PACE (Property Assessed Clean Energy) is a simple and effective way to finance energy efficiency, renewable energy, and water conservation upgrades to buildings. PACE can pay for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more for almost any property – homes, commercial, industrial, non-profit, and agricultural.
Property owners across the US are using PACE because it saves them money and makes their buildings more valuable. PACE pays for 100% of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing stays with the building upon sale and is easy to share with tenants. State and local governments sponsor PACE financing to create jobs, promote economic development, and protect the environment.
PACE in 90 Seconds
PACE was named one of the top 20 “world-changing” ideas by Scientific American magazine
Nearly half the energy we consume, and three quarters of the electricity we generate in the United States is used to heat, cool, light, and otherwise operate our buildings. Most of this energy is created by burning fossil fuel, so reducing its consumption in a meaningful way will depend on reducing energy use in buildings. A number of barriers have thus far limited wide scale adoption of energy efficiency and renewable energy measures.
PACE is the Solution
PACE overcomes challenges that have hindered adoption of energy efficiency and related projects in our nation’s buildings. PACE financing solves the upfront cost barrier by providing 100% financing for project costs. Long term repayment of up to 20 years makes longer payback projects immediately cash flow positive and buildings more valuable. For contractors, PACE makes it easier to close a larger sale.
Benefits of PACE
Property owners are more focused today than ever before on energy and water conservation. PACE helps them save money by lowering energy costs. Long term pay back makes PACE funded projects immediately cash flow positive.
Creates local jobs
PACE funded projects create more jobs and economic activity. According to the 2011 study by ECONorthwest, every $1 million in project spending results in 15 new jobs and $2.5M in economic output.
Helps the environment
PACE helps communities achieve important energy and water conservation goals. Efficiency projects upgrade old equipment which reduces energy use, while renewables replace fossil fuels and reduce greenhouse gas emissions.
How PACE Works
Step 1: Framework
States pass enabling laws that allow local governments to offer PACE financing to building owners. PACE is completely voluntary.
Step 2: Project
Qualified PACE service providers help building owners select cost effective projects that make good business sense.
Step 3: Financing
PACE programs process applications, qualify projects and provide or arrange financing. An assessment or charge is added to the property’s tax roll once the funds are disbursed.
Almost any building is eligible for PACE financing, including homes, offices, hotels, restaurants, shopping centers and other retail properties, non-profits, warehouses, garages, etc.
Energy efficiency and energy generation improvements and, in some states, water conservation and hurricane hardening, all qualify for PACE financing.
Eligibility may vary by state and municipality, so we recommend that you contact your local PACE program for a list of eligible properties and improvements.
Energy efficiency is the least expensive energy we can buy. Homeowners are using PACE to upgrade heating and air conditioning systems, and improve insulation and weather sealing. PACE in an effective financing tool because it:
- Covers 100% of a home upgrade project
- Results in savings from day one
- Stays with the property upon sale
- Helps lower electric, gas and water utility bills
- Results in more comfortable buildings and improved indoor air quality
- Lowers carbon footprint and improves the environment
Momentum is building across the U.S. for commercial PACE programs that drive energy efficiency, renewable energy, and in some places, water conservation measures. Real estate owners choose PACE financing because it:
- Covers 100% up front financing, including project development costs
- Provides long-term funding and results in immediate benefit to cash flow
- Stays with the building upon sale
- Solves split incentives by passing payments to tenants
- Increases building value and marketability
- Offers a range of accounting treatments.
Featured Success Stories
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“The HERO Program is a great way to finance energy efficient improvements without any upfront money,” explains Duane, “and then write off the interest for the payment that’s on our property tax bill. So if we were to sell the house, it’s good to know that we wouldn’t have to continue the payments or to pay it off – it would continue with the house with the new owners.”