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2019 PACE Facts

2019 PACE Facts
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Notes on methodology

Projected market growth:

This calculation starts by assuming that in 2020, market growth will be equal to the three-year average annual growth in C-PACE investment in each state observed in PACENation’s data. If C-PACE projects closed in a state for the first time in 2019, we assume the 2020 growth rate will be equal to the national three-year average annual growth rate (approx. 70%). After 2020, the annual growth rate is assumed to slow each year until annual investment nationally reaches approx. $2B in 2025 and continues adding approx. $2B annually from 2025-2030.

Under this scenario, in 2030 national C-PACE market penetration would be roughly equal to the market penetration seen in Connecticut today (about 0.85% of buildings, excluding government-owned and buildings under 5,000 sq. feet), and the average C-PACE lien-to-value on properties using C-PACE would be in the range of 20-25%.

To improve this analysis, it is possible to break out each state’s market segments (small commercial retrofit, large commercial retrofit, new construction, refinancing) and demand for specific types of improvements to develop growth estimates for each segment of the market. This is a potential area of further work to develop more thorough estimates of market potential.

Addressable market size:

Our estimate of addressable market size starts with the number of commercial properties in each state using data available from Black Knight. We then remove government-owned and small commercial properties (less than 5,000 square feet) from the data to roughly approximate the number of C-PACE eligible properties per state. Using PACENation’s C-PACE data, we take the average C-PACE project size among multiple property types present in Black Knight’s data—Multifamily, Office, Industrial, and Other Commercial—and use these averages to calculate a weighted average potential C-PACE project size for each state based on the breakdown of all commercial building types in the state. Finally, we multiply these weighted averages by the number of C-PACE eligible properties to estimate addressable market size in dollars. We report 15% of addressable market size as an aspirational estimate of market potential.

PACE impacts:

Impacts, including job-years added, economic output, energy saved, and carbon-equivalent emissions abated, are based on estimates from the University of Southern California (USC)’s Schwarzenegger Institute study “Impacts of the Property Assessed Clean Energy (PACE) Program on the Economies of California and Florida.” In the study, researchers estimated impacts of R-PACE and C-PACE investments via Ygrene’s PACE program in California and Florida. Our calculation scales the same per-dollar impacts found in the study to the total PACE market. The analysis assumes that one million dollars invested in PACE will generate approximately 11.6 job-years, avoid 3,518 MWh combined electricity and natural gas consumption, and abate 1,249 metric tons CO2-equivalent emissions over the useful lifetimes of installed measures as a national average, with variations at the state level.

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