Property Assessed Clean Energy (PACE) Financing: Update on Commercial Programs
Since 2008, 24 states and the District of Columbia have Authorized Property Assessed Clean Energy (PACE) Under state law, and state and local governments initially allocated over $150 million in federal grant funds to help launch programs. However, actions taken by the Federal Housing Finance Agency (FHFA), the Office of the Comptroller of the Currency(OCC) and other financial regulators in mid--‐2010 froze most residential PACE programs. Commercial PACE programs were not directly affected by these actions and are moving forward in a number of cities around the country. This policy brief provides an overview of all currently operating PACE programs., including project data, the various financing mechanisms that are being piloted, and common challenges across programs. The policy brief also includes a summary of programs in the mid to late developmental stage. Key findings:
- 71 projects have been approved and financed in the four active commercial PACE programs, representing about $9.7 million in energy efficiency and renewable energy project investments.
- In all active and planned programs, the existing mortgage holder must provide written consent or formal acknowledgement for the property to participate in the program. Mortgage lenders from local, regional and national banks have provided their approval for these projects.
- While all existing programs are utilizing government capital or credit to provide financing for PACE projects, the programs scheduled to launch in 2011 will rely primarily on private capital complemented by federal grant money for credit enhancement purposes.
- The improvements financed have varied by program. For example, the majority of financings approved by Sonoma County (CA) will or have funded solar PV projects, while Boulder County's projects are predominately energy efficiency. This may be due to climate, local incentive structures, or other factors.
- New commercial PACE programs are launching around the country and more significant project volumes are expected by the end of 2011. An overview of the programs that have recently launched or are planning to launch in 2011 appears below.