By Annie Gilleo
Property assessed clean energy (PACE), a popular, long-term financing tool for energy and water conservation projects, has grown quickly in recent years across the United States.
The PACE market increased by 75% from 2016 to 2017, completing $251 million in funding by the end of 2017, according to PACENation, a private advocacy group. The impact is significant. Commercial PACE funding has cumulatively saved 6.3 billion kWh, about equal to the electricity used by 25,000 commercial office buildings each year.
PACE financing, used for energy efficiency and clean energy projects, is repaid as an assessment on a property’s tax bill. This financing mechanism means the loan stays with the property rather than the customer, even if the property is sold. To date, 36 states and the District of Columbia have passed PACE-enabling legislation, the first step in giving customers access to this financing tool. Local governments in these states then establish programs, which may be run by third parties.
Commercial PACE, or C-PACE, has been driven by expansion into new markets. In Milwaukee in 2016, PACE Equity financed $7 million of a new Marriott hotel, the first new construction project to use PACE financing in its capital stack. PACE financing accounted for 10% of the project’s development costs, including improvements to HVAC, water heating, windows, and controls. These upgrades resulted in 42% energy savings over code. PACE Equity has also applied C-PACE to new construction projects in other states, including Arkansas, Colorado, Kentucky, and Missouri.
According to PACENation, PACE financing can currently be applied to new commercial construction projects in 11 states…
To learn more about the growth of the PACE financing tool, continue reading Gilleo’s blog post on the ACEEE website.
As Senior Manager, State Policy, Annie Gilleo manages the American Council for an Energy-Efficient Economy”s (ACEEE) state-based technical assistance activities and conducts research on energy efficiency resource standards, the utility business model, and other state-level policies. Annie was also the lead author of the 2013-2015 editions of the State Energy Efficiency Scorecard. ACEEE is a nonprofit, 501(c)(3) organization and acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behaviors.