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Property Assessed Clean Energy Loans: Finance Solar Panels and Energy Efficiency Projects With No Money Down

Updated on July 6, 2015

Property Assessed Clean Energy Loans Can Help Finance Green Retrofits for Homes

Property Assessed Clean Energy programs could be just the ticket to get you off of fossil fuels and into solar or wind renewable resources. So-called "PACE" programs are low-cost financing options that allow homeowners to purchase and install solar panels or wind turbines without any down payment. The loans are paid back through incremental increases in property tax bills over 20 years and are transferable to new owners should you sell your home before then.

For many people, PACE programs allow them to invest in renewable energy without the upfront costs. Unlike a solar lease program, you will own the equipment at the end of the loan. Whether you are thinking about a photovoltaic (PV) solar electric system or solar hot water, property assessed clean energy loans could help you minimize your out of pocket expenditure at the outset.

As of the date of this publication, the U.S. federal government is no longer considering legislation to enable property assessed clean energy loans on a national basis. For now, if you want a PACE loan, you'll have to see if your municipality offers the program.

And why would they do so? Perhaps its because, for every $1 you save in annual electricity costs, the value of your home goes up by $20. That means that if you cut out $500 from your utility bills, it's a $10,000 home equity bump! PACE raises property values because homes and buildings can become less expensive to heat and cool with renewable energy installations.

What is a PACE Program?

As discussed above, PACE is an acronym for Property Assessed Clean Energy, a low-cost renewable energy loan program funded by private markets, without the need for government subsidies or tax breaks.

Currently, enabling legislation for property assessed clean energy loan programs has been adopted in 24 states, plus the District of Columbia (CA, CO, FL, GA, IL, LA, MA, ME, MD, MI, MN, MO, NV, NH, NM, NY, NC, OH, OK, OR, TX, VT, VA, and WI).

Instead of spending money upfront, you can "fold the cost" of certain energy saving/clean energy improvements into your property tax assessments, spread out over 15-20 years. This helps homeowners address fears of being unable to come up with money to pay for energy efficient installations, and relieve them of worries of whether they will recoup their investment before selling their home in the future. Because PACE loans automatically transfer to new owners, the financing simply continues through the next owner.

Here's how it works:

  1. A local municipality selects a company that will administer its PACE program
  2. Municipal bonds are sold to fund the program
  3. You hire a company to evaluate your home for solar panels or other energy efficiency improvements and get a quote
  4. Take the quote to the PACE program administrator at your municipality and apply for PACE financing
  5. If your application is approved, the PACE program will directly pay the installer for the solar panels or energy improvements
  6. The cost of the improvements are paid off as part of the property tax bill, at a competitive interest rate, over 15-20 years

In short, PACE offers you a simple way to finance solar power systems or other energy efficiency retrofits.  People that have gone with PACE financing have noted that any increased property tax assessments are offset by energy savings of 25-35%.

PACE Loans: Green for Green!

What Can you Finance with a PACE Program?

PACE financing allows qualifying homeowners to spread the cost of energy improvements, which include solar panels, home wind energy systems, weather stripping, insulation, energy efficient boilers and cooling systems and new windows over the expected life of the improvements.

PACE programs will differ depending on your municipality. Details you will want to review include: (1) length of the assessment; (2) items that can be financed through the program; (3) penalties for missed or late payments (if any); (4) transferability to a new property owner; and (5) whether additional energy improvements can be added to the program in the future.

You may want to seek professional guidance before committing to a PACE program to help you avoid potential pitfalls unique to your property or location, in advance.

Are PACE loans the way to go?

If you do not have cash for energy improvements which can help you save money on your utility bills, then a PACE loan may be right for you. There are many benefits of PACE programs, both for individual property owners and the overall economy:

  • Local green jobs are created
  • Private capital is used to encourage energy improvements instead of tax breaks or government subsidies
  • Owners can save on utility bills, while enjoying increased property values
  • Because the programs are backed by the government you don't have to worry about getting scammed
  • The programs are voluntary instead of mandated by the government
  • Promotes individual energy securit
  • Reduces the need to build additional power plants
  • Cuts greenhouse gas emissions

© 2011 Stephanie Hicks


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    • MSantana profile image


      8 years ago from Madison Wisconsin

      I believe these ideas needs to be promoted. Thanks for doing that.

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      You are right about Fannie Mae and Freddie Mac loans. It is a big issue that the government should change, most definitely. PACE loans - as you point out - could be a real game changer! Thanks for the great comment, Steph

    • kenflip profile image


      8 years ago from NY NY

      PACE is a fantastic concept but there are a lot of problems with it also. It's been a little while since I've read up on the current legislation passing around but the biggest problem is that Fannie and Freddie are not accepting a PACE lien on property. So unless you own your home outright, or have a private lender, your mortgage has been resold to any govt agency, etc, etc... PACE may not work for you.

      It is actually a huge problem and something that our govt should address. PACE could be a real game changer.

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Hi K9, your comments always make me smile (so happy for people like you here at HubPages!) Regarding the property assessed clean energy loans, you are right that PACE is a great way to finance solar panels, etc. in a relatively pain-free, affordable manner. Appreciate your reading the hub as always! Best to you, Steph

    • K9keystrokes profile image

      India Arnold 

      8 years ago from Northern, California

      Steph, even as I am over here reading about Property Assessed Clean Energy Loans, your hub on Harry Potter Lego's has totally caught my eye! How fun does a Harry Potter read sound--very! Then add in lego's? My God Daughter would flip over these.

      Back to clean energy loans. The PACE program you mention is a super way to amortize your energy improvements over the life of your loan, like impounding everything; which I find brilliant. As always, a super high quality content hub. Up and awesome.

      Huge Hub Hugs!


    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks StillGreen - I feel the same way. These creative ways to finance solar panels and other renewable energy installments can really help a lot of people live green and clean.

    • StillGreen profile image


      8 years ago

      The PACE program definitely is something that interests me because I have always wanted to make my home more "green and clean" but didn't know if I could afford it!

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Thanks Audrey - I wrote about PACE loans on one of my blogs about a year ago when they were still relatively untested. Now, lots of municipalities are offering this easy financing option for solar and wind projects, which really helps people like you and me who live in areas rich in renewable resources. Hope your meeting goes well! Best, Steph

    • akirchner profile image

      Audrey Kirchner 

      8 years ago from Washington

      That's really great information as always, Steph - will have to ask the energy assessment fellow coming out next month more about all this! As I've said before too, we have so much wind out where we live I keep thinking there has to be something we can harness here!

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Hi Darski,

      That is so funny - I know that I posted a response to your comment last night.... oh well! So, what you need beyond a solar panel is an inverter that can be installed by an electrician. That converts the solar energy that is absorbed from direct current to alternating current, which is what we use in our homes. I've written an intro to solar hub a few years ago, but its probably time to update it! Best to you, Steph

    • stephhicks68 profile imageAUTHOR

      Stephanie Hicks 

      8 years ago from Bend, Oregon

      Hi Fay, that is fantastic! I hope you live in a place that offers the PACE loan programs. We do, and I'm researching it for our home!

    • profile image

      Fay Paxton 

      8 years ago

      Steph, you have no idea how timely this magnificent hub is. I've been investigating how to incorporate more energy efficient improvements into my home. Thanks so much for the information about PACE.

      up and very useful

    • Darlene Sabella profile image

      Darlene Sabella 

      8 years ago from Hello, my name is Toast and Jam, I live in the forest with my dog named Sam ...

      What a great hub my friend, it's so awesome. I just don't understand how this works? Okay I have a glassed in from porch, so let's say I put a solar panel just keep this room warm during the night time so I can grow herbs and things. How do you, or what do you plug in to create the room to become warm. This is hard to grasp for me, maybe you can write solar 101. I adore this hub and I adore you, rate this up up love & peace darski


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