By Nigam Trivedi, Lehigh University
It is a straightforward idea to access local, state or federal funds to pay for a portion of energy improvement costs. In late 2009, the U.S. Department of Energy (DoE) termed this financing technique Property Assessed Clean Energy, or PACE for short. More than half of the United States have enacted PACE-related legislation since 2010, and a recent update to PACE guidelines extends their applicability to energy efficiency and renewable energy measures.
PACE guidelines include 10 broad categories that govern the establishment of programs for a building. Owners who enroll in PACE programs and make energy improvements agree to pay back the governing authority over a period of 10 to 20 years.
Additionally, the PACE contract is a “debt of property, meaning the debt is tied to the property as opposed to the property owner(s), so the repayment obligation may transfer with property ownership,” eliminating a major disincentive to investing in energy improvements. Many property owners hesitate to make property improvements if they think they may not stay in the property long enough for the resulting savings to cover the upfront costs.”
Loudoun County is one of the nearly 50 locations in the United States that is engaging with the PACE paradigm at some level, although Loudoun County has not begun a PACE program. Rather, the county lists its involvement with the program as “in development.”
PACE-based financing structures could serve the Loudoun County homeowners well. From 2010 to 2013, the county had a 145-percent increase in permits for new residential construction. A PACE program for these new homes would allow homeowners to invest in clean, renewable options like solar without worrying about shouldering the burden afterwards. In addition, an increase in the energy efficiency of homes could contribute to an increased value of real property per capita. While property values have been slowly increasing since 2012, widespread residential participation in the PACE financing structure could contribute a greater increase in per capita property values over the course of the next two decades.
The guidelines for a PACE program are highly detailed, but owners of residential and commercial buildings who participate in the program could both monitor the balance of their own energy resource portfolio and improve the efficiency of their buildings while simultaneously making a positive contribution to the economy of Loudoun County as a whole.
And imagine if through conservation, efficiency and individual generation, we collectively could forestall or eliminate the need for new power plants and new, unsightly transmission lines!