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.