The Missouri Clean Energy District offers a wide variety of project financing programs with forms and structures designed to address a range of market needs. But its’ premier financing mechanism is the eponymous PACE program:
Property Assessed Clean Energy – PACE – is a financing tool that allows property owners to borrow money for renewable energy and energy efficiency property improvements with no upfront cost.
The Concept:
PACE is a simple and effective way to finance energy efficiency and renewable energy upgrades to buildings. PACE can pay for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more for almost any property – homes, commercial, industrial, and agricultural.
Added Value:
Property owners across the U.S. are using PACE because it saves them money and makes their buildings more valuable. PACE pays for 100% of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing stays with the building upon sale and is easy to share with tenants. State and local governments sponsor PACE financing to create jobs, promote economic development, and protect the environment.
The cost of the energy saving improvement is then repaid through an assessment on the owner’s annual property tax bill. Assessments are tied by a lien to the specific property. If the property is later sold, the assessment and lien stay with the property and become the obligation of the new owner, but the cost-saving benefits of the energy improvements also transfer to the new owner.
Properly designed energy saving projects will allow property owners to save more on yearly energy costs than their property tax increase. In plain terms, PACE financing can help property owners achieve a net positive cash flow or economic benefit.
PACE was named one of the top 20 “world-changing” ideas by Scientific American magazine
The Challenge
Nearly half the energy we consume, and three quarters of the electricity we generate in the United States is used to heat, cool, light, and otherwise operate our buildings. Most of this energy is created by burning fossil fuel, so reducing its consumption in a meaningful way will depend on reducing energy use in buildings. A number of barriers have thus far limited wide scale adoption of energy efficiency and renewable energy measures.
PACE is the Solution
PACE overcomes challenges that have hindered adoption of energy efficiency and related projects in our nation’s buildings. PACE financing solves the upfront cost barrier by providing 100% financing for project costs. Long term repayment of up to 20 years makes longer payback projects immediately cash flow positive and buildings more valuable. For contractors, PACE makes it easier to close a larger sale.
