We have made little to no progress since PACE (Property Assessed Clean Energy) entered the scene as an investment tool to help prevent climate change in 2008. PACE investments minimize market caused investment risk for all consumers and all lenders. Local governments can create a PACE program so that the public at large is not forced to take a major market risk alone to upgrade their property infrastructure to consume minimal amounts of energy,minimize fossil fuel consumption and add renewables on their property.
By using a Property Assessment, the public may choose to effectively join an individualized special assessment district. Special real estate assessments can survive a sale or transfer of ownership. That, combined with a long term secure investment is what gives PAEC its power. Many homes and commercial properties already have the same type of special assessment real estate taxes paying for water, sewer, roads, bridges and even metro expansion or other similar infastructure beneficial to all. It is interesting that these other assessments survive all sales and transfers and are commonly managed by mortgage payments. They can also be covered by mortgage company escrow collections just like standard real estate taxes and privagte insurance.
As an example of the power of PACE financing, if you select 10 kW of solar panels costing $25,000 and finance it for the guaranteed life of over 25 years in Richmond (on a 30 degree south facing roof you will generate on average $1,578 dollars per year in electricity). The Federal Tax incentive takes care of 26% of the total costs (this year and next) of the PACE financed amount of $27,500. If you finance it through a 25 year PACE program assessment the annual payment at 5.75% will be $1,544.30 In other words you will be paid a whopping $24.30 per year to let the PACE program provide you with solar panels. I know it's not much money but it is a tool that needs to be made available to all consumers. Solar is easiest to illustrate for how PACE can work but the least rewarding financially. It is more complicated to figure out how geothermal HVAC, better insulation, duct sealing and energy controls will impact savings. They can all usually provide better benefits but are not as easily illustrated.
What can be seen is the asset value has increased by the value of the solar panels and the owner has a few dollars more in their pocket to pay their mortgage. Next year the savings will likely be more. It's hard to see why a mortgage lender wouldn't want to do both the PACE assessment investment and the mortgage. 100% of the PACE re-payment through the special assessment will be made, the term is not as long as a thirty year mortgage and the interest rate is higher. Meanwhile, the mortgage is subject to market risk so (as in 2008) they can end up upside down on a mortgage and even furthe upside down if the solar panels are financed in a bigger mortgage .
Right now if a property owner is contemplating a deck or a Solar PV investment, the deck usually will win. If a builder is contemplating isofoam or fiberglass insulation, fiberglass wins. Even though closed cell foam adds as much as 300% structural resilience, is a moisture and air barrier and reduces the AC tonnage
VA first passed C(ommercial)-PACE enabling legislation in 2009. Counties waited many years to develop programs. The first projects closed within the past month allowing solar panels to be installed on restaurant in Arlington.
Isn't it time to pick up the PACE in your community?