Property Assessed Clean Energy Financing: An Introduction

Property Assessed Clean Energy, also known by its abbreviation PACE, is a financing platform dedicated to energy efficient upgrades and installations for a variety of commercial and residential properties, also including industrial, agricultural and non-profit residences.

Due to the expanding world population and heavily industrialized nature of our civilization, this way of investing is becoming crucial in a modern, environmentally conscious society. If you are interested to learn how you can benefit from it, read on for a comprehensive introduction to property assessed clean energy financing.

What are the most glaring benefits?

When it all comes down to it, we’re all interested in the basic benefits of such programs. Thankfully, PACE benefits are everything but one sided – on the one hand, it definitely decreases your property’s carbon footprint on the environment. On the other hand, many sensible homeowners opt for PACE option because it lowers utility bills and adds value to their properties.

How does the financing part work?

The financing platform is fairly straightforward. Let us use an example – you are an owner of a house that uses a lot of electrical energy. If you sign up for PACE program, you may choose to install solar panels to reduce the use of electricity. Initially, the program will pay for the project 100%.

Now, according to the contract, you, as the property owner, will pay back the cost of the project by way of increased property taxes. The rate of the taxes will be set based on the time frame you have agreed upon during negotiations, and it can range from 5 to 25 years. There is no upfront payment or a competitive interest rate.

What are the types of improvements?

There is a limited number of improvements that are eligible for PACE financing and they can vary depending on the city, county or a country. The most basic ones include installations of solar panels, cool roofing, disaster proofing, and climate controls. It also includes improving insulation, water efficiency and lighting.

Once the budget is set, you can customize the project within the arranged financial framework. For example, if your project ends up costing less than expected, PACE program gives you an option to use the rest of the money for additional green retrofits, as in the case of this California homeowner, who had leftover money after financing a drought-tolerant backyard. He used the rest of the funds for an additional solar upgrade which did wonders for his electrical bills.

Where does that leave you money wise?

Increased property taxes are actually a fair tradeoff considering the financial benefits. First of all, the value of your entire property can potentially skyrocket in the real-estate market.  Additionally, with the overall decreased bills at the end of each month, you will end up with a significant sum of saved money after a few years.

Are there any disadvantages?

PACE requires you to put a lien on your property. For those who are not familiar with the term, a lien is essentially a claim on a property for the unpaid bills. This means you cannot sell a residence until all bills are paid, which can put you in a tight spot. Furthermore, if you sell the residence, a new owner will be liable for PACE assessments, which means there will be some additional financing attached to their new building.

Considering the nature of the financing program, advantages considerably outweigh the disadvantages by a significant margin. If you’re absolutely positive you will remain the owner of a particular residence for this reason or the other, signing up for PACE program will leave you in a comfortable financial situation and a stable contractual obligation without unpredictable changes.

As you can see, PACE offers firmly structured and reliable financial framework for any property owner interested in ecologically sensible retrofits. It is a fairly simple idea that has many benefits, but above all else, it amounts to the most pressing matter which is transference from fossil fueled energy sources to renewable energy measures.