What is PACE?
PACE (Property Assessed Clean Energy) is a funding mechanism for financing energy efficiency and renewable energy projects for buildings which uses the energy savings to fund the project. PACE funding allows for the possibility of reduced energy costs and increased property values as well as the production of positive cash flow. If you are a building owner interested in making energy improvements, you can get started with PACE funding with the help of a regional Port Authority that has a bond fund and an energy services company that can audit the energy opportunities of the building and reliably identify the energy savings potential.
Energy Optimizers, USA, in Tipp City, OH, is currently working with the Dayton-Montgomery County Port Authority to initiate PACE projects in the mid-Ohio region.
What Kinds of Projects Qualify for PACE?
PACE is used with major energy projects involving at least $100,000 in costs, with no maximum. Some examples include: lighting upgrades, solar panel installation, heating and cooling upgrades, insulation, and more.
PACE funding requires an escrowed reserve of approximately 10%. Current (June 2015) interest rates are approximately 5.5% over a 15-year period. Payments are collected with real estate taxes twice a year by the regional collecting authority.
What Are the Benefits of PACE?
Because the project is externally funded by the Port Authority, no capital investment is required from the owner, nor does it impact your other loan-to-value ratios, as the funding is not a conventional loan, but a voluntary assessment, so the process is off-books. In fact, identified energy and maintenance savings will be used by the owner to pay for the assessment over an extended period (likely 15 years). In some cases, the owner realizes a positive cash flow from the savings.
In addition, there are other ways to realize savings: the assessment is tied to the building, so it passes to the new owner in a sale, and the entire funding value, both principal, and interest, is tax deductible. If you have leasees, then you have even more opportunities for cost savings: in triple net leases, both the cost of the assessment and the utility savings will be shared by the tenants.
How Do We Get Started?
When initiating a PACE project with a customer, Energy Optimizers, USA will provide a detailed energy audit of the facility which will meet all the Port Authority requirements.
We then design and manage the retrofit or new energy project, ensuring all rebates and incentives are achieved, and commissions the completed project, with follow-up measurement and verification. EOU will then guarantee that all identified energy savings are achieved and work with the Port Authority to assist the owner in completing all requirements of the project.
Upon completion, we will provide news contacts and news releases so that the owner can take public advantage of his/her energy saving achievements.
Want to learn more? Call us at (937) 877-1919 today.