Property Assessed Clean Energy Financing
| Program Type | Municipal loan program |
|---|---|
| Technologies | Locally determined, but the state recommends photovoltaics, geothermal heat pumps, fuel cells, and high-efficiency HVAC systems, insulation, and windows |
| Amount | Usually a minimum of $5,000 |
| Required Documentation | Varies. Usually an application, energy audit, invoices of work |
| Official Web Site | San Francisco GreenFinanceSF: https://greenfinancesf.org/systems/energy Berkeley FIRST: http://www.ci.berkeley.ca.us/ContentDisplay.aspx?id=26580 City of Palm Desert Energy Independence Program: http://www.cityofpalmdesert.org/Index.aspx?page=484 City of Yucaipa Energy Independence Program: http://www.yucaipa.org/cityPrograms/EIP/eip.php Sonoma County Energy Independence Program: http://www.sonomacountyenergy.org/ Placer County mPower Placer: http://www.mpowerplacer.org/learn.html |
In California, the state oversees a municipal loan program called Property Assessed Clean Energy Financing, where cities can loan homeowners money to make efficiency improvements to their properties. Homeowners who receive the loan pay it back through their property taxes, typically over a period of 20 years, in the form of an annual lien assessed against the property—it’s not as scary as it sounds; “lien” just means “tax obligation.”
Interest is calculated at a fixed rate at the time of the loan, and borrowers are allowed to deduct the interest on their income taxes in the same way homeowners can deduct the interest on a home-equity line of credit. Furthermore, the loan is technically lent to the property itself, so if the property is sold, the payback cost is transferred to the buyer.
The purpose of the PACE program is to defray the cost of making energy improvements to properties, and to encourage property owners to do so. The California Energy Commission oversees the program, but it’s up to municipalities to implement it—not all cities in California participate. Many do, however.
San Francisco is one of the participants, and property owners can seek a loan by applying to be a part of a “tax district” that allows the city to recover the cost of the loan through a special line item on the property taxes. The basic guideline is that the projects funded by financing make the property 20 percent more energy-efficient, and the city wants property owners to start with the basics—insulation, windows, and so forth. Solar water-heating, photovoltaics, and almost any other renewable-energy-generating equipment is eligible for financing, but for more advanced projects like those, the city requires an energy audit first, and may require more basic efficiency improvements to the property to accompany the equipment. Such improvements can, of course, be covered by the loan.
The city of Palm Desert, the city of Yuciapa, Sonoma County, Placer County, and the city of Berkeley all offer similar city-issued loans for energy-efficiency improvements. In most cases, the interest rate is low (7–10 percent) and no down-payment is required. For property owners who want to upgrade efficiency and install solar power equipment in their homes but lack the cash-on-hand to make it happen, PACE programs offer an excellent option.
