SAN DIEGO — Renovate America, a provider of residential Property Assessed Clean Energy (PACE) financing, announced it has topped the $1 billion mark in energy and water conservation home improvements financed since the inception of its Home Energy Renovation Opportunity (HERO) Program in 2011. Renovate America said it will expand into new states in 2016, but the $1 billion of projects are all in California, spread across about 44,000 households. According to PACENow, a total of $1.045 billion in home improvements have been financed through PACE nationwide.
“American residential energy efficiency is at a tipping point,” said Renovate America CEO J.P. McNeill. “PACE financing is accelerating the adoption of renewable energy, energy efficiency, and water efficiency in the housing sector.” This milestone “is a tribute to California’s elected leaders, the small business contractors who install this technology, and families who choose to lower the operating costs of their homes and realize the promise of an energy-efficient future.”
In August, President Obama named PACE as an innovative, voluntary tool to meet the country’s clean energy and energy efficiency goals and encouraged its use. In conjunction, the Federal Housing Administration (FHA), which insures one in five new mortgages, announced it is developing guidance for the use of PACE financing. California’s drought has added urgency to homeowners doing water efficiency improvements.
The billion dollar mark shows momentum, yet it actually represents less than one half of one percent of the homes in California which could make PACE improvements. That points to the still huge potential of energy efficiency across the country.
PACE has been adopted to address a problem conventional financing products have not solved. Each year, more than 20 million of the 135 million homes in the U.S. will have systems replaced that affect energy or water consumption — such as HVAC, water heaters, windows, and roofs — in most cases because existing products are failing. Unfortunately, the majority of homeowners still select the least-efficient solution because homeowners are not sure how long they are going to stay in their home. As a result, the least-efficient solutions end up being the most expensive when taking into account the total cost of ownership when energy or water costs are factored in.
PACE provides new options to homeowners to choose more efficient improvements: PACE finances 100 percent of the home improvement, requiring no upfront cash outlay; the term of the financing is based on the useful life of the product, up to 20 years, lowering the size of monthly payments; and collection is conducted through regular property tax payments. The products installed must meet federal and state efficiency standards, enabling homeowners to lower monthly utility bills and help pay for the cost of the improvement over time.
PACE was also designed to help achieve public policy objectives. As of today, the $1 billion financed through HERO are projected to save $2 billion on energy bills, conserve 6.7 billion kWh of electricity, reduce emissions by 1.8 million tons, and save more than 2.1 billion gallons of water. HERO has already created more than 8,400 jobs and generated a local economic impact of more than $1.7 billion.
Publication date: 11/27/2015