PACE Home Solar Loans Spreading Like Wildfire
Hardly a week goes by before I find myself listing off more cities and counties that have adopted the landmark municipal solar lending program piloted in Berkeley, California in 2008. Now dubbed the more universal moniker, Property Assessed Clean Energy (PACE), this revolutionary program allows homeowners to pay for home solar power over the long-term through a voluntary increase on property taxes. And it’s invading cities faster than flies can eat a potato salad.
About 90 cities in California will launch a version of the program this summer. That’s in addition to Oakland, San Francisco and San Diego, which have already set the PACE wheels in motion in America’s most solar-powered state. Santa Fe County, New Mexico; San Antonio, Texas; and Boulder County, Colorado are signing up as well.
How Does it Work?
While Berkeley’s Financing Initiative for Renewable and Solar Technology (Berkeley FIRST) program is dedicated to solar power, the broader PACE programs offer payment plans for energy efficiency upgrades as well. The city or county decides the range for loans (in SF, they range from $5,000 to $50,000) and pays approved homeowners up-front for the cost of their renewable energy system or EE upgrade. Then, a voluntary property tax increase is paid off over the long-term, typically 20 years. This gets solar power and efficiency onto roofs and into homes immediately, but allows homeowners to avoid the high up-front costs that would otherwise prevent them from doing so.
The Berkeley program has come off as pure genius, with the entire world watching its progress. Expect a slew of additional cities or counties to adopt PACE programs. The process begins when state governments pass laws allowing municipalities to adopt their own version of PACE. So far, 16 states have passed these laws and 10 more have them in the works. To illustrate how effective PACE incentive programs are, note that Berkeley’s applications were “sold out” in just nine minutes when the program opened. And the Sonoma County, CA PACE program that is considered by many to be too expensive (with a 7% interest rate) still garnered some 1,200 applications in less than a year.
Via USA Today
Photo Credit: Rancho Solar
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Posted on February 25th in Solar Funding by Dan.
February 27th, 2010 at 5:27 pm
While the federal government can provide incentives to install solar energy, the approach of adding it to the value of the home and paying for it via property taxes allows the current owner to invest in a technology that may extend beyond his ownership.
March 24th, 2010 at 10:23 pm
[...] innovative municipal solar incentive program is spreading like wildfire across America. Based on a program devised in Berkeley, California, Property Assessed Clean Energy [...]
April 20th, 2010 at 1:14 pm
I agree with Global Patriot; state and federal tax incentives are simply not enough. There are a lot of people interested in making energy efficient and/or renewable energy upgrades to their homes, and programs such as PACE allow them to worry less about where the money will come from and more about getting the job done right.
May 20th, 2010 at 4:36 pm
I like the concept of PACE for financing solar and believe that it’s a wonderful option for folks whose credit is less than stellar, have a high LTV, and are current on their property taxes. For credit worthy customers with a favorable LTV, traditional financing can be secured at a far lower cost of money. Most PACE programs I’ve worked with in CA charge interest rates in the 7-8% range. Many of my customers are able to secure financing from their local credit union for 5-6%. Over 20 years, a couple hundred basis points can add up to some serious money. Additionally, residential PPAs (like the one offered by SunRun) are gaining a lot of traction, and generally have a cost of money in the 4-5% range. Other benefits of a PPA include: regular cleanings, monitoring, insurance, and a very long 18 warranty. I believe that folks looking to go solar should examine all of their available financing options.