Property Assessed Clean Energy (commonly referred to as PACE) is an innovative funding mechanism designed to help property owners invest in energy efficiency and renewable energy for commercial and industrial buildings.
Essentially, PACE creates a system by which local governments (or an acceptable third-party authority) can make loans to property owners, and require repayment of those loans through a “special assessment” on the building’s property taxes. Check out our blog post for examples and a video on how PACE works.
PACE programs are being launched all over the state but are currently only available in the City of Ann Arbor, the City of Southgate and Ingham County. The Regional Energy Office is in the process of creating an authorized authority that can issue bonds. Once this process is complete we will be able to assist southeast Michigan communities in developing PACE programs in their communities, starting with a few pilot cities in 2013.
PACE is a fairly simple idea, but it could be a game changer in making energy efficiency and renewable energy attractive investments. Its unique financing enables property owners to undertake longer-term energy projects that could otherwise be unattractive because of their longer payback time. Under PACE, the building owner does not have to worry about what happens if they leave or sell the building, because the assessment is attached to the building, not the individual.