NYPA sells more than $608 million in green bonds to finance investments in statewide transmission assets
The New York Power Authority, marking Earth Week, has sold more than $608 million in green bonds to finance capital expenditures related to the Power Authority’s development of electricity transmission in New York state. The bond sale supports the Power Authority’s “VISION2030” strategy to expand the transmission of clean energy throughout New York; and the creation of the future digital grid while meeting the objectives of the state’s Climate Leadership and Community Protection Act (Climate Act) and Gov. Kathy Hochul’s State of the State initiative to issue green bonds to benefit the transformation of the state’s electric grid.
“The capital generated from this green transmission revenue bonds sale is a significant investment in the foundation of a clean energy economy in New York state,” NYPA Interim President and CEO Justin Driscoll said. “NYPA is working to achieve Gov. Kathy Hochul’s bold clean energy vision for the state, addressing the administration’s 2022 State of the State green bonds commitment and accelerating New York’s goal to ensure that 70% of the state’s electricity comes from renewable energy by 2030, and 100% by 2040.”
The green bonds, which are specifically earmarked for the development of transmission assets, will accelerate the Power Authority’s progress toward the state’s clean energy and climate goals, including the mandate to obtain 70% of the state’s electricity from renewable sources, as identified in the Climate Act. The bond sale marks the first time in Power Authority history that it has issued a 100% green bond to only support revenues derived from specific projects and not NYPA itself. Sustainalytics, a company that rates the sustainability of companies based on their environmental, social and corporate governance performance, has also provided a second party opinion on the green bond designation.
The increase in capital will directly support the development of two ongoing large transmission projects that are estimated to reduce millions of tons of carbon emissions and create clean energy new jobs and economic development in upstate New York:
•Smart Path, a $484 million project to improve 78 circuit-miles of transmission from Massena in St. Lawrence County to the Town of Croghan in Lewis County enabling transmission from clean energy projects in the North Country into the grid and to load centers.
•Central East Energy Connect, a $210 million project that includes the construction of more than 90 circuit-miles of new 345 kV and 115 kV transmission lines and two new substations between Marcy in the Mohawk Valley and New Scotland in the Capital Region.
A press release noted, “NYPA, which owns approximately one-third percent of the high voltage transmission lines in the state, critically evaluates where transmission power needs are greatest and where the power grid needs to be most strengthened. The Power Authority, either in stand-alone investments or through private-public collaborations, moves to modernize and unify New York’s energy grid to help accelerate the transition to clean energy generation resources through a more resilient and reliable electrical grid.”
“This is the first of many reinvestments needed to rebuild and modernize the state’s transmission grid,” NYPA Chief Financial Officer Adam Barsky said. “The bonds will finance two projects, the Central East Energy Connect Transmission Project and the Smart Path Reliability Transmission Project, which will help move power from the St. Lawrence River and Central New York more cost-effectively through the grid to high-demand areas downstate in New York City and Long Island while creating economic development and jobs upstate.”
The bond sale included approximately $600 million of tax-exempt Series 2022A Bonds and was completed on April 14. The interest rate that NYPA priced is 3.62%, which is the lowest rate of any bond ever issued by NYPA. As a result of the Power Authority’s retail marketing efforts, 50% – more than $300 million – of the bonds was sold to retail investors. The rating on the bonds was affirmed in March with an A1 from Moody’s, AA from S&P and AA- from Fitch.