERB is an important way for states to finance
projects like solar with energy storage in food banks, fire stations, wastewater treatment plants,
and schools. This is a model that other states should track and evaluate for possible replication.”
Milford also noted that in addition to low-interest loans and grants, the ERB “can also
provide credit enhancement for bond issuances and other private financing participations.” Such
participations seem to fit the community investment strategies of sustainable investors. In 2012,
in the aftermath of Sandy, Community
Capital Management (CCM), a Florida-based fixed income investment manager, invested $100
million in disaster recovery and redevelopment projects in the Northeast.