SAINT PAUL, MN: The board for the Minnesota Climate Innovation Finance Authority (MnCIFA) has approved its 2-year strategic plan and its investment strategy, with the goal of lending to hundreds of Minnesota projects that will save energy and reduce greenhouse gases. At least half of the projects will serve Minnesota communities that have the greatest need to reduce energy costs.

“With this plan, we are bringing innovations in financing that are critical for Minnesota to be a leader in the clean energy economy,” said MnCIFA Executive Director Kari Groth Swan. “Our plan provides gap funding that is critical to moving clean energy projects forward, creating local energy jobs, and increasing local ownership in our state’s increasingly clean energy system”

“Our strategic plan and investment goals fulfill MnCIFA’s vision to empower communities that have historically been left behind when it comes to decisions about energy resources and energy costs,” said MnCIFA Board Chair Bali Kumar. “When we remove barriers for financing, we open the door for innovative projects that will deliver long-term savings and benefits for communities.”

Through its strategic planning process, MnCIFA heard from hundreds of individuals and organizations from affordable housing groups, environmental and energy nonprofits, environmental justice communities, labor unions, lending authorities, local governments, utility groups, and interested members of the public.

The strategic plan’s annual goals include targets for saving energy and reducing carbon emissions, with each category saving about 2.5 million kilowatt hours of energy and reducing carbon emissions by a thousand metric tons, which is the equivalent of removing 500 to 600 gas-powered vehicles from the roads or powering 200 to 300 homes with electricity for the year.

MnCIFA’s plan would provide lending in these areas:

Tax credit lending – MnCIFA would provide bridge loans for nonprofits and governments to develop projects eligible for federal tax credits, with an annual goal is to support 10 of these types of projects each year, for a total of 20 projects over 2 years. The bridge loans would cover upfront costs until the organizations received the federal tax credits.

Accessing pooled lending – As a designated State Energy Financing Institution by the U.S. Department of Energy Loan Program Office, MnCIFA can finance much larger projects or portfolios than using its own balance sheet. The Environmental Protection Agency’s Greenhouse Gas Reduction Fund program also offers new lending opportunities. MnCIFA plans to seek financing for 100 projects in 2025 and 200 projects in 2026 using these resources.

Debt financing – MnCIFA will provide direct debt financing to emissions-reducing projects. Clean energy technologies that serve underserved markets may need smaller deal sizes, longer loan terms, or lower interest rates than the private market is able to provide. MnCIFA seeks to support 10 projects annually in 2025 and 10 in 2026, utilizing $5 million in lending capacity each year.

Loan Loss Reserves – Entities like banks, credit unions and utilities are able to provide loans for projects but they may not be willing to extend credit to some individuals and businesses without the backing of a loan loss reserve (LLR). MnCIFA will provide a LLR in circumstances where it is clear that the funding would not occur without it in place and it advances MnCIFA goals.

The complete strategic plan and investment strategy are available online.

More about MnCIFA
During the 2023 Session, the Minnesota Legislature passed bills that created and funded MnCIFA, which is structured as a publicly accountable financing authority, commonly known in other states as a “green bank.” To date, the MnCIFA Board of Directors has approved funding for three projects, all of which are located in environmental justice communities:

• The Heights of St. Paul – $4.7 million loan to The Heights Community Energy nonprofit to build a district geothermal renewable energy system to deliver energy for The Heights, a redevelopment site in St. Paul that will have over a thousand affordable housing units and a million square feet of light industrial space.
• Avenues For Youth - $4.5 million loan to Avenues For Youth nonprofit, which assists youth ages 16 to 24 who are experiencing homelessness, for a geothermal renewable energy system.
• Resiliency Hub – $1.2 million loan to Renewable Energy Partners, a certified Minority Business Enterprise, for a federally approved resiliency hub project in North Minneapolis. The Resilient Minneapolis Proposal was recently approved by the Minnesota Public Utilities Commission for solar energy and battery storage.

MnCIFA is an independent authority with a Board of Directors, created in statute, with State agency leaders and with public members appointed by the governor to achieve statewide representation across public and private sectors, and environmental justice communities. In addition to accelerating clean energy projects, MnCIFA aims to expand access to untapped markets and bring benefits to historically underserved communities. Based on state law, MnCIFA must ensure at least 40 percent of the direct benefits of authority activities flow to these communities, which are typically determined by their US census ethnic and income level characteristics. More about MnCIFA here .