Property assessed clean energy
By Cody Hooven
Cities and other local governments across the country are taking the lead in fighting climate change, and are discovering ways to do this while also creating jobs and saving people money on utility bills. Property Assessed Clean Energy (PACE) is a proven mechanism to help local governments meet greenhouse gas emissions reduction targets while boosting the local economy – all at no cost to public budgets.
PACE enables property owners to make energy, water, and efficiency improvements and to pay for them over time as a new line item on their property tax bill. This approach makes it easier for property owners to install the most efficient technologies. This is particularly important because a large percentage of expensive household systems (like water heaters and heating and cooling systems) are replaced when they break. Many homeowners opt for the least-cost replacement option because of the initial price tag, when a higher up-front investment in a more efficient technology can save money and reduce emissions over the product’s lifetime.
This program also has a track record of creating local jobs by spurring demand for contractor services. PACE financing payments may have tax benefits, and many homeowners see immediate savings on energy and water bills by investing in efficiency or renewable energy upgrades.
Homeowners nationwide have financed $3.3 billion in energy and efficiency renovations through PACE, creating more than 29,000 clean-energy jobs that cannot be automated or outsourced. Improvements financed through the residential PACE market leader alone are reducing customers’ water and electric bills by more than $3.4 billion while avoiding more than 3 million tons of CO2 emissions.
San Diego’s Success With PACE
The City of San Diego has an ambitious Climate Action Plan, whereby the city aims to eliminate half of all greenhouse gas emissions and source all electricity from renewable generation by 2035. Residential PACE is making a significant contribution toward these goals. More than 2,000 homes in the city now have PACE-financed solar panels, setting in place close to $100 million in energy bill savings over the life of the systems. Together with the PACE-financed energy efficiency improvements to San Diego homes, these projects will reduce over 100,000 tons of GHG emissions and reduce energy use by more than 400 million kWh. We’ve seen a 16% decrease in electricity use in our residential sector between 2010 and 2015, and PACE is a key tool supporting this progress.
A Public/Private Partnership
Because of the link to property taxes, PACE financing is a public-private partnership. For property owners to be able to take advantage of PACE, legislative action is needed at the state level, and local cities and counties must opt in. The City of San Diego has welcomed and enabled PACE, as have most cities and counties across the state, because we’ve seen the model’s success and we recognize its broad value in supporting our city’s goals. And PACE features consumer protections, like post-funding investigative and dispute resolution support, that go well beyond what other home improvement financing products and providers offer.
Nineteen states have launched PACE programs for commercial buildings, as shown on the map at PACENation. Residential PACE is available to homeowners in California, Florida and Missouri, and several other states are considering adding the financing option.
As the fight against climate change shifts increasingly to the level of local government, PACE is a powerful tool to contribute to these efforts. Add to that PACE’s role in creating local jobs, and it’s easy to understand why so many local government leaders are eager to bring this tool to their communities.
Cody Hooven is the Chief Sustainability Officer for San Diego, the 8th largest city in the country. Cody emphasizes economic development within the context of climate resilience and sustainable communities, and works to engage business in win-win solutions for sustainability. Cody chairs the San Diego Regional Climate Collaborative.