The problem with many renewable energy (solar pv/thermal and wind turbines) and energy efficiency retrofits (new windows, efficient hvac system, insulation, etc.) is that they cost a fair amount of money up front. In times like these, many people don't have the cash laying around to cover that initial costs; even if these projects do pay off in the long run. Luckily many states are adopting a a form of financing called PACE to remove the burden of residents having to come up with the cash for their clean energy projects.
PACE stands for Property Assessed Clean Energy. In its simplest it works like this:
- Your local government puts down the cash to pay for your retrofit (clean energy)
- You pay back the initial cost through your property tax (property assessed)
- Everyone wins (except your local utility, who wont be selling you as much energy. Boo Hoo.)
I first mentioned PACE financing when I covered Vice President Biden's "Recovery through Retrofit" plan. Biden's plan mentioned PACE as a great alternative to traditional financing for energy projects.
Thankfully, there is a wealth of resources on the web for this topic. Renewable Funding is a company that is focused on renewable energy financing and they have a ton of information on their site regarding PACE. They provide a detailed description as follows:
A local government creates an improvement district; a bond, secured by real property within the district, is issued; and the bond proceeds are used to fund renewable energy and energy efficiency projects. Property owners then repay the debt service on the bond in fixed payments as part of their property tax bill.
There are two major characteristics, however, that make PACE unique. First, property owner participation is 100% voluntary. Only those property owners who choose to participate in the PACE program pay additional costs. Second, the bond proceeds are used to pay for prequalified clean energy improvements on participating properties. Improvements that a property owner may often choose from include renewable energy technology like solar panels, energy efficiency projects like a high efficiency furnace, and in some states water conservation measures.
Another great resource for information on PACE financing is the D.O.E.'s Energy Efficiency and Renewable Energy (EERE) site for financial products. I took the image below which describes the advantages and disadvantages of PACE off of their site:
So what can you do to help bring PACE funding to your neighborhood? Tell your state legislature you demand it! One way to do this is on Vote Solar's website where you can fill out a form to send to your elected official. There was a great post on SolarPowerRocks.com back in November of 2009 calling for New Yorkers to petition their lawmakers to allow for cities to offer PACE financing. Guess what, it was passed by a unanimous decision. Even great ideas have to trudge through the bureaucratic system.
PACE financing doesn't just help with the up-front cost of clean energy projects, it also allays any worries about moving before the project's payback. For example, say your solar panel project won't payback until year 9, but you can see your family moving in 5 years. If you have PACE, no problem. Since your project is amortized - usually over 20 years - on your property tax bill, the payment is just passed on to the new owner for your house. But they don't incur any more financial burden, because they are getting the advantage of lower energy bills! It's a win/win.
I really can't see many disadvantages to this method of funding clean energy projects. Let's face it, the fossil fuel status quo is hard to compete with, so clean energy needs all the help it can get. Take a few minutes to voice your desire to have access to PACE financing to your state lawmakers, start talking about PACE with your friends and neighbors, and bring on a clean energy revolution in your city!
PACE NOW - this page includes a great list of advantages to PACE financing