One of the most innovative projects in solar financing over recent years was the Property Assessed Clean Energy program introduced in over two dozen states and Washington, D.C. The PACE program was designed to allow municipal governments to help finance investment in retrofitting properties to incorporate renewable energy like solar panels and HVAC upgrades by releasing municipal bonds to help pay for the loans.
In essence, the PACE program provides solar financing by selling municipal bonds to create loans that are offered to both residential and commercial homeowners to add renewable and efficient energy technology to the properties. These loans are repaid through assessed liens added to the property taxes of the home or business for the next 20 years, which are in turn offset by the lower energy costs resulting from the upgrades and often leaving the property owner with a net gain each year. Additionally, PACE loans are attached to the properties rather than the individual owners, meaning that they are easily transferred when a property is sold.
The PACE loans were an important source of financing for energy efficient construction, and had the potential to create an enormous amount of economic activity and jobs. Unfortunately a past tense is required in that description, since both Fannie Mae and Freddy Mac were persuaded by the Federal Housing Finance Agency to discontinue backing mortgages with PACE loans attached. That case is currently undergoing litigation, with a recent victory for PACE proponents this past month, but has yet to be resolved. If the ruling is overturned the program offers to be one of the most inventive and important sources of financing for anyone seeking to install solar panels or other renewable energy technology on their home or business, period.