Stories of successful PACE projects are appearing in many communities across the U.S.
(Michael D. Braun Photography Inc.)
In Minnesota, the latest is an account of the experience of Rick Murphy, the owner of Grandview Tire and Auto in Edina, who in cooperation with local solar installer Bradley Hanson, the Edina city government, and PACE, installed a solar system that is anticipated to save him more than $70,000 over the 25-year life of the system. National Journal calls PACE “a program that’s changing how home and business owners finance clean-energy projects.”
National Journal selected the Edina PACE project as our leading innovator in energy because the project offers a repeatable model for ordinary business owners to invest in renewable energy and energy efficiency not to soothe their green consciences, but because it saves them money. While some green-minded consumers can afford to pay a premium for clean energy that reduces the risk of global warming, most homeowners and businesses are unlikely to change until it benefits their bottom line. The Edina project shows a way to make that happen through a process that stimulates local communities both by creating jobs in installing energy-efficient and renewable infrastructure and by freeing up capital as small businesses enjoy lower utility bills.
The National Journal reports “Already, Murphy’s model is spurring followers. Inspired by Grandview’s solar project, an Edina restaurant, Salut Bar Américain, is applying for a PACE loan for energy-efficient retrofits. Two other Minnesota cities, Eden Prairie and Northfield, have added PACE to their city-council agendas this summer.”
In Texas, Governor Rick Perry has signed into law Senate Bill 385, that updates the 2009 legislation that established PACE, to facilitate the implementation of local PACE programs and extend them to cover water conservation as well as energy conservation and renewable projects. (Similar legislation is also currently being considered by the NJ Legislature under S2632, a bill sponsored by Senator Bob Smith.) For further details, see Austin Business Journal, June 12, 2013.
The New York Times just picked up both of these stories and more several more in its Business section on Energy & the Environment: http://www.nytimes.com/2013/06/22/business/energy-environment/tax-programs-to-finance-clean-energy-catch-on.html?_r=0. It also carried a modestly positive quote from the FHFA, which has been the principal roadblock to residential PACE:
“We’re not averse to energy retrofitting,” Alfred M. Pollard, the F.H.F.A. general counsel, said in an interview, adding that the agency remained concerned with how the loans would be repaid.
And in Washington, DC, Examiner.com reported:
A multifamily building at 400 M Street in southeast Washington, D.C. recently financed various energy-related improvements with a new commercial financing approach that does not increase the building owner’s debt, the D.C. Department of Environment announced yesterday.
It was “the nation’s first PACE-financed affordable housing endeavor,” said D.C. Housing Authority Executive Director Adrianne Todman in a prepared statement released by the Department of Environment. It was also the first completed PACE financing for the D.C. PACE program, the statement said.
In Connecticut, the C-PACE program already has 150 projects in the pipeline, and more than one-third of the towns in the state have signed up to participate in the program, which is administered by Connecticut’s Clean Energy Finance and Investment Authority (CEFIA), the state’s “green bank.” According to Alexandra Lieberman, Senior Manager of Clean Energy Finance for CEFIA:
50% of C-PACE applications are for energy efficiency upgrades; 36% for renewable energy systems (mostly solar); and 15% both. And 50% of C-PACE applications are from office buildings, with the balance split between industrial, multi-family, retails, and non-profit.
According to Lieberman, the key features of C-PACE are:
- Commercial, Industrial, and Multi-family only
- Avoids Fannie and Freddie ruling
- Can combine with utilities on LREC/ZREC and incentives
- Requires consent of mortgage lender
- Buy-in and support of mortgage holders
- Creates conversations with potential capital providers
- Requires SIR > 1
- “Savings-to-Investment Ratio”
- Investment (amount financed) includes project capital cost, energy audit or renewable energy feasibility cost, M&V cost, financing cost, any other measures required for energy improvements (eg roof or structural repair)
- Statewide, opt-in program
- Empowers CEFIA as administrator
- Flexibility to develop pipeline and source partners
- Bonding authority (potential next step)
- Enables municipalities to opt-in
(Source: “C-PACE: A financing tool for building owners,” ADVANCED ENERGY RETROFIT FINANCING SOLUTIONS Wednesday, June 12th, Energy Efficient Buildings Hub The Navy Yard; 4747 South Broad Street, Building 101, 3rd Floor – See more at: http://www.eebhub.org/about-eebhub/event-presentations/finance-and-real-estate-platform-launch/#sthash.rwPWt63f.dpuf.)