How do PACE Energy Loans Work?

August 20, 2020

If you're looking to invest in solar energy for your property but can't afford the upfront costs of the installation process, Property Assessed Clean Energy (PACE) loans are an innovative financing option.

HowtoFinance-PACELoansPACE loans allow lenders to work with the government to offer loans to homeowners and businesses for energy-efficient products and services. The standout characteristic of this financing plan is that the assessment is attached to the property instead of the homeowner. 

This means, for example, that a recipient of a PACE loan has the option to move homes without carrying over the debt used to finance their solar panel system. The addition of solar panels to your home or property can also prove to be an enticing opportunity for homebuyers interested in renewable energy.

This key distinction means PACE loans are typically safer for investors, leading to financing options available at lower rates. 

PACE Pros and Cons

Pros

  • Spreads repayment over many years and requires no upfront payment, removing the requirement that the debt be paid at sale or refinance
  • Can lead to low interest rates because of the high security of loan repayments attached to the property tax bill
  • Allows municipalities to encourage energy efficiency and renewable energy without putting general funds at risk

Cons

  • Available only to property owners
  • Complicated structures that could lead to potential confusion, particularly on behalf of the loan recipient

Where is PACE Now?

PACE legislation only exists in about 30 states, with a handful of other states currently considering it. However, only three of these states have residential PACE financing options available (California, Florida, and Missouri) while the rest are restricted to only commercial projects.

If you’re interested in financing your solar project through various financing options, make sure you’ve done your research ahead of time and understand the details before you sign anything. Speak with your solar representative if you’ve got additional questions, and they should be able to lend a guiding hand. 

For more on these points and other suggestions about financing your solar energy, check out our eBook “How to Finance  Solar” here.


Download our eBook, How to Finance Your Solar, to learn more about the financing options available to you before kicking-off your next home improvement project! eBook_CTA_HowtoFinanceSolar

 

 

Categories: Financial