Commercial Property-Assessed Clean Energy (C-PACE)

Commercial property assessed clean energy (C-PACE) is a financing structure in which building owners borrow money for energy reduction, onsite generation, or other projects and make repayments via an assessment on their property tax bill. The financing arrangement then remains with the property even if it is sold, facilitating long-term investments in building performance. C-PACE may be funded by private investors or government programs, but it is only available in states with enabling legislation and active programs. Jurisdictions with PACE-enabling legislation include 32 states and the District of Columbia.

States and local governments develop the legal, regulatory, and procedural framework for PACE and work with specialty program administrators and finance providers to implement PACE programs, with utilities helping to advertise this financing method to their customers. Third-party financial institutions typically provide the capital for PACE projects. Regardless of the financier, the local government typically acts as the payment collector and remitter.

One of the main benefits of PACE for property owners is that it can be used to cover 100% of the upfront cost of an energy or resilience upgrade. The investments are then repaid over the useful life of the installed equipment. PACE interest rates are usually between 5% and 10% of the total funded amount and allow for flexible payback terms of up to 20 years. However, for properties with a mortgage, mortgage lender consent is usually required before CPACE can move forward, which can difficult and time-consuming to obtain.

Although there are no explicit affordability requirements, C-PACE offers a pathway for housing providers to access low cost financing to improve energy efficiency, install onsite solar, and other improvements, which help reduce the operating cost of the property and improve tenant comfort.

CPACE was created in 2009 as an offshoot of a residential PACE program that was created in 2008 in Berkeley California.