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Combining Solar And PACE In Connecticut: A Potential Game Changer For Commercial Properties

In my last post about Connecticut’s clean energy finance efforts, I alluded to an important innovation in their Property Assessed Clean Energy (“PACE”) financing program for commercial properties.  PACE programs have been in place for several years, and the basic concept is that property owners are able to pay back clean energy financing through their property tax bill over time.  Rates tend to be low because property taxes are almost always paid back and the PACE assessment will survive foreclosures.

To date, PACE transactions have generally been structured as a set of fixed payments to finance retrofits managed by the property owner.  Functionally, these transactions have been quite similar to loans.  In the solar industry, however, the vast majority of financings have been structured as leases or power purchase agreements (PPAs) in order to fully capture the tax benefits associated with solar investments.  This has generally resulted in fairly low use of PACE by solar installers and limited installations of solar on commercial properties.  (Most commercial properties have large mortgages and are not good candidates for additional financing unless PACE or On-Bill Repayment (OBR) can be used to improve credit quality.  The exceptions are buildings that are owned or occupied by very high quality credits, such as a large corporation or city.) Read more.

PACENation

Summit 2024

June 12-13
Nashville, Tennessee

Join hundreds other PACE professionals for two days of extensive educational and networking opportunities at the premier global PACE event!