August 25, 2020
Spotlighting the PACE Program: Is Your Project a Good Fit?
What is it?
Property Assessed Clean Energy (PACE), is an innovative financing initiative that helps fund energy efficiency, renewable energy, and water conservation projects.
Despite being a nationwide initiative, the program operates locally, which allows regional markets to tailor the program to their needs. The funding is allocated to property owners, at no out-of-pocket cost, allowing them to secure low-cost, long-term loans for their projects. In some cases, PACE can cover up to 100% of a project’s hard and soft costs. PACE can also be combined with utility, local, and federal incentive programs, making it an attractive option for property owners.
PACE’s commercial financing (C-PACE) has achieved over $1.5 billion in projects financed. The program starts with a state-level government policy that classifies clean energy upgrades as a public benefit. These upgrades can be financed with no money down and then repaid as a benefit assessment on the property tax bill over a term that matches the useful life of improvements. The assessment transfers on the sale of the property and can be passed through to tenants where appropriate.
Where is PACE available?
PACE programs are currently active and operating in 22 states and Washington D.C, where 37 states have PACE-enabling legislation.
Source: https://pacenation.org/pace-programs/
Why use PACE financing?
- Easier to Qualify: Eligibility is based primarily on the equity value of the subject building. Generally, this makes the application and approval process easier than traditional loan products.
- Flexible + Advantageous Terms: Often have significantly more attractive interest rates and loan maturities, making for smaller payments than traditional loans.
- Streamlined: As PACE loans are paid along with property tax payments, borrowers make one convenient payment. Like tax assessments, PACE loans do not accelerate and remain with the building upon transfer.
- Availability of Funds: PACE loans can fund up to 100% of the project costs, more than traditional loan options.
Think you may be a good fit for the program?
Eligible PACE Projects must meet the following criteria:
- PACE Project improvements must reduce energy usage, water usage, or generate renewable power for the property.
- Improvements associated with the PACE Project must have a useful life of at least five years.
- The PACE Financing amount plus the outstanding principal amount of all mortgage liens secured by the property shall not exceed 95% of the property value, unless otherwise approved by PACE Wisconsin. PACE Lenders may have additional limits based on their underwriting criteria.
- PACE Projects with PACE Financing amounts both above and below $250,000 are subject to specific requirements; see below.
How we can help
As an approved third party contractor, Edison Energy has been working within the PACE ecosystem nationwide, and specifically within the Midwest region (check out our case study on Oscar Mayer Station), providing energy optimization and implementation services, including:
- Commissioning and Retro-commissioning (new + existing)
- Energy Assessment and ASHRAE Level Audits
- Measurement and Verification
- Performance Contracting
- Project Development and Management
If you would like to learn more about the PACE Program and see if your project may be eligible, please reach out to Farhan Khatri at Farhan.Khatri@EdisonEnergy.com to learn more.
