Berkeley, California pioneered the idea to advance California’s Million Solar Roofs program and it’s finally spreading and gaining traction nationally. A State House Bill wants to bring it to Massachusetts.
PACE, or Property Assisted Clean Energy financing, is another example of applying a long-standing tool to a new problem – financing renewables for homeowners. Renewable energy technologies, especially Solar PV, are coming down in cost and may have a positive net present value – a good return on investment – but the time horizon is long and the upfront investment can be large. A homeowner faces the double challenge of getting the upfront investment and worrying whether he or she will be in the home long enough to reap the full benefits.
PACE solves that problem. It allows local governments, who can generally raise capital at favorable rates, to loan money to homeowners to make renewable energy investments. The loan is then paid off as a “betterment” – an assessment on the property. Since it is paid over time as a property tax, the obligation stays with the property, not the individual.
Since Berkeley’s pioneering effort,
- other communities like Athens, OH and Babylon, NY as well as sunbelt communities have signed on to implement similar programs.
- several states (including Connecticut and Maryland) are developing programs.
- the Obama administration has incorporated PACE into its Policy Framework and is targeting some of Department of Energy’s State Grant Program and Energy Efficiency and Block Grant programs to pilot support programs.
In Massachusetts, House Bill 4393 – Renewable Energy Betterments – is a one-page piece of enabling legislation that has been introduced to allow municipalities to create PACE programs. Towns would issue bonds, loan money to homeowners for improvements, then collect the money to pay off the bonds through an additional assessment on those properties. That bill is currently under consideration by the Joint Committee on Municipalities and Regional Government.
A UC Berkeley lab (RAEL – Renewable and Appropriate Energy Lab) published a detailed analysis and guide aimed at local governments considering PACE (or in their terms EFD -Energy Financing District) program.