Broad coalition applauds recommendations for statewide Property Assessed Clean Energy (PACE) financing programs for homes and commercial buildings to meet Gov. Cuomo’s energy-climate goals
PLEASANTVILLE, N.Y., April 27 – Today, New York State announced its support for residential Property Assessed Clean Energy (PACE), recommendations to strengthen the State’s existing Energy Improvement Corporation (EIC) administered commercial PACE program, and support for a new, New York City Energy Efficiency Corporation (NYCEEC) administered C-PACE program. A broad coalition of energy and environmental groups and businesses today applauded the New York State Research and Development Authority (NYSERDA) and the New York Department of Public Service (DPS) for their support of these key policy tools that will help to meet New York Gov. Andrew Cuomo’s ambitious energy efficiency target for the state. In less than a decade, PACE, a free-market financing tool facilitated by a unique public-private partnership, has become one of the most successful drivers of energy-efficiency and renewable-energy improvements to homes and other buildings in U.S. history.
In a new white paper titled “New Efficiency: New York,” NYSERDA and DPS recommended that the state “promote statewide availability of Residential PACE financing with appropriate necessary consumer protections and regulation of PACE administrators in New York.” The white paper notes that “NYSERDA and EIC recently worked with the legislature to amend New York’s PACE enabling legislation to make the State’s C-PACE market more accessible to property owners, third-party capital providers, and clean energy developers, which should help the C-PACE market achieve scale more quickly.”read more
A new study by Berkeley Lab found that residential Property Assessed Clean Energy (R-PACE) programs increased deployment of residential solar photovoltaic (PV) systems in California, raising it by about 7-12% in cities that adopt these programs. R-PACE is a financing mechanism that uses a voluntary property tax assessment, paid off over time, to facilitate energy improvements and, in some jurisdictions, water and resilience measures.
While previous studies demonstrated that early, regional R-PACE programs increased solar PV deployment, this new analysis — Assessing the PACE of California residential solar deployment — is the first to demonstrate these impacts from the large, statewide R-PACE programs dominating the California market today, which engage private capital to fund the upfront costs of the improvements.
Berkeley Lab estimated the impacts using econometric techniques on two samples:
- Large cities only, allowing annual demographic and economic data as control variables
- All California cities, without these annual data
Analysis of both samples controls for several factors other than R-PACE that would be expected to drive solar PV deployment.
Berkeley Lab infers that on average, cities with R-PACE programs were associated with greater solar PV deployment in our study period (2010-2015). In the large cities sample, solar PV deployment in jurisdictions with R-PACE programs was higher by 1.1 watts per owner-occupied household per month, or 12%. Across all cities, solar PV deployment in jurisdictions with R-PACE programs was higher by 0.6 watts per owner-occupied household per month, or 7%. The large cities results are statistically significant at conventional levels; the all-cities results are not.
The estimates imply that the majority of solar PV deployment financed by R-PACE programs would likely not have occurred in their absence. Results suggest that R-PACE programs have increased PV deployment in California even in relatively recent years, as R-PACE programs have grown in market share and as alternate approaches for financing solar PV have developed.
The U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy-Building Technologies Office supported this research.
During the PACENation Summit in Denver, keynote speaker Abigail Hopper, president & CEO of SEIA, explored the PACE program’s potential to open new markets, key means to increase solar usage and the tariffs on imported solar panels.
Day two of the PACENation Summit kicked off in Denver on Tuesday with a keynote address from Abigail Hopper, president & CEO of SEIA, the national trade association for the solar industry. Hopper spoke on the present and future of the solar market before shifting her focus to ways that the solar industry and PACE have worked together, and how they can grow and enhance the relationship between the two industries in the future.
It has been a turbulent year for the solar industry. The current White House is more inclined to support traditional forms of energy, a position made abundantly clear when the Trump Administration announced a 30 percent tariff on solar imports in January of this year. Solar installations fell sharply in 2017, although a hefty portion of that can be attributed to the anticipation of an expiring tax credit that accelerated installation for much of 2016. Hopper also cited a “playbook on how to undermine solar” for the opponents of the solar industry to follow when engaging with state and local governments, which has arisen over the last couple of years. This is to be expected. As solar is beginning to eat into the market share of traditional energy companies, push-back was inevitable.read more
PACENation welcomes new DBRS report showing “strong performance with very low delinquency levels.”
Today, credit rating agency DBRS released the first comprehensive analysis of residential PACE (R-PACE) delinquency rates that combines data across multiple years and PACE providers. Using data on R-PACE assessments over four tax years, the analysis found lower delinquency rates compared to all properties and single-family homes in California.
DBRS rates R-PACE asset-backed securitization transactions. The agency remarked that their analysis of delinquency rates showed “strong performance with very low delinquency levels,” and “consistent performance and very low volatility across tax years.” The analysis highlights the following:
- The limited performance history shows strong performance with very low delinquency levels around 2% to 4% at the peak, declining to less than 1% within 12 months;
- PACE delinquency metrics are lower than general aggregate property tax and single-family residential only property tax delinquency levels. PACE also shows consistent performance and very low volatility across tax years; and
- Healthier performance relative to all residential tax payors may reflect self-selection of PACE homeowners to improve their properties.
PACENation welcomes the additional clarity this report brings to this important discussion. This data provides further confirmation that R-PACE remains a consistent and reliable way for homeowners to fund energy efficiency, renewable energy and resiliency upgrades to their properties. PACENation’s Executive Director David Gabrielson said “This report shows that PACE is a great option for homeowners who choose to make their homes more efficient, safer, and more comfortable – as over 180,000 homeowners already have.”read more
Last week, the Federal Housing Administration (FHA) announced it will stop insuring new mortgages on homes with property assessed clean energy (PACE) loans. As to what motivated its decision—according to its letter to the U.S. Department of Housing and Urban Development—the FHA is “concerned with the lack of consumer protections associated with the origination of the PACE assessment, which are far less comprehensive than that of traditional mortgage financing products.” This announcement directly contradicts guidance issued by the FHA in 2016.
Rocky Mountain Institute feels this decision is misguided for three key reasons.
- The FHA overstates the risk of PACE to taxpayers while failing to acknowledge or account for the significant default risk that the excessive energy expenditures of inefficient homes can create for a homeowner.
- This will inhibit homeowners from making valuable home improvements, while curbing PACE’s job-creation potential in the construction and renovation industry.
- It undermines existing state-level consumer-protection standards that are in place and federal standards that are in development, and may in fact guide homeowners toward more risky financing solutions, such as high-interest rate credit cards, that lack such standards.
U.S. Department of Housing and Urban Development Announces The Federal Housing Administration Will Cease Insuring Mortgages On Homes With PACE Assessments
PACENation is dismayed to learn that HUD has abruptly reversed FHA’s PACE policy, which was put into effect by the Obama Administration in 2016, and will no longer insure mortgages for homes with Property Assessed Clean Energy (PACE) assessments. The new guidance is set to go into effect on January 6, 2018.
PACENation finds it disappointing that HUD has made a determination that will eliminate one of the principal benefits of PACE, which is transferability of the PACE assessment upon resale, for homes that have used FHA financing. It is well documented that PACE is a successful tool for helping homeowners make energy efficiency, renewable energy and water conservation improvements that save money and make their homes safer and more comfortable to live in.
The mortgagee letter released by HUD yesterday names two reasons for the policy change: concern about losses to FHA’s Mutual Mortgage Insurance Fund, and concern with the lack of consumer protections related to PACE.read more
Arlington County will pioneer Virginia’s first Commercial-Property Assessed Clean Energy (C-PACE) program—a public-private partnership to provide affordable, long-term financing for projects to improve the energy or water efficiency of commercial buildings in the county.
Under C-PACE, owners of existing buildings will be able to finance up to 100 percent of the cost of efficiency-enhancing projects, including renewable energy projects, for up to 25 years. Commercial property developers can use the program to finance up to 20 percent of the total construction cost of a new building, provided the building is designed to exceed energy efficiency standards. Thirty-three states and the District of Columbia currently allow PACE financing programs.read more
Adam Hasner, who lead Florida’s 2010 PACE legislation as the Republican Leader of the Florida House of Representatives has written a strong and thoughtful op-ed piece in the Sun Sentinel that is a direct answer to critics of PACE.
David Gabrielson, PACENation’s Executive Director, notes, “We continue to see strong Republican support for PACE, because it’s a state and local government initiative, creates local jobs, unlocks private capital, and is voluntary — giving property owners control without impacting other taxpayers.” Gabrielson went on to say that “PACE is uniquely positioned to help bring private capital to rebuild hurricane ravaged homes. Bolstered consumer protections at the state level, led by industry and recent state legislation (see California’s AB 1284 and SB 242) will help ensure that homeowners receive all the benefits from PACE financing”.
We continue to see strong Republican support for PACE — 14 Republican Governors have signed PACE bills into law — as it is state and local led, creates domestic jobs, unlocks private capital, and requires no taxes or subsidies.read more