Property Assessed Clean Energy (PACE) programs can offer a no-upfront-cost option for financing PV systems. PACE financing allows those without conventional access to capital to invest in their own PV systems. In these programs, the cost of the efficiency improvement (in this case, adding a PV system), is covered by a loan through the city or county. The loan is amortized over 15 to 20 years, with the annual repayment added to your property tax. While your property tax bills will increase, your energy bills will decrease. If you sell your property, the property tax assessment transfers to the new property owner.
Residential PACE programs got off to a great start in several states, but they’ve since been stymied by the Federal Housing Finance Agency, which asserts that the PACE loans, which take precedence over pre-existing first mortgages, subordinate Fannie Mae and Freddie Mac interests in the property, transferring financial risk to those agencies without “adequate consumer protections.”
A few states have enacted legislation to address the problem. Congressional legislation to address the problem died at the end of the 112th (2011-2012) Congress and is expected to be introduced into the 113th Congress (2013-2014). It would “prevent Fannie Mae, Freddie Mac, and other federal residential and commercial mortgage lending regulators from adopting policies that contravene established state and local property assessed clean energy laws.” Until Congress acts, however, most PACE financing is on hold.
