Have you ever applied for a solar panel installation only to be denied?
Solar companies have tried to find the right loan to help homeowners go solar almost before solar energy came in the market. This task is far from simple since banks and traditional lending institutions want a perfect credit score, and too many homeowners lack this.
That’s where PACE comes along.
What is PACE?
Property Assessed Clean Energy (PACE) financing allows property owners to simply and efficiently finance energy efficiency, renewable energy, and water conservation upgrades to buildings. PACE can pay for items such as new heating and cooling systems, lighting improvements, solar panels, water pumps, and insulation for almost any property – homes, commercial, industrial, non-profit, and agricultural. Instead of borrowing based on credit you finance the project and upgrades through your property tax assessment.
More on how PACE helps you
Property owners across America use PACE because it saves them money and makes their buildings more valuable. Homeowners also use PACE to upgrade heating and air conditioning systems, and improve insulation and weather sealing. PACE pays for 100% of a project’s costs; lowers your electric, gas and water utility bills; stays with your property upon its sale; covers 100% of a home upgrade project; and results in a more comfortable home and improved indoor air quality. It also improves the environment.
Real estate owners choose PACE financing largely for the same reasons. PACE also covers 100% of their up front financing, including project development costs. It provides long-term funding and results in immediate benefit to cash flow; split incentives by passing payments to tenants; and a range of accounting treatments. PACE, in short, increases your property’s value and marketability
What’s PACE to do with solar power installation?
Solar power is a crucial product for many homeowners as it help generate electricity at a cheaper cost without pollution. In fact, solar installation benefits you by lowering your electricity bill to as much as 75%. But it is still costly to install.
PACE financing chops your bill by giving you a 20 year stretch that makes your payment and interest deductible convenient and less stressful. (Compare this to most financing companies that offer 3-7 years capped loans). Secondly, PACE focuses on your property-value rather than your credit-history.
Think of it like this: Home owners who are denied financing or PPA have to pay galloping and increasing rates for utility.
You enjoy the benefits of solar power.
How does PACE work?
States pass enabling laws that allow local governments to offer PACE financing to building owners. PACE is completely voluntary. Qualified PACE service providers help building owners select cost effective projects that make good business sense. One of these is solar panelling. PACE programs process applications, qualify projects and provide or arrange financing. An assessment or charge is added to the property’s tax roll once the funds are disbursed.
Can I use PACE for my home or business?
As of January 2016, if you live in Arkansas or California, you’re lucky. These are the only two states that have established PACE programs. Twenty-two other states are in the process of developing them.
Regarding your eligibility, almost any building is eligible for PACE financing. This includes homes, offices, hotels, restaurants, shopping centers and other retail properties such as warehouses and garages.
Projects that qualify for PACE financing include energy efficiency and energy generation improvements and, in some states, water conservation and hurricane hardening.
The Thrifty Gist
PACE benefits are three: The program saves money. It creates local jobs. It helps the environment.
Benefits to you include the following.
• PACE gives you 100% financing. There are no out-of-pocket costs
• PACE allows you to borrow up to 15% of property value
• PACE gives you flexible repayment terms that range from 5 to 25 years
• A PACE program may add value to your property
• PACE gives you rapid in-home approvals
• There is no prepayment penalty. You get free re-amortization
• The PACE balance may transfer to the new owner upon a sale
• The financed amount won’t appear on your credit report.
There’s reason why more than 85% of people install solar power with PACE.
The program is so important that it was named one of the top 20 “world-changing” ideas by Scientific American magazine