The state of property-assessed clean energy (PACE) is strong, and getting stronger. After a few stumbles, the concept of helping homes go solar through annual property taxes that remain with them, thereby increasing their value over time, has predictably become a renewable energy no- brainer.
Last week, California treasurer John Chiang suspended administrative fees for PACE’s loss reserve program, which he promised would save homeowners hundreds of thousands of dollars while making it “more affordable for more Californians to make green investments in their own homes.” Last month, San Francisco dropped its previous obstructions by reviving its residential PACE program, following on the heels of a Los Angeles County Board of Supervisors PACE vote in June. From Renovate America’s HERO program to the recently created Ygrene Energy Fund and beyond, more and more PACE providers are gearing up to offer residential, commercial, industrial and agricultural property owners opportunities to solarize their structures and decrease their emissions for mutual community benefit.
“Clearly, this is a positive development,” Solar Energies Industry Association spokesperson Ken Johnson told SolarEnergy. “As an industry, we are appreciative of any efforts that will help to further advance the adoption of solar in California.”
“In California, top-down mandates from the state are pushing cities and counties to aggressively reduce local demand for energy,” HERO program spokesperson Severn Williams added. “PACE is a great tool available to local jurisdictions looking for opportunities to get residents involved in meeting those mandates. Because it is based on a public-private partnership model, PACE is attractive to policy makers, making it possible for elected officials to promote individual investments in energy efficiency and renewable energy at no cost to their jurisdiction.”
Top-down support has made the difference. Early concerns from federal regulators about PACE lien defaults stalled its progress after San Francisco adopted the program in 2010, but they were allayed after the Brown administration ponied up a $10 million reserve fund. Williams explained that all HERO contractors are licensed by the state to serve its 228 communities and 22,500 residential projects, thereby meeting competency, bonding and insurance requirements for its $450 million in PACE support.
For his part, chairman Chiang’s California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) slashed PACE’s administrative fees as part of emergency regulations adopted during a recent meeting in Sacramento. With $350 million in its loss reserve program backstopping the state’s PACE efforts, neither bondholders nor homeowners have any good reason not to invest in renewable energy upgrades like solar panels. It’s not like California doesn’t have hundreds of thousands of structures that don’t need them, post-haste.
“We appreciate Treasurer Chiang’s efforts to make PACE more accessible to California homeowners, which is another sign that state regulators see its benefits,” Williams told SolarEnergy. “Federal solar tax credits that are set to expire next year certainly help to make it more affordable for homeowners to go solar, but financing mechanisms like PACE play an equally important role.”
“PACE makes going solar more affordable by spreading out the cost of installing the system over up to 20 years, allowing property owners to leverage home equity instead of personal credit to finance home improvements,” he explained. “In most cases, PACE liens are transferrable to the new owner when a homeowner sells a home that has a PACE lien, which is appropriate since the benefits of the investment stay with the home. And because HERO financing is funneled through a homeowner’s property taxes, the interest is tax deductible.”
As more and more providers enter the marketplace, property owners will have to throw even less skin into the game, as PACE competition heats up and prices cool. Although solar is currently skyrocketing as a renewable energy solution and investment, we are still only at its launchpad. As the oil and gas markets utterly fail, financing solar, wind and other renewable energy upgrades will be the only energy game in town. PACE is a great place to start playing for keeps.
Solar installation photo CC-licensed by NAIT on Flickr.