Increasing Access to Renewable Energy Through a Green Tribal Bank

By Lisa Sundeen

You may have heard the statistic that 1.2 billion people around the world lack access to electricity, but did you know that a percentage of those people are located here in North America? If you look at the World Bank Indicators on access to electricity in the United States, you’ll see that the country has 100% access to electricity. You will not, however, see information about the access to electricity on tribal lands in North America.

Given that tribal lands hold 10% of the country’s renewable energy resources, how could the housing and electrical situation be so inadequate? How can it be that up to 40% of the residents living on the Pine Ridge Reservation, located in a region that boasts some of the highest average wind speeds in North America, have no electricity? Why shouldn’t every Hopi citizen be able to harness the 200 plus days of sunshine per year to power their homes?

The reasons are numerous and complex. However, there is one that can be addressed today: access to capital.

Most renewable energy technologies require a large upfront investment but then pay for themselves over time. For example a typical homeowner might pay upwards of $10,000 to purchase and install a rooftop solar system. Recently, the renewable energy and energy efficiency industry has blossomed thanks to innovative financing structures that allow customers to pay for low-carbon technologies over time, with revenues generated from energy savings. If residents can eliminate the need for expensive diesel generators or lower their utility bills by installing energy efficiency measures, they can use those monthly savings to gradually pay for the clean energy technology.

On tribal lands home ownership is complex, financial institutions have little to no experience funding renewable energy projects, and residents often lack stable credit records. Thus many companies do not feel comfortable initiating clean energy finance programs that rely on future payments. The paperwork, legal technicalities, and perceived risk, often seem insurmountable. A Tribal Green Bank could tackle these barriers, thereby giving tribal communities access to cleaner, cheaper, and more consistent energy.

A green bank is public or quasi-public financial institution that uses low-cost, long-term capital to encourage investment in clean energy. Connecticut, New York, California, and Hawaii have established state green banks that provide examples of how a tribal green bank could be structured. Following the traditional green bank model, a Tribal Green Bank would act according to a mission defined by tribal leaders but run fiscally sustainable programs. By providing clean energy financing, instead of grants or donations, the bank would invest directly into the community and also be able to recycle the funds. A Tribal Green Bank could be structured in three ways: a program within tribal government, a tribally owned financial institution, or a pre-existing financial institution (i.e., a community development financial institution). The bank could be capitalized in a variety of ways: US Federal grants, foundation grants or investments, tribal revenue streams, or crowdfunding. A Tribal Green Bank would have its own program staff and legal counsel that understand both the needs of a sustainable financial institution and the needs of the community.

An initial program might be a microfinance pilot to capitalize the deployment of solar heaters. Although $2,000 may be overwhelming for a homeowner to pay upfront, that homeowner may be able to pay back a microloan for that heater in as little as a year. Through the pilot program, the Tribal Green Bank could provide the upfront capital to finance the installation of the solar heater at a low interest rate with a flexible repayment plan. As soon as the heaters are installed, homeowners will begin saving money on their monthly heating bills, enabling them to repay the loan through small monthly payments. Historically, these heaters have reduced monthly bills by up to 50%, from $400 to $200 per month. With those kinds of savings, homeowners will easily repay the loans within a year.

Furthermore, The Tribal Green Bank could mimic the traditional microfinance model, requiring homeowners to repay the loans in small groups, so if one person misses a payment, others can cover for that person. The group model also helps with recruiting and education. Homeowners will compose their lending groups of responsible and trustworthy friends, and monthly group meetings will provide the opportunity for financial training, technological education, and community leadership.

Green banks are already having a significant impact on clean energy development in states across the US. A Tribal Green Bank could learn from these examples but define a community-specific mission in order to meet tribal goals. After one Tribal Green Bank is developed it will quickly develop a track record, and demonstrate to other financial leaders that access to capital should not restrict the development of clean energy on tribal lands.

Everyone deserves the opportunity to live comfortably and sustainably, and a Tribal Green Bank could help make that a reality.

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