PACE (property assessed clean energy) financing is an initiative created by the U.S. Department of Energy to finance improvements on private properties for renewable energy improvements. Simply put, it helps private homeowners finance improvements which would not otherwise be affordable in the areas of energy efficiency. The basics of PACE finance are rather simple and many Americans can easily get on board.
PACE Financing works differently from state-to-state, but the crux of it remains largely the same. Some states will also cover improvements in regard to protecting against natural disasters and saving water. The overriding goal of PACE Financing is to lower the average American’s carbon footprint and ensure the country leads the way in the fight against climate change.
#1: How Does PACE Work?
The application of PACE can vary throughout different parts of the country because PACE programs are operated by different authorities depending on where you are, however, they all have the same goal – to provide financial relief to private homeowners who want to make their homes more energy efficient.
Property owners can use PACE financing to make the upgrades to their homes and then repay the amount of money financed over time. It is a fantastic alternative to a bank loan and is backed by the government. In many cases, the money saved through making a home more energy efficient can completely offset the cost of the upgrades and repayments.
#2: How is Money Provided?
PACE financing works largely in the same way as traditional secured loans. The finance provided will be secured against the property where improvements are being made, and whoever owns the property is responsible for making the repayments in full and on time.
If you sell your home or property, the PACE finance passes over to the new owner who then becomes responsible for it. PACE financing is listed on property taxes and your obligations in relation to the loan are extinguished when your property passes to its new owner.
#3: Examples of PACE-Approved Improvements
There are a number of home improvements which fall under PACE financing. Although it varies from state-to-state, these are all generally approved –
- Solar panels are fully covered under PACE financing – the cost of installation and leasing – and these are the most popular type of PACE-financed improvement.
- Insulation falls under PACE and this is especially popular given that many pre-1960s homes do not come with it as standard.
- Lighting improvements, such as the addition of LED lighting, can massively cut energy costs as they use substantially less energy than incandescent lighting.
- Climate control technologies such as air conditioners and heat pumps.
There are many other home improvements which fall under the remit of PACE financing and it is worth checking with your local PACE authority to find out exactly what type of home improvements you could have covered.
PACE financing is an innovative government-backed programme which aims to provide many Americans with the chance to make significant home improvements which will improve its energy efficiency and cut bills significantly.
