Barry Wides, Deputy Comptroller, Community Affairs, OCC

National banks use their public welfare investment authority to invest in facilities that generate solar power, making them partners in the effort to increase the use of renewable energy. This partnership benefits communities as well as banks by

• providing financing for “green” renewable energy projects.
• creating critically needed jobs for a range of worker skill levels in local communities.
• bringing energy savings to consumers and businesses.

National banks can play a leadership role in spurring investment in energy-saving projects. Banks have authority under 12 USC 24(Eleventh) and 12 CFR 24 to make public welfare investments that primarily benefit low- and moderate-income individuals and low- and moderate-income areas, other areas targeted by a governmental entity for redevelopment, or in assessment areas where a bank would receive consideration of “qualified investments” under the Community Reinvestment Act. This allows banks to invest in and provide equity for affordable housing and other real estate development, small business, and revitalizing or stabilizing a government-designated areas.

Banks that make public welfare investments help themselves as well as the communities they serve. In addition, banks investing in solar energy-producing facilities can benefit by taking advantage of often-generous state and federal tax incentives or grants. These benefits make solar energy investments by banks a fitting topic for this issue of Community Developments Investments.

Rising energy costs and growing concern about global warming are spurring interest in renewable-energy production. In 2009, 8 percent of total U.S. energy consumption came from renewable energy sources, according to the U.S. Department of Energy.¹ Although solar power represents only a small portion—just 1 percent—of the renewable energy generated in the United States, solar power generation is growing. From 2009 to 2010, solar power generation grew 48 percent, with most of the increase occurring in California and Nevada.²

Photovoltaic or solar cells convert sunlight into electricity. When converted to thermal (or heat) energy, solar energy can be used to heat water or buildings. Individual photovoltaic or solar cells can power small appliances, be arranged in panels to power buildings, or be assembled as power plants that generate electricity.

Although initial costs can be high, many developers are using solar energy technology and green building techniques to reduce future energy costs and decrease environmental impact over the life of the building.

National banks making solar investments may have in-house experts who evaluate and underwrite financing structures using these tax credits. These experts may help banks take advantage of the considerable resources, tax credits, and grants directed at spurring the renewable energy generation. The American Recovery and Reinvestment Act of 2009 included more than $80 billion for renewable energy projects and related energy saving initiatives, further spurring the development and use of alternative energy sources.

This issue of Community Developments Investments features articles describing the innovative investments national banks have made in solar energy-producing facilities using their public welfare investment authority. National banks are providing critical leadership and bringing creativity, expertise, and renewable energy financing to help communities. This issue of Community Developments Investments serves as a guide for banks interested in how renewable energy could fit in their overall investment strategies.