Property Assessed Clean Energy (PACE) financing is a simple but powerful concept. PACE empowers property owners to finance upgrades to their homes and businesses by gradually repaying those costs as a line item on their property tax bill. PACE is voluntary, costs nothing to taxpayers, and has empowered more than 200,000 American homeowners to make renewable energy, energy efficiency, storm hardening, and other critical energy and safety home upgrades.
By many measures, PACE has proven to be the most successful residential energy and resilience financing tool in history. Earlier this month, Berkeley National Lab released a new report showing that PACE financing has increased residential solar PV installations by as much as 12 percent across California. This is great news. It’s also no surprise that PACE is serving its intended purpose: making critical home improvements affordable.
I invented the PACE financing model more than a decade ago, when I was chief of staff to the mayor of a small city in California. I realized that far too many Americans live in old, outdated homes that are inefficient and in need of repair. But repairs have traditionally been out of reach for too many Americans considering that more than 60 percent of Americans have less than $1,000 in their savings account. It’s simply not right for homeowners to be unable to make critical safety and energy upgrades to their homes unless they can pay all the money upfront. I’m proud to say that PACE solves that problem.
Over the past ten years, the PACE industry and my company Renew Financial have worked with state, local and federal policy makers to establish industrywide consumer protections to strengthen PACE for homeowners.
Last year in California, the biggest PACE market in the country, low-income advocates, small business groups, real estate professionals and environmental organizations came together to ensure passage of the most comprehensive PACE financing legislation in history. Governor Jerry Brown signed these bills into law in October 2017. They went into effect in 2018.
California law now empowers homeowners by providing:
- A three-day right to cancel their PACE financing agreement
- Live and recorded confirmation calls to explain the terms of financing
- New standards on contractor marketing to thwart misleading sales tactics
- Authority for the California Department of Business Oversight (DBO) to oversee the PACE industry
- And uniform income verification requirements and underwriting based on the property owner’s ability to pay
I noted on Renewable Energy World’s March 23 webcast, “Trends and Developments in Green Securitization,” that the outlook for PACE financing is bright. Analysis released by Morningstar in February concludes that these comprehensive consumer protections enacted in California could serve as a model for other states. And new independent research by the rating agency DBRS finds that, “PACE delinquency metrics are lower than general aggregate property tax and single-family residential-only property tax delinquency levels.” The report notes that PACE has “healthier performance relative to all residential tax payors.”
The entire clean energy community should be proud of PACE’s positive impact on local communities and the environment. PACE has created more than 40,000 jobs and pumped billions in private investments into local communities. Together, homeowners will save $1 billion on their utility bills during the lifetime of their projects. PACE’s impact on water conservation should not be overlooked either. In California, where low water levels are a serious problem, PACE projects will help save more than 10 billion gallons of water.
With stronger PACE financing consumer protections now being implemented in California, we can continue to expand and provide innovative, affordable financing to make critical energy and resilience upgrades. Our goal is simple: to empower American homeowners and create a more resilient country for all of us — one home at a time.
Lead image credit: U.S. Department of Energy | Public Domain
