What is PACE?

PACE, Property Assessed Clean Energy, is a way to finance a solar project, frequently with no money down, through local government allocated funds.

How does PACE work?

Commercial organizations, or property owners can finance their solar energy system with a solar loan, solar lease, power purchase agreement, or a unique blend of the three. PACE financing is a special type of financing that is only available in areas where the local government has allocated funds.

The general process for using PACE financing goes as follows:

  1. A county, local, or municipal government passes legislation that establishes a PACE program and makes funds available to investors, usually through the sale of municipal bonds.

  2. An authorized PACE lender (such as GreenPace Capital or Ygrene) provides those funds to property owners who want to make clean energy improvements, like solar panels or battery backup systems on their property.

  3. Property owners repay the financial institution through an assessment attached to their annual property tax bill.

PACE financing can also be used to pay for other property upgrades such as HVAC systems, insulation, and other energy efficiency upgrades and/or infrastructure required for those upgrades (usually roofs) in addition to solar and batteries.

Why choose PACE?

PACE funding is different from standard home improvement loans in a few important ways:

  1. Instead of repaying the loan in monthly installments, property owners pay their PACE funds back once a year for a fixed term (typically 20-30 years) through an assessment that is added to their property tax bill.

  2. PACE financing requires nothing upfront, so you get to immediately enjoy the financial benefits of solar without incurring any out of pocket costs for the property upgrade. Typically the amount of money saved in electricity costs throughout the year are significantly greater than the assessment added to the property taxes, meaning most PACE clients see positive cash-flow right away.

  3. Unlike most other loans or leases where transfers are negotiated separately, PACE financing is attached to the property itself, not the owner – simplifying the transfer process. If the property owner sells the property before the solar system is completely paid off, the rest of the money owed transfers to the new property owner. But the new owners shouldn’t mind, as they’ll immediately enjoy the financial benefits of solar panels on their new property!

  4. While funding amounts and interest rates for traditional loans are determined by your credit, PACE financing amounts are determined by the tax capacity of your property (i.e., how much your property is worth). For property owners who don’t have good enough credit to access favorable loan options, PACE financing is a great alternative for receiving the financial benefits of solar with no upfront costs.

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