What are solar PACE loans and am I eligible for PACE funding?

How does PACE work?

PACE works by you taking out a loan to finance a solar system or other energy efficiency upgrades. The lender works with your local government to allow you to make periodic payments included in your annual property tax bill. The duration of the loan payments is usually stretched over 10-20 years. First, your state must pass legislation to allow this kind of financing and then your locality must choose to implement these programs.

PACE is great because it allows homeowners to receive the financial benefits of solar power without having to pay a large sum of money upfront. The reductions in your power bill will be much greater than the annual loan payments, so you start saving money day one.

What happens if I take out a PACE loan and move houses?

Since PACE loans are tied to the property the remaining loan balance is transferred over to the next owner. This gives you a feeling of freedom since you no longer feel bound to your property until you’ve broken even on your investment. With PACE you start making money day one.

Where are PACE loans available?

Current states with residential PACE programs are:

• California
• Florida
• Missouri

A total of 20 states including Washington DC offer PACE programs, however, most of these are commercial only.

What is the best way to finance a solar system?

Since loans have interest paying cash for your solar system always offers the best financial return. While PACE loans give you great freedom their interest rates can be as high as 6.5%-8.5%. A home equity line of credit (HELOC) of $20,000 at 4.5% interest is available to homeowners with a credit score above 700, this offers better financial returns than a PACE loan but not the same level of freedom.

Perhaps the best way to finance your solar system is to refinance your current home loan adding the cost of your solar system to the balance.