Property Assessed Clean Energy (PACE) programs are used across the US to help property owners get low interest financing to make energy efficiency and solar power investments in their buildings.
Connecticut has had a successful PACE program for residential property owners, but here is an example of Connecticut’s newer PACE program for owners of rental, commercial and industrial property:
The Connecticut Commercial Property Assessed Clean Energy (C-PACE) program enables commercial, industrial, and multi-family building owners to access affordable, long-term financing for smart energy upgrades to their buildings. These upgrades save property owners money and increase property values. The Connecticut Green Bank launched Connecticut’s C-PACE program in January 2013 and it quickly became the largest commercial PACE program in the US—surpassing programs that had been around for years. In its first 22 months, C-PACE approved nearly $50 million for more than 60 clean energy projects, which will result in the deployment of over 8 megawatts of solar energy and myriad energy efficiency improvements across over 4 million square feet of buildings.
With C-PACE, building owners are able to secure 100% upfront financing for clean energy upgrades to their businesses and buildings. Property owners place a voluntary assessment on their property tax bill, and then pay for clean energy improvements over time through this additional charge. Capital provided under the C-PACE program is secured by a lien on the property, so low-interest capital can be raised from the private sector, with no government financing required. Building owners can be cash-flow positive from day one, because of the long term of C-PACE financing. This allows them to do deeper energy upgrades than they otherwise would have done. The repayment obligation transfers to the next owner if the property is sold.
Connecticut’s program uses only money raised from private sector financing through the state’s Green Bank, created to finance PACE.
The Connecticut Green Bank developed and manages Connecticut C-PACE. Although PACE financing has been in practice for years, Connecticut’s C-PACE program has achieved notable success with its many innovations. Within a year of its launch, it was the largest in the country and brought $20 million in financing to clean energy projects in Connecticut. In May 2014, it reached a landmark in its short history with the first-ever securitization of its commercial energy-efficiency loans. Achieving this “holy grail of energy efficiency finance,” the deal helped prove that energy efficiency is able to attract private capital, catalyzing the PACE market and energy efficiency financing across the country. The Connecticut Green Bank also played a significant role in demonstrating proof of the warehouse model (whereby a portfolio of transactions—a “warehouse” of financed projects—which share a similar structure and underwriting standard could be bundled for sale in the financial markets) for commercial PACE loans that were used to fund energy efficiency in Connecticut commercial buildings.
West Virginia is ready for its own PACE program. Our state is among the worst in energy efficiency, for both residential and commercial electric customers. WV also has the highest rates of extremely inefficient residential electric heating in the US.
The WV Legislature can help West Virginians reduce their energy bills and support business owners by creating a PACE program in the coming legislative session. One thing is certain, they won’t do it unless citizens let them know that PACE’s time has come for WV.