ABCtech #94 15-SEP-17 Financing Energy Efficiency

ABCtech #94 15-SEP-17 Financing Energy Efficiency

We first heard of PACE at our Conference Banking on CleanTech Now! last spring. We were very impressed with the innovative option that Leigh Bond and Brian Scott have come up for financing the upgrade of homes to make them energy efficient.  Their presentation was taped and appears HERE. Is Alberta ready? – Editor

Climate Change Race – Use PACE by Leigh Bond and Brian Scott, PACE Alberta Co-op Ltd.

Property Assessed Clean Energy (PACE) is a program whose time has come.  The race to take action on climate change is upon us and most people will agree that we have limited time and limited resources to address the problem.  At the Paris Conference of the Parties (COP21) Canada was one of the signatories to a climate change action plan.  A PACE program is a piece of the puzzle in that action plan.

To minimize greenhouse gases, the solution is simple; stop burning things.  Stop burning coal in our power plants, gasoline in our cars and propane, heating oil and natural gas in our buildings.  It sounds simple, but to make that transition is requiring huge amounts of capital investment.  Most homeowners and building owners do not have the capital required.  At the same time, there are many investment companies that have amassed large sums of money and the investors in these funds have said they want the money invested in energy efficiency and green initiatives.

A PACE program channels that money to individual building owners so that they can do those upgrades.   The repayment is via, an assessment on the tax bill for the property, much like a local improvement charge for new sidewalks, street lights, or back lane paving.

There are really two barriers to energy efficiency upgrades in buildings.  One barrier is the large sum required up front as we have outlined above.  The second barrier is what we call transferability.  If you do an upgrade on your building and then wish to sell the building you frequently will not get your investment back.  Market recognition of an energy efficient building is not currently part of the mindset of most purchasers.  By putting the energy upgrade on the tax bill, the owner gets the benefit of lower energy costs while occupying the building but also pays the associated cost on the tax bill.  If building is sold, the new owner gets the benefit of lower energy costs and continues to pay the tax bill.  The obligation gets transferred from one owner to the next.

PACE adoption is well underway in the US

The first PACE program was in 2008 in California introduced by Cisco Devries.  To date over four billion dollars has been invested in over 150,000 projects in 36 states in the U.S.  Growth is exponential and forecasts show that not just millions, not billions, but trillions of dollars will be invested in energy efficiency upgrades via PACE programs in the US over the next 10 years.

PACE financing is not a “loan”

There have been three PACE-like programs attempted in Canada.  All of them had very limited success – attributed to their execution.  First, the financing was called a “loan” and while technically PACE financing is a loan, the word “loan” conjures up a person borrowing money who is then expected to repay it when the building is sold. In reality, the financing is an investment that is tied to the facility. The transferability issue was not adequately addressed in the programs that were attempted.  In another case the energy efficiency upgrades were simply limited to solar PV.  Solar PV in the U.S. represents only 34% of all the dollars invested in energy efficiency upgrades.  Alberta should learn from the experience of others.

Adopting PACE-financing pan-Alberta

Over the last two years, Mayors, Councilors, Legislators, and other officials in Alberta have been introduced to the concept of property assessed clean energy as originally developed by Cisco Devries.   Legislative reviews are now underway to consider changes to the Municipal Government Act (likely Part 10, Division 7, clauses 382 and 384) – allowing all municipalities in Alberta to implement a Property Assessed Clean Energy program.   FOR MORE