PACE (Property Assessed Clean Energy) Green Loans

Green loans are designed to provide funding for environmentally friendly projects. The Property Assessed Clear Energy green loans, or PACE loans, provide home owners and businesses with the necessary funding to install solar panels or other environmentally friendly improvements to the property. PACE loans are funded using property taxes. Only some states have legislation that allow PACE loans to exist, but this may change as solar energy becomes a more widespread resource of alternative power.

Why PACE Green Loans Are Necessary

With the rising energy costs, and increased environmental awareness, solar panels are becoming more popula. However, solar panels are expensive to install, and the home power grid usually has to be modified in order to accept power from the solar panels. So, while solar panels can save power on the long run, the initial start-up costs are expensive and discourage home owners from making the initial investments.

PACE green loans were designed to address this problem. The loans provide the funds necessary to handle the start-up costs, allowing property owners to save money on the long run. PACE green loans can be used for other environmentally friendly purposes including, installing more energy-efficient windows, adding a wind-based power generator, setting up condensation-based water reservoirs, etc.

How PACE Green Loans Work

PACE green loans are authorized on the state level and managed by municipal governments. The state governments pass the laws that allow municipalities to create PACE green loan financing districts. Then, they issue bonds. This can include residential, business and industrial properties. The bonds are then used to finance the actual loans.

PACE loans are available to anyone who lives within the PACE green loans financing districts. The loan terms can be anywhere between ten and twenty years. The loan payments are added to property tax bills. The interest rate is usually fixed, so loan payments remain the same until the loan is repaid in full. It is assumed that the cost of the loan payments will be offset by the money the property owners will be able to save with solar panels. Unlike most other loans, these loans are attached to the property. So, if the property owner sells a house before the loan is fully repaid, the person who bought it would have to pay the remaining amount.

States Where PACE Green Loans Are Available

There are several states that have passed legislation to allow for PACE green loans, without legal obstacles. The legislation is state-based, and the details of the loan vary depending on the state. This is especially true when it comes to what the loans can be used for and what kind of property they can cover. There is lobbying for a federal law that provides a national standard, but it is currently up to each state to establish it's own legislation.