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Energy Department Releases Draft Updated Best Practices for Residential PACE Financing Programs

Energy Department Releases Draft Updated Best Practices for Residential PACE Financing Programs


As part of the Obama Administration’s Clean Energy Savings for All Initiative, the U.S. Department of Energy (DOE) today released best practice guidelines for Residential Property Assessed Clean Energy (PACE) programs. PACE is an innovative mechanism for financing energy efficiency, solar, and related improvements. DOE’s updated best practices guidelines will enable more states and communities to adopt and implement residential PACE programs, unlocking access to affordable financing to reduce homeowners’ energy bills, achieve more resilient homes and communities, and create jobs. DOE will also provide technical assistance to make it easier for states and communities to stand up effective PACE programs.

PACE programs allow state and local governments, where permitted by state law, to offer innovative financing options for homeowners to fund energy efficiency, renewable energy, and water conservation improvements to their homes. Homeowners will benefit from these improvements immediately and pay back the cost over time through their property taxes. When the property is sold, the remaining PACE loan stays with the property and the next owner is responsible for repaying the loan. As of May 2016, nearly 100,000 homeowners have used PACE to make energy efficiency and renewable energy improvements to their homes, representing over $2 billion in investment.


The revised Best Practice Guidelines for Residential PACE Financing Programs focus on best practices for program design, including protections to both consumers who voluntarily opt into PACE programs, and to lenders who hold mortgages on properties with PACE assessments; compatibility of PACE with other energy efficiency programs and services; and evaluation of program outcomes, including cost effectiveness, energy savings, and non-energy benefits such as improved health and comfort. The guidelines can also be used by PACE program administrators, contractors and consumers to plan, develop, and implement programs and improvements that effectively deliver home energy upgrades. DOE developed these revisions to the original “Guidelines for Pilot PACE Financing Programs,” initially issued on May 7, 2010, to reflect the evolving structure of the PACE market, and to incorporate lessons learned from various PACE programs that have been successfully implemented since the original guidelines were issued.

DOE is now seeking input on the draft revised Best Practice Guidelines for Residential PACE Financing Programs; to learn more and submit comments, visit the State and Local Solution Center. The comment period will be open from July 19, 2016 to August 19, 2016.

In addition to the guidelines, DOE will provide limited technical assistance to support the design and implementation of effective PACE programs. This assistance will include:

Conducting a series of webinars and online workshops to facilitate peer exchange and provide access to PACE experts (register for the first webinar, on July 21);Conducting research on the lessons learned from residential PACE programs implemented by state and local governments, including analysis of the impact of PACE on community adoption rates of energy efficiency improvements and per household energy consumption, and various program design strategies, and the effectiveness of PACE relative to other financing mechanisms;
Working with State Energy Offices, local government representatives, PACE industry representatives, and subject matter experts to focus on PACE program design (including consumer protection options) and the development and dissemination of detailed program best practices.


In coordination with the DOE Best Practice Guidelines, the Federal Housing Administration (FHA) released guidance outlining how properties with PACE loans can be purchased and refinanced with an FHA insured mortgage. The Department of Veterans Affairs (VA) also issued guidance on the use of PACE financing for VA-insured mortgages, which will provide a new opportunity for veterans to participate in the clean energy economy and lower their energy bills.

Together, the draft DOE guidelines and new guidance from FHA and VA will enable more households, including low and moderate income Americans and veterans, to use PACE financing to make energy and water efficiency, renewable energy, and other improvements that save energy and improve the resilience of their homes.

Anand Gupta Editor - EQ Int'l Media Network


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