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PACE Financing: The Easy Choice In Solar Financing

The days of leasing solar panels or other clean energy systems are over! Today’s solar adopters benefit from new and improved ways to reduce (or eliminate) up-front costs and make the most of their investment in renewable energy sources. For those who prefer not to purchase solar panels or other energy efficient improvements outright, PACE financing programs offer an easy and effective way to pay for energy improvements to home and commercial building owners alike.

PACE Programs: The Basics

Property-Assessed Clean Energy (PACE) Programs allow property owners to secure funding for energy improvements by leveraging equity in their property. Local or state governments, or other authorities authorized by state law, authorize the program in their jurisdictions. Funding is provided by third-party companies who raise funds through investors. These funds are then paid back over time, generally within 10 to 20 years, by the owner of the residential, commercial, industrial, or agricultural property. Payments are made through a property assessment secured by the property itself and added to the owner’s property tax bill.

The availability of this kind of financing, which is based on the “improvement district” model in which local governments issue bonds for public improvements, offers major benefits to property owners. PACE provides 100% financing for a variety of energy improvements, including solar panels or wind turbines, insulation, heating or cooling systems, and water pumps. By removing the up-front costs of these improvements, the PACE program enables property owners to save money while increasing the value of their property and decreasing its environmental impact.

Property Owners Benefit from PACE

Many homeowners I speak with dream of cutting the cord and producing their own energy independent of utility companies, but are put off by potentially high equipment and installation costs. Luckily for them, the PACE financing program for homeowners eliminates this barrier to entry, making it possible to achieve their energy savings goals. With 100% financing that includes fees and installation costs, homeowners can immediately benefit from the lower utility bills that result from solar panel installation, upgraded HVAC systems, or improved insulation.

In addition to comprehensive financing, PACE repayment periods are long-term and can extend for up to 20 years. In some cases, this means homeowners can save more on energy costs than they are paying annually for their energy improvements, resulting in more cash-in-pocket in the first year and beyond. Financing is tied to property value, not the owner’s credit, and the loan stays with the property if it is sold prior to repayment and can easily be transferred to subsequent owners of the property. This reduces the risk of making energy improvements for homeowners who may not plan on staying put for the entire term of repayment. PACE financing is yet another reason to consider an off-the-grid, passive solar home within your reach!

For owners of commercial, industrial, or agricultural property, an additional benefit of PACE financing is that it can be passed on to tenants under most lease forms, solving split incentives and potentially resulting in lower payments alongside energy savings. Also, the loan repayment doesn’t appear on the property owner’s balance sheet. All property owners reap the benefits of increased property values due to energy efficiency improvements.

Communities Benefit from PACE

Property owners aren’t the only people who are helped by PACE financing programs. Communities benefit from additional economic development opportunities, job creation, and environmental protection driven by financially viable energy improvements. Employment in the solar industry has seen a substantial boom over the last several years, growing at 20% annually from 2012-2015 and 25% from 2015 to 2016. Communities in which PACE financing is available can expect to generate new employment opportunities all while helping preserve the environment for future generations.

Availability of PACE Financing

Since PACE financing is a function of state and local governments, not all property owners and communities can currently experience its benefits. In the Midwest, PACE programs are available in Missouri, Ohio, Michigan, Wisconsin, and Minnesota. Both Illinois and Nebraska are PACE-enabled, although there are currently no active programs. Property owners can check this map of PACE programs to find out which communities in their area offer PACE financing.

The PACE Act of 2017

PACE financing benefits property owners and their communities alike by providing an easy way to finance energy improvements that enhance local economies and the environment. Advocates for solar and other clean energy methods support PACE financing for removing the barrier to entry that keeps many property owners from investing in renewable and efficient energy sources. Unfortunately, a recent legislative challenge may put the future of PACE programs in jeopardy.

The PACE Act of 2017 was recently introduced by Senator Tom Cotton of Arkansas. While it claims to protect consumers, in truth it is the result of a banking lobby that would like to see PACE financing eliminated from the competition. The Natural Resources Defense Council says that this legislation “completely mischaracterizes” PACE programs, is “poorly considered,” and “risks shutting down these popular… programs.” If you would like to stand up for PACE financing programs, PACENation provides an easy platform for making your voice heard in the ongoing fight to provide easy and efficient financing options for important energy improvements.

To learn how Solar Design Studio can partner with you and a PACE financing program to make your solar goals a reality, contact us today!

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