Property Assessed Clean Energy Loans: Finance Solar Panels and Energy Efficiency Projects With No Money Down

Property Assessed Clean Energy programs could be just the ticket to get you off of fossil fuels and into solar or wind renewable resources. So-called "PACE" programs are low-cost financing options that allow homeowners to purchase and install solar panels or wind turbines without any down payment. The loans are paid back through incremental increases in property tax bills over 20 years and are transferable to new owners should you sell your home before then.

For many people, PACE programs allow them to invest in renewable energy without the upfront costs. Unlike a solar lease program, you will own the equipment at the end of the loan. Whether you are thinking about a photovoltaic (PV) solar electric system or solar hot water, property assessed clean energy loans could help you minimize your out of pocket expenditure at the outset.

As of the date of this publication, the U.S. federal government is no longer considering legislation to enable property assessed clean energy loans on a national basis. For now, if you want a PACE loan, you'll have to see if your municipality offers the program.

And why would they do so? Perhaps its because, for every $1 you save in annual electricity costs, the value of your home goes up by $20. That means that if you cut out $500 from your utility bills, its a $10,000 home equity bump!  PACE raises property values because homes and buildings can become less expensive to heat and cool with renewable energy installations.

As discussed above, PACE is an acronym for Property Assessed Clean Energy, a low-cost renewable energy loan program funded by private markets, without the need for government subsidies or tax breaks.

Currently, enabling legislation for property assessed clean energy loan programs has been adopted in 24 states, plus the District of Columbia (CA, CO, FL, GA, IL, LA, MA, ME, MD, MI, MN, MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, and WI).

Instead of spending money upfront, you can "fold the cost" of certain energy saving/clean energy improvements into your property tax assessments, spread out over 15-20 years. This helps homeowners address fears of being unable to come up with money to pay for energy efficient installations, and relieve them of worries of whether they will recoup their investment before selling their home in the future. Because PACE loans automatically transfer to new owners, the financing simply continues through the next owner.

Here's how it works:

1. A local municipality selects a company that will administer its PACE program
2. Municipal bonds are sold to fund the program
3. You hire a company to evaluate your home for solar panels or other energy efficiency improvements and get a quote
   
4. Take the quote to the PACE program administrator at your municipality and apply for PACE financing
5. If your application is approved, the PACE program will directly pay the installer for the solar panels or energy improvements
   
6. The cost of the improvements are paid off as part of the property tax bill, at a competitive interest rate, over 15-20 years
   

In short, PACE offers you a simple way to finance solar power systems or other energy efficiency retrofits.  People that have gone with PACE financing have noted that any increased property tax assessments are offset by energy savings of 25-35%.

PACE financing allows qualifying homeowners to spread the cost of energy improvements, which include solar panels, home wind energy systems, weather stripping, insulation, energy efficient boilers and cooling systems and new windows over the expected life of the improvements.

PACE programs will differ depending on your municipality. Details you will want to review include: (1) length of the assessment; (2) items that can be financed through the program; (3) penalties for missed or late payments (if any); (4) transferability to a new property owner; and (5) whether additional energy improvements can be added to the program in the future.

You may want to seek professional guidance before committing to a PACE program to help you avoid potential pitfalls unique to your property or location, in advance.

If you do not have cash for energy improvements which can help you save money on your utility bills, then a PACE loan may be right for you. There are many benefits of PACE programs, both for individual property owners and the overall economy:

• Local green jobs are created
  
• Private capital is used to encourage energy improvements instead of tax breaks or government subsidies
• Owners can save on utility bills, while enjoying increased property values
• Because the programs are backed by the government you don't have to worry about getting scammed
  
• The programs are voluntary instead of mandated by the government
• Promotes individual energy securit
• Reduces the need to build additional power plants
• Cuts greenhouse gas emissions
  

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