🔒CT Green Bank driving private investment in climate tech through crowdfunding, partnerships

Over the past decade, as Connecticut has tried to develop ecosystems around key growth sectors — including insurance, life sciences, manufacturing and fintech — there have been plenty of events to showcase innovative startups with the potential to transform industries.

But last month, amid a heightened focus on addressing climate change and increasing energy efficiency statewide, Connecticut hosted its first VentureClash, Climate Edition startup pitch event at District in New Haven.

The event, which drew more than 150 applicants for six available slots, was created in partnership by Connecticut Green Bank, Connecticut Innovations, the state’s quasi-public venture capital arm, and other state agencies. Presenting companies, which included startups from Canada and Israel, featured innovations that addressed carbon utilization, power grid modernization and transportation electrification.

Efforts to grow green technology and investment in Connecticut reflect a strategy the state legislature set in motion in 2011, when it established the nation’s first Green Bank, a model designed to leverage public dollars to attract private-sector investors in clean energy.

Green investments also aim to help Connecticut meet its aggressive climate change goals. The state has committed to getting all of its energy from zero-carbon sources by 2040.

The Green Bank, so far, has played a significant role in the state’s green efforts, officials said.

“We have driven more than $2.3 billion of investment in Connecticut’s green economy while using around $320 million (in public funds),” said Bert Hunter, the Green Bank’s executive vice president and chief investment officer.

Those dollars, Hunter said, have gone into a variety of investments including residential solar programs, increasing energy efficiency for commercial properties and developing wind, hydro and fuel cell technology.

And it’s not just institutional and accredited investors Green Bank wants involved.

In July 2020, the Green Bank raised more than $16 million with its inaugural issuance of Green Liberty Bonds, with proceeds benefiting projects that combat climate change.

With minimum investments as low as $1,000, individuals accounted for more than three-quarters of initial retail orders. Collectively, more than $40 million has been raised through Liberty Green Bonds over the past three years.

“These bonds were inspired by the war bonds in the 1940s, when Americans had to step up and fight this huge existential threat,” said Davis Beech, manager of clean energy finance at Connecticut Green Bank. “We see climate change as this huge threat we are facing now and we want to be able to provide citizens with an opportunity to be part of that [clean energy] transition.”

Green Notes

Increasingly, Americans are shifting support for more renewable energy sources, like wind and solar.

A January 2022 Pew Research Center survey of American adults found that nearly seven in 10 (69%) favor the U.S. being carbon neutral by 2050, although only 31% of respondents want to phase out all fossil fuel usage.

And it’s not just consumer attitudes about clean energy changing; it’s behaviors, too.

According to data from the U.S. Energy Information Administration, residential solar power installations rose by 34% between 2020 and 2021. Furthermore, Pew Research found that 8% of U.S. homeowners — buoyed by federal and state tax credits — have installed solar panels and nearly 40% of homeowners surveyed said they are giving solar power serious consideration.

The Green Bank has helped fuel solar adoption rates and created funding opportunities that not only make it more affordable for homeowners to install solar, but also easier for residents to invest in the program.

In December 2021 — encouraged by past investor demand for  Green Liberty Bonds — the Green Bank launched a crowdfunding campaign with the sale of Green Liberty Notes, which provide a fixed rate of return with a one-year maturity and are available for a $100 minimum investment.  

Offered quarterly, Green Bank has cumulatively raised more than $800,000 through its first four Liberty Note offerings, including selling out its last two offerings. 

Funds raised through the Green Liberty Notes support Connecticut’s Small Business Energy Advantage program, which provides loans for energy efficient upgrades to commercial and industrial customers of Connecticut’s electrical utility companies, Eversource and United Illuminating. 
New federal dollars

Ted Novicki, manager of smart grid innovation programs for Avangrid, United Illuminating’s parent company, said the move to clean energy also creates a demand for new innovation to make the state’s power grid more dynamic and resilient.   

“We have all these disruptive technologies becoming more prevalent with solar adoption and electric vehicles,” Novicki said. “Our electric grid was originally designed as a one-way power flow, but now there’s a lot of bidirectional (energy) flow as (solar-powered) homes are either consuming (electricity) or pushing it back on the grid.”  

He said green innovations that address challenges like energy storage and grid modernization to increase efficiency are not only good environmental policy, but sound economic development, too.  

Green Bank’s 2021 annual report noted that the organization directly or indirectly supported more than 25,000 jobs in the state and helped generate more than $107 million in tax revenue. And for every $1 in public funds Connecticut Green Bank invested, it attracted $7.40, it said.  

And with the climate-related provisions in the recently passed Inflation Reduction Act (IRA), an additional $370 billion will be available for energy security and climate change programs over the next decade, including a $27 billion investment to fund a National Green Bank. 

In Connecticut, $100 million of those federal funds will be invested to support startups and new green technologies through Connecticut’s ClimateTech Fund, managed by Connecticut Innovations. 

“We would like these innovative companies to establish a headquarters here and have a Connecticut growth plan,” said Konstantine Drakonakis, fund manager of CI’s ClimateTech Fund. “Strong statewide collaboration and programs to help startups pilot and scale innovations make Connecticut an attractive location for aspiring green entrepreneurs.” 

And the future is trending greener, with the global renewable energy market expected to increase annually by 8.4% to nearly $2 trillion by 2030. 
And since Connecticut launched the country’s first Green Bank over a decade ago, multiple states now house them and 22 states are looking to create them.