Property-assessed clean energy loan (PACE) programs for both residential and commercial sectors are booming in 2014, with much more growth to come in 2015.
California has completed about $500 million in residential PACE projects for around 25,000 homes, according to PACENow, a nonprofit that promotes the PACE concept. The commercial market has closed about $100 million in completed projects, with another $400 million in the pipeline. The approximately $600 million in completed projects is up from about $60 million in 2013.
PACE programs allow investments in energy-efficiency retrofits and distributed renewable generation to be paid back through property taxes, which lowers the risk for both lenders and owners and can potentially open up a far larger swath of the energy-efficiency market.
Various players were able to securitize PACE loans in 2014. In Connecticut, the state’s Green Bank sold its first batch of PACE projects to Clean Fund. Renovate America, which has executed 95 percent of all residential projects in California, securitized more than $200 million in residential PACE bonds this year.
Most of the money in commercial and residential goes to energy-efficiency upgrades, but about a quarter of commercial projects are renewable energy projects.
The numbers should continue to grow significantly in 2015, as Texas, Utah, Illinois, Colorado and Florida expand commercial programs.
Texas is a particularly interesting market to watch with its ‘PACE in a Box’ toolkit that is meant to make PACE programs easy to launch across the state. But it is California that has some of the most interesting developments to watch in 2015.
Programs like CaliforniaFIRST are offering upgrades not only for energy, but also water efficiency. In September, Governor Jerry Brown signed AB 1883 into law, which will make it easier to aggregate small PACE projects and apply PACE to new construction, according to PACENow. The state treasurer’s office also launched the $10 million PACE Loss Reserve Program, which the California Senate required to mitigate the risk to mortgage lenders for losses related to PACE liens in foreclosure situations.
The PACE map is filling in, with much more action to come in 2015. There are legislative efforts underway in Arizona and Pennsylvania, and encouraging developments in the South. There is new legislation to get PACE going in Kentucky, and the Ygrene Energy Fund, which operates in California and Florida, expanded to Atlanta. In Arkansas, a PACE program launched this month in Fayetteville and will expand into more cities in the new year.
Greentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.