INTERVIEW WITH: Anthony Owolabi, PACE Canada Volunteer

PACE Canada getting a foothold

Originating in California, the property assessed clean energy (PACE) program offered by PACE Canada wants to make energy efficiency and renewable energy upgrade measures affordable to all Canadians.

What is PACE?

Property Assessed Clean Energy (PACE) is an innovative financing tool which property owners can use to upgrade the energy efficiency of their buildings and install renewable energy systems with no money down and with repayment through their property tax bill. The source of funds is usually private lenders who are looking for long term, low risk investments.

The key requirements of a PACE program are that the building owner must own the property and must be paying (or be able to pay) property taxes: secondly the program will cover 100% of the financing for these types of measures:

• renewables such as solar panels and geothermal heating systems

energy efficiency upgrades such as insulation and windows

In the last five years in the USA, over 220,000 PACE projects have been completed with over $6B invested.

Who is PACE Canada?

PACE Canada is a non-profit, education and advocacy organization. We are dedicated to bringing the PACE program to Canada, and in the process will create thousands of jobs and dramatically reduce Canada’s GHG footprint.

Our vision is for every building in Canada to be optimized with renewable energy and energy efficiency measures to achieve net-zero performance – and for PACE financing to be the tool that makes the measures affordable to all.

Can you explain a little more how the financing system works?

The PACE administrator acts as a coordinator between investors (lenders) and home/property owners (buyers). Investors lend the money to home/property owners and money flows to the contractor who completes the job.

Once the project is complete, the PACE Administrator facilitates the placement of a property tax lien and the home/property owner starts repayment via their property tax bill.

Since investors provide long-term, fixed interest rate money, the model is usually cash flow positive from day one. Energy savings are meant to more than offset the increase in taxes.

What are the available markets for PACE Financing in Canada?

There are two very distinct markets for PACE financing – C Pace (commercial) and R Pace (residential). Even though there are similarities, there are major differences when it comes to implementation processes and approvals for each market.

Think of both programs sharing the DNA of the cat family, but one is a kitten and one is a tiger.

Based on US market data, the average PACE financing per project has been $456,000 for C-PACE projects and $24,000 for R-PACE projects. The largest single C-PACE financed project to date is $32 million. A C PACE best practices guideline can be found at http://www.c-pacealliance.com: (Well-Designed-C PACE-Programs-2018-07-02)

Does PACE require government involvement even down to the municipal level?

Even though the loan repayment is made through the property tax system, the municipality should have only two simple tasks – place the tax lien and collect/remit the annual payments. All other tasks should be handled by the PACE Administrator – approve contractors, projects, and upgrade types allowed; and find the investors.

What are the full economic benefits?

1. Energy Savings to property owners: Since the target is to be net positive cash flow from day 1, property owners save money on their energy bills.

2. Increased property value: Unlike subjective upgrades like countertops and paint, PACE upgrades are quantifiable and calculations can show increased property value. This feature can be translated into a higher price at the time of sale.

3. Green Jobs: Apart from the public good benefits of reduced green house gases, many new jobs are created. Statistics show that for every million dollars invested, 15 new market transition jobs are created.

4. Reduced fiscal debt: Since PACE attracts private investors, it reduces the use of public tax dollars in the retrofit economy.  Governments don’t have to provide rebates, subsidies, or give-aways that contribute to increased public debt levels.

What are the next steps for PACE Canada?

PACE Canada is committed to advocating for the adoption of a best practices PACE model across Canada. We will continue our efforts to educate governments and politicians on PACE and its economic benefits (see the website at PACECanada.green)

We will be expanding our membership base by organizing educational events on PACE and its components and to help the public understand all the PACE benefits.

Interview with Rob Bernhardt, CEO of Passive House Canada

Passive House on an upward curve

Rob works to advance building energy efficiency. A certified Passive House consultant and the developer of several certified Passive House projects, Rob is familiar with the economic and social advantages of high-performance buildings.

What is a Passive House Building and how does it work in Canada??

Passive House (Passivhaus) is considered to be the most rigorous voluntary energy-based standard in the design and construction industry today. They consume up to 90 percent less heating and cooling energy than conventional buildings. It is recognized internationally as the proven best way to build for comfort, affordability and energy efficiency of residential, institutional and commercial buildings, through all stages of design, construction, and livability.

The Passive House approach works because it’s a pragmatic combination of applied building science and economics. Designs and components vary to suit the local climate, enabling comparable levels of comfort, hygiene and performance in varied climates.  All Passive House buildings are designed using detailed energy modelling software, which allows the design team modify the architecture and specify the combination of insulation and components required to bring a building to the required performance standard in their own climate zone.

Why was Passive House Canada created?

Passive House Canada was incorporated by practitioners wanting to transform Canada’s buildings, making the multiple benefits of high performance buildings the norm. We started with few high-performance resources in Canada but have ramped up resources through educational services, events, advocacy and communications over the few years we have existed.  With time Canada’s policy, regulatory and incentive environment has become very support of Passive House as the level of building efficiency required for Canada to meet its Paris commitments become apparent.   

Why do you think the movement has been successful so far?

The successes that we have experienced are directly attributable to the dedication of industry professionals and elected officials who are passionate about sustainability.

Their momentum and enthusiasm has given us the privilege of assisting all levels of government in building policy development, the ability to support the growth of a national membership of over 1,100 members (in eight provinces and two territories) and deliver hundreds of courses, with over 5,000 registrations across Canada. 

This appetite for a higher standard of building bridged partnerships resulting in the launch of Canada’s first Zero Emissions Building Exchange in Vancouver and a successful inaugural national conference with over 350 delegates attending each year.

Why do you think people are making the change to Passive House buildings?

While the initial driver is, of course, environmental and the common goal to mitigate climate change, this alone does not catalyze market transformation, represent the motivation of everyone involved, or simplify the process of managing change. 

For many, the primary motivation is a desire to have better buildings. The unparalleled comfort, health, durability, resilience and affordability of buildings offering Passive House levels of performance are reason enough to make the choice. Affordable housing advocates may focus on the reduced costs of ownership, operation and utility costs to tenants, homeowners on the comfort, while absolutely everyone craves a constant supply of filtered fresh outdoor air.

Some professionals, developers and trades are attracted by the quality of work such buildings entail and enjoy the pride of workmanship. Others know high performance building regulations are coming and are looking for a competitive advantage, a market differentiator, in establishing their company brand. Increasingly, some are simply responding to the developing market for Passive House buildings and their components, which they know will grow.

Why do you feel Canada is winning in the change to Passive House building?

During our 2018 conference, the federal government took the opportunity to say it is probable that the final tier of the Net Zero Energy Ready Code will be very close to Passive House standards. This is a significant win for Canada, and with recent budget support we can see our national buildings strategy taking root across cities and provinces, nationwide.

We know our role at PHC will change and likely diminish as building codes and standards approach Passive House performance levels and we can’t think of a better reason to become redundant.

Taking a “mission first” approach enables more rapid progress, facilitating collaboration with industry and consumers in addition to government. We can best achieve our mission by collaborating with aligned groups and individuals, and we invite you to do the same.