PACE Equity announced $200 million in new financing for commercial PACE projects, which provides property-assessed clean energy financing for commercial projects. It is also looking to expand its team into Texas, Michigan and more cities in California.
PACE programs allow investments in water- and energy-efficiency retrofits and distributed renewable generation to be paid back through property taxes, which lowers the risk for both lenders and owners and can potentially open up a far larger swath of the energy-efficiency market.
Commercial PACE had been performing better than residential financing until last year, when PACE financing for homes in California eclipsed the rest of the PACE market. The residential PACE market is estimated at more than $1 billion by PACENow, with most of that in California.
The commercial PACE market is now estimated at about $150 million, so the announcement from PACE Equity would more than double the availability of PACE financing for the commercial sector.
The residential growth is likely to continue by leaps and bounds, as President Obama removed a key barrier to the expansion of PACE for single-family homes at the end of summer by offering clear guidance from the Federal Housing Administration around payment and transfer of PACE liens.
Soon after the White House announcement, Renew Financial completed its first securitization of residential PACE bonds by issuing $50 million in privately placed notes.
Renovate America’s HERO program, the leader in residential PACE financing, just launched a direct-pay service that removes credit-limit barriers for registered contractors. The new offering is meant to help contractors install solar systems more quickly.
“HERO Direct Pay is a great solution for small- and medium-sized solar contractors who have high customer demand because of HERO PACE financing, but can’t fulfill that demand because of credit constraints,” Greg Memo, executive vice president of business development and product strategy for Renovate America, said in a statement.
Renovate America is not alone in offering new products to help unlock PACE markets. K2 Clean Energy Capital announced last week that it is integrating with the Energy Toolbase software platform, which is used by distributed energy providers to analyze potential projects. The integration will allow developers and installers of commercial products to instantly see PACE financing quotes from K2 for solar and energy-storage projects.
“It’s well documented that PACE financing for solar is really taking off, and K2 has clearly established themselves as a leader in this space for non-resi projects,” John Gurski, founder and CEO of Energy Toolbase, said in a statement. “This is a great fit for our first financing partner integration."
In Florida, another financing company is bringing more options to the commercial solar market to leverage PACE financing.
Demeter Power Group has been bringing solar to small- and medium-sized business (SMBs) for the past few years. It received $500,000 through the Department of Energy’s SunShot initiative to help commercial buildings find access to credit.
Using the money from the DOE, Demeter announced it closed its first PACE lease, which brings together solar leasing and PACE financing. The financing was done through the Florida Green Energy Works PACE Program.
The novel financing structure for the SMB sector in Florida comes at a time when solar advocates and utilities are fighting over the ban on third-party sales of solar in the state. Demeter hopes its financing structure will not only grow beyond Florida, but also help change the outlook for solar in the Sunshine State.
“Customers want the ability to make smart energy choices,” Michael Wallander, president of Demeter Power Group, said in a statement. “And if our financing helps pave the way for solar and customer choice in Florida, we’d be very proud of the precedent set by this transaction.”