The U.S. Department of Energy has just released “Commercial PACE: Updates from the Field & New Resources for Design and Implementation,” based on experiences in California, Connecticut, and Minnesota.

According to DOE,

The property-assessed clean energy (PACE) model is a new, innovative mechanism for financing energy efficiency and renewable energy improvements on private property—commercial or residential. PACE programs allow local governments, when authorized by state law, to fund energy improvements on commercial and residential properties.

The property owners that voluntarily choose to participate in a PACE program repay their improvement costs over a set time period—typically 10 to 20 years—through property assessments, which are secured by the property itself and paid as an addition to the owners’ property tax bills. Nonpayment generally results in the same set of repercussions as the failure to pay any other portion of a property tax bill.

A PACE assessment is a debt of property, meaning the debt is tied to the property as opposed to the property owner(s), so the repayment obligation transfers with property ownership. This eliminates a key disincentive to investing in energy improvements whereby property owners are hesitant to make property improvements if they think they may not stay in the property long enough for the resulting savings to cover the upfront costs.