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New USC Schwarzenegger Institute Study Highlights Long-Lasting Benefits of PACE


Property Assessed Clean Energy (PACE) is a public policy tool established by state statute and enabled by local governments to provide affordable financing to homeowners and businesses for renewable energy, energy efficiency, water conservation, and natural disaster resiliency property improvements. PACE was first signed into law in California in 2008 by Governor Schwarzenegger and is now available in 37 states across the country. The program is designed to leverage private capital for public benefit and create new opportunities for homeowners and businesses to invest in environmentally responsible infrastructure. PACE overcomes the up-front cost barrier property owners often face when considering whether to install improvements like solar PV systems. But with any well-intentioned public policy, the question is asked: Is it working?

The Schwarzenegger Institute, part of the University of Southern California’s Sol Price School of Public Policy, has just released a new study, one of two studies the Institute has published since March of 2019, on the benefits of PACE financing. The first study, the most comprehensive research performed on PACE to date, analyzed the environmental, resiliency, and economic impacts of PACE in California and Florida, the two largest PACE markets in the country. The Institute’s initial study examined the number of jobs created, carbon emissions reduced, and natural disaster cost savings, among many other attributes, directly resulting from over $1 billion of PACE investment. The results of that research were extremely positive, and established that PACE was successful in creating: more than 21,000 jobs; producing more than $1.5 billion in local economic growth; saving more than $640 million in avoided property damage and displacement costs in the event of natural disasters; and, reducing CO2 emissions by more than 1.1 million metric tons, which is the equivalent of taking 237,000 cars off the road for a year. And that research was based on the investment of one PACE Administrator. Accounting for the entire industry of nearly $7 billion in clean energy and disaster resiliency investment, those impacts would be significantly greater.

This new study, “The Impact of PACE Funding on Solar Adoption,” conducted by Jonathan Eyer, USC Sol Price Research Assistant Professor, expands upon prior research and analyzes how PACE induces investment in solar energy that would not have otherwise occurred without it. This study is the first to analyze this aspect of PACE at a multi-state level and the first to analyze the impact of removing the availability of PACE, which significantly reduces the amount of solar investment in a community as a result. The findings of this research demonstrate that:

  • The availability of PACE roughly doubles the number of solar installations at the community level.
  • When PACE availability is removed from a community (in the case of Kern County, CA in 2017), solar installations drop by approximately one third.
  • Solar installations increase as the number of PACE administrators operating in a municipality rises in addition to the underlying impact of access to PACE.
  • PACE availability at the state level, analyzing California and Missouri PACE programs, increased solar installations by between 13 – 25% respectively per month compared to neighboring states without PACE.

In fact, the study shows that in the absence of PACE, California would have lost hundreds of millions of dollars in solar energy investment between 2016 and mid-2018 alone.

Despite the clear economic and environmental benefits of PACE, the program has been undermined by some unscrupulous contractors who took advantage of the program and left some consumers at risk of losing their homes. This is obviously unacceptable for a program designed to help California homeowners invest in sustainability and resiliency. The PACE community and the California legislature worked together to address these issues in 2016 and 2017 through sweeping improvements to consumer protections, including the passage of Assembly Bill 2693, Senate Bill 242, and Assembly Bill 1284, the last of which established regulatory oversight of PACE providers and PACE contractors under the California Department of Business Oversight (DBO). Additionally, the federal Consumer Financial Protection Bureau (CFPB) has been tasked by Congress with implementing standardized national ability-to-pay regulations, which should further strengthen consumer protections. We believe that additional study is needed to examine the impacts of these policies to ensure that homeowners have access to affordable financing while maintaining strong consumer protections. Just like any growing industry, policies and processes can always be improved to enhance outcomes. PACE is no different. It would be a significant loss to all Californians, especially low to moderate income homeowners, if the program were to be shelved because of legacy issues and some dishonest contractors who exploited the program in its early days.

But, returning to the question ‘is PACE policy working?’ – to advance sustainable investment, to reduce carbon emissions, to protect against climate related natural disasters – the answer is yes. This research, and previous research from the Schwarzenegger Institute, establishes that PACE has been successful at delivering speed and scale solutions to the challenge of climate change. Moreover, as additional states and local communities across the country seek innovative policies to spur sustainable investment, it is clear that PACE can play a crucial role.


Conyers Davis is the Global Director of USC’s Schwarzenegger Institute for State and Global Policy
The USC Schwarzenegger Institute for State and Global Policy is committed to advancing post-partisanship, where state and global leaders work together to establish best practices in policymaking regardless of political party. Through research, conferences, and advocacy the Institute seeks to inform public policy and debate to confront serious challenges to our society including climate change, political reform, and education.