As we gear up for another legislative session in Virginia, we once again hope to introduce bills that could open up the state-regulated monopoly of the energy industry. I took a step back and thought what are some things we can do to open the advanced energy market without having to lobby in Richmond? Well there are a ton of great ideas (and please don’t hesitate to send your ideas our way), but one that stands out at the moment is Property Assessed Clean Energy or PACE financing.
What is Property Assessed Clean Energy Financing?
PACE is actually a really simple financing concept to understand, and can be a major driver to more widespread advanced energy adoption here in Virginia and nation-wide. Long story short, PACE financing provides an economic vehicle to pay for solar and other renewable energy systems.
Why hasn’t it been adopted here in Virginia yet? That’s a good question…perhaps people who have heard about it think it’s too good to be true, or more likely people, including government officials, have not been educated on the positive benefits that PACE financing can bring to individuals, businesses, and our local economy. You can learn even more about PACE financing in Virginia here.
In reality, PACE financing is a no-brainer for a property owner looking to add value to their property without up-front capital expenditures. Too good to be true? On the contrary it’s completely possible and has already been successfully implemented in several states, and it’s even legal here in VA. Imagine that!
So, how’s it work? It’s really quite simple; PACE is a way to finance energy efficient improvements and solar systems through a loan with the city, and you pay it back through your property tax bills over a 15-20 year time period.
You might be thinking…My business has good credit and I could get a loan, what’s so great about this loan?
A few things:
The loan is backed by the city (most likely through a municipal bond) so you know it’s legit.
As I mentioned above you don’t have to fork over any cash, or cut into the equity you have in your property as you might with other loans.
As you pay your property tax over the 20 year term, your utility bills are significantly reduced. In other words, the savings pay for the retrofit over time- and then some! This leaves you with a net gain -most people like cash flow net gains.
If/when you sell the property, the solar system (or energy upgrades) AND the tax liability will transfer to the new owner like an easement. I bet your property will sell quicker and for a higher price than a comparable one with no energy retrofits….Done and done!
There’s only one problem for commercial owners wanting to take advantage of this in Virginia; the PACE Program is still under development here. Also, unfortunately due to objections by the Federal Housing Finance Agency (FHFA) along with Fannie Mae and Freddie Mac, residential consumers cannot take advantage yet.
The good news is that with your help we can push PACE financing through here locally! Please sign the Loudoun County PACE Financing Petition to lend your support, and help advance energy efficiency and clean electricity in our beautiful commonwealth state.
Financial incentives like PACE provide another tool in the solar installer’s toolbelt, especially in markets that lack state incentives such as Virginia. Cheers to out of the box thinking, and putting more solar on the grid!