Sonoma Mountain Village, a mixed-use development, used PACE to finance a 1-MW solar system in Rohnert Park, California, that combined with an older system to allow SMV to cover 100% of its electric needs from on-site renewable power.
In March, the Los Angeles County Board of Supervisors voted to make a PACE financing program, called HERO, available to residents. The decision comes as another big example of PACE (Property Assessed Clean Energy) programs gaining traction as a way to finance solar projects, as well as energy efficiency and water conservation upgrades, on residential and commercial properties.
HERO, like many PACE programs, makes solar installations affordable for property owners by providing long-term, competitive financing through an additional property tax assessment. Payments are made through the property tax bill over as many as 20 years, and interest is tax-deductible.
Participation in PACE programs is voluntary for both local governments and property owners and is cost-neutral for jurisdictions. That’s why more state and local governments are developing PACE programs to create jobs, promote economic development and protect the environment.
“The PACE market has grown exponentially over the last three years,” said Kristina Klimovich, director of communications and market research at non-profit PACENow. “In fact, PACE has become nearly a $1 billion industry.”
Presently nearly 40 PACE programs are active across the country, most have completed projects and more programs are poised to launch in the near future, according to Klimovich. More than 80% of the U.S. population lives in states with PACE-enabling legislation.
Savvy solar contractors can grow their businesses with PACE financing, which can help them close bigger deals.
“Since most contractors have little to offer commercial property owners who want to undertake projects with a 10- to 15-year payback, PACE fills this market gap by providing 100% up-front financing that stretches as long as 20 years,” Klimovich said.
Additionally, solar contractors working in the PPA and solar lease space should know there are innovative structures, such as solar PACE PPAs, Klimovich said. For example, Connecticut’s PACE PPA mechanism helped contractors make sales that were previously impossible and opened up the market to property owners who cannot pay for solar improvements out of pocket.
According to non-profit PACENow, besides California and Connecticut, these are the places to watch in 2015 for PACE programs:
- New programs: Texas, Colorado and Utah have put programmatic frameworks in place and are launching shortly.
- PACE programs in the Midwest reaching scale: Ohio, Michigan, Minnesota, Missouri and Wisconsin are expanding and developing healthy pipelines.
- NY PACE program EnergizeNY has a robust financing vehicle and is poised to grow in 2015 and beyond.
