The PACE program allows property owners to avoid upfront costs of energy efficiency retrofits and repay over time
The PACE program- financing Solar Energy through Property Tax
The Property-Assessed Clean Energy (PACE) program is basically a way to finance solar systems or energy efficiency retrofits. According to the PACE program, the city is the one giving the loan, while the home owner has to pay it back through property tax bills over a period of twenty years. PACE bonds can be issued by municipal financing districts or finance companies and can be used to retrofit both commercial and residential properties.
The PACE program offers low interest rate loan, so far at 7%. In addition, the loan is then paid back bi-annually through the country property tax payments. The uniqueness on the program lies in the fact that the PACE program is reserved only for energy efficiencies, and covers most of the renewable energies available.
What are the advantages of the PACE program?
Well, one of the most obvious advantages of the PACE program is that it doesn’t require paying any money upfront. Since the cost of renewable onsite generation systems and energy efficiency measures can be very high, the PACE program benefits property owners by avoiding the upfront installation costs. Actually, PACE program permits property owners to go green without any financial risk.
Moreover, property tax financing through the PACE program allows the solar power system and whatever tax liability one owe to go to the new owner of the home, in case of selling the home. Many home owners prefer to avoid investing in a home they can’t be sure to be living in for the next 20 years. The PACE program actually eliminates the concern that the property will be sold before recovering the system investment from utility bill savings. Since it doesn’t require credit check it can be passed to the new owners of the property without future credit checks. Another evident advantage of the PACE program is that the financing is guaranteed and secure, as it is backed by the city itself
The PACE program has many benefits in different aspects. For property owners, the PACE program will be beneficiary through lowering energy bills and substantially reduced upfront costs for energy retrofits. Nation wise, it will be responsible for significant job creation. The PACE program can also help with reducing GHG emissions and by that to contribute to AB 32Of course the states and cities will also benefit from local job creation, No credit or general obligation risk.
PACE program- a little background
Initially, the program was first developed in Berkeley California by a company named Renewable Funding, as a way to finance home solar energy systems and energy efficiency improvements by partnering with a city and adding the cost of energy developments to the homeowner’s property tax bill, spread out over twenty years. The first PACE bond was issued by Berkeley, CA in January, 2009. Following California this states have passed enabling legislation as well: Colorado, Illinois, Louisiana, Maryland, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Texas, Vermont, Virginia and Wisconsin (legislation is pending in Arizona and New York).
the PACE program incorporates a great advantage to the cities themselves, since the PACE mechanism requires little or no investment of general funds and presents very low risk given that the loan repayment is a senior lien on the property, ahead of the mortgage itself.
PACE program in California- AB 811
California passed AB 811 in July 2008, a bill that offers sustainable energy project loans to eligible property owners. According to AB 811, a city must opt in to the program in order to allow financing for solar systems or energy efficiency retrofits. The cities that do opt in benefit first and foremost from more clean energy. In addition, more clean energy will assist local governments in reaching the goals of Assembly Bill 32, the California Global Warming Solutions Act of 2006.
The Loans given through AB 811 have a minimum of $5,000 and no maximum limits, and aren’t subject to credit ratings or credit checks. Moreover, Loans can be used on a variety of energy efficiency improvements and the materials and labor required to install them properly, including: air conditioning and ventilation systems, pool pumps, energy efficient windows, doors and skylights, window films, tank less water heating equipment, white -roofs and coatings. Renewable energy sources include solar systems gas burning fuel cells.
The PACE program- is that the future?
The PACE program is surly a positive legislation in regards to sustainability and the environment. More and more stats and municipals are embracing this innovative program, and understand that by encouraging property owners to be more sustainable everyone benefits from it from the home owner, through the state and of course our environment itself. As PACE becomes more popular, the potentials of the nation to benefits from it grows considerably to stimulate more green jobs , reduce energy consumption and save a lot of money on utility bills.