Property-Assessed Clean Energy (PACE) financing “is really starting to take off” as a tool for financing home energy retrofits, as legislators and homeowners gradually recognize the ability to cover the initial cost of building improvements that lead to longer-term savings.
“Like most investments, energy efficiency works by using an up-front expense to generate a stream of economic benefits,” writes Jim Barrett, chief economist at the American Council for an Energy-Efficient Economy (ACEEE), in a recent blog post. The problem is that few homeowners have the initial cash to spare, and they’re often unsure they’ll stay in a house long enough to see the investment pay off. Too often, the result is that owners opt for more modest efficiency improvements, or no improvements at all.
With PACE financing, the initial cost of the work is attached to the house’s tax assessment, which means the future owner picks up any remaining costs but also reaps the reward of a more comfortable, energy-efficient home.
Barrett says PACE financing is gaining serious momentum in the United States. “Even though the concept is relatively new, over US$2 billion has been invested in about 97,000 homes through residential PACE financing,” he writes. “PACENation estimates that residential PACE projects have created over 17,000 jobs, just in implementing the upgrades.”
ACEEE’s research also shows that energy savings resulting from PACE programs “create as many net new jobs as the implementation does,” he adds, “so the total is really about double the PACENation estimate.” PACE programs in the U.S. have also produced about $250 million in loans in the commercial sector.