State ‘green bank’ funds its first climate project in St. Paul
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Minnesota’s newly established “green bank” announced its first loan this week: $4.7 million for a geothermal energy system at The Heights.
The housing and light industrial development underway on St. Paul’s east side is looking to be net-zero: producing all of its energy on-site. The money from this loan will go toward infrastructure for a geothermal system, which will heat and cool the site’s buildings.
“Using the Earth’s natural energy to heat and cool a whole community is a big step toward achieving our local climate goals,” St. Paul Mayor Carter said in a statement following the loan. “We’re building a neighborhood that can be a blueprint for a cleaner, more sustainable future.”
It’s the kind of project that might be hard to find funding for from private investors, who likely would not want to put money toward a project in such an early stage, before the buildings and infrastructure are built.
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That’s the goal of the Minnesota Climate Innovation Finance Authority (MnCIFA): to fund green energy and environmental projects that struggle to find funding elsewhere.
“We know that the construction and the buildings are going to come along … but at this point the private sector isn’t willing to finance a project like that,” said Peter Klein, MnCIFA’s executive director.
The loan is meant to kick-start the project’s sustainability goals until the development is further along.
“As the buildings start to go up, the private lenders will be able to judge the risk a little bit better, and they will absolutely step in and finance the connections to the building and the rest of the infrastructure,” Klein said.
It’s the first loan that MnCIFA’s announced since the legislature established the agency in 2023. Several other states have established similar ‘green banks’ to try to fill gaps in funding for environmental projects.
Klein says the agency is still developing a strategic plan for distributing its $45 million in funding. It got about 40 proposals in response to its request for information. The agency will wait to distribute most of the funds until after it’s finished the planning process.
It fulfilled the request from The Heights early because of its deadline: developers are starting to build roads on the site this spring, and piping for the geothermal infrastructure has to go in as part of that process.
“The urgency there required us to react quickly,” Klein said. “We saw the need there and the absolute environmental benefit, so we did step in for that one.”
The Heights will operate the geothermal system under the direction of District Energy St. Paul, a nonprofit utility partner of the city.
The Heights is taking over 112 acres formerly home to the Hillcrest Golf Course. The St. Paul Port Authority is developing the site, where it plans to build over 1,000 housing units and create 1,000 jobs.
Legislation passed last year put $11 million in public infrastructure funding towards the project.