Climate Finance

Clean Energy Fund of Texas – Guiding CEFTX’s Expansion into Environmental Infrastructure and Successful “Solar for All” Application

Location: Statewide in Texas

Status: Complete

Quantified Ventures and the Clean Energy Fund of Texas (CEFTX) partnered to expand the green bank’s mandate to add environmental infrastructure financing programs for low-income communities and led the financial modeling for CEFTX’s successful U.S. EPA “Solar for All” application, which was awarded $156MM.

Once implemented with the support of the Bullard Center for Environmental and Climate Justice, CEFTX’s GGRF projects are anticipated to reduce CO2 emissions by 3.14 million metric tons, deliver nearly $77MM in household utility bill savings, create $137.6MM in value at the community level, and generate an estimated 1,900 new jobs.

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Problem

The Inflation Reduction Act (IRA) committed $27 billion to the Greenhouse Gas Reduction Fund (GGRF) with an explicit mission to catalyze private investment in clean energy and climate resilience transition.

A core pillar of the GGRF’s mission is to capitalize a national green bank and a network of state green banks across the country. This was intended to fill a critical gap in the existing project financing ecosystem. While a patchwork of green banks had sprung up across a variety of states and municipalities, prior to the IRA it was largely at the mercy of local political considerations. States like Connecticut, Rhode Island, New York, Massachusetts, and California had already stood up statewide green banks and dedicated funding to capitalize them, while other states, including Texas, have been reluctant to fund statewide green banks.  

The Clean Energy Fund of Texas (CEFTX) is the first green bank in the state of Texas, and it operates as a non-profit organization, without any ongoing funding from the state.

With support from the Lyda Hill Foundation, Quantified Ventures and CEFTX were able to anticipate the seismic growth opportunity offered by GGRF to tackle two key objectives:

• Secure funding for CEFTX’s Solar For All application through the competitive GGRF bid process. QV provided financial analysis expertise to support CEFTX’s successful application to bring cheap solar power to low-income communities in Texas.

• Identify opportunities for CEFTX to create financing programs focused on environmental infrastructure needs across the state, which QV has done in a handful of other states, notably Connecticut.

Approach

QV developed the original financial model to inform CEFTX’s EPA Solar for All application, which was submitted in partnership with the Bullard Center for Environmental and Climate Justice and was awarded $156MM by the EPA. With this funding, CEFTX will deploy technical assistance, private capital, and grants to nearly 40 minority-serving institutions (MSIs), facilitating the development of residential-serving community solar, storage, and upgrade projects serving low-income and disadvantaged communities (LIDACs) across the American South and Southeast. The financial model developed by QV and partners serves as the foundation for the project’s community solar deployment strategy, financial assistance design, and budget.

The model is optimized for a range of constraints, such as average retail and commercial electricity tariffs across the target LIDAC census tracts. The model guarantees 20-25% energy savings for targeted vulnerable LIDAC households, ensures community ownership for projects in the long-term, and ensures attractive returns for private investors. The model also incorporates differentiated specifications for a range of variables, including enabling upgrades and resilience microgrids. This flexible approach recognizes that projects funded through this program will have different features and structures based upon the local sites, partners, community preferences, and regulatory and operating environment.

QV also worked directly with CEFTX to expand their mission beyond clean energy to include environmental investments such as clean water infrastructure, climate smart agriculture, and the remediation of legacy pollution. This required working together to develop standard operating procedures around project prioritization, community eligibility, project tracking, and anticipated funding requirements. Additionally, this partnership produced standard template term sheets for lending to environmental projects. QV leveraged connections in Texas to lead early pipeline development for environmental infrastructure projects through engagements with Harris County, Harris County Flood Control District, Harris County Precinct 1, Harris County Precinct 2, Fort Bend County, Dallas County, and the City of Dallas.

Impact

The Clean Energy Fund of Texas’ Solar For All application was approved for $156MM through an intensely competitive process.

Once fully implemented, the projects are anticipated to reduce CO2 emissions by 3.14 million metric tons. These projects are also intended to generate local wealth, deliver nearly $77MM in household utility bill savings across more than 8,870 household subscribers, create $137.6MM in value at the community level, and generate an estimated 1,900 new jobs.

Following a three-day retreat where QV presented the vision for the role CEFTX could play, the CEFTX Board of Directors approved revisions to the organization’s bylaws that call out environmental infrastructure as a key focus area for the green bank.

Additional Materials

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