A barrier for many businesses considering energy efficiency retrofits is upfront capital. Even if there is institutional will, a business owner must first and foremost meet daily expenses, and then consider the commitments throughout the entire period of repayment. But what if the debt were tied to the building in question? How would the financial calculus shift if the burden of repayment were not on the business or individual, but in fact, remained with the property itself?
The world of policy has come up with just such a mechanism called Property Assessed Clean Energy (PACE) financing. PACE provides long term, low cost loans for upgrades which reduce a property’s energy use. Eligible projects include improving the building envelope (insulation and airtightness), high efficiency HVAC systems, onsite renewable energy, and many more. PACE’s major selling point how repayment is structured. PACE loans are administered like property tax through the local government, meaning that neither individual nor entity is saddled with the repayment over the long term. In most cases the loan can be easily transferred to the next owner of the property, who continues to experience the benefits of the improvement. PACE is also not exclusive – it can be combined with other energy efficiency financing programs.
PACE enabling legislation has popped up in 33 states across the US, and more than 20 have fully launched and funded a program (California itself has 13 initiatives!) As for Pennsylvania, Senate Bill 234, to enable PACE financing is in the state legislature right now. The bill is budget neutral, and only enables the possibility of PACE for commercial and industrial property owners. (Side note: Initially there were some predatory lending practices within residential financing has dissuaded Pennsylvania from pursuing both commercial and residential legislation. This has since been resolved with states enacting legislation that provides consumer protections). There is no forced participation, and in fact, both individual municipalities AND property owners must voluntarily sign on to the program. If the bill seems like a no brainer, the 29 cosponsors would agree with you. But movement has been slow, and other partisan issues have taken precedence.
We’ll be sure to update you as soon as the bill passes, so ready your energy efficiency improvements and clean energy projects. If you simply can’t contain your excitement (we know, it’s contagious!), please reach out to your local state senator or representative and ask them to support this bill!