Property-Assessed Clean Energy could be coming to Minnesota

Photo CC licensed by flickr user Wayne National Forest

I write a lot about planning here, but the other half of my work is focused on energy and climate change.  I intend to post more about these topics in the near future, starting with this post.

Today Governor Pawlenty signed a Jobs bill contains many provisions, most of which don’t directly relate to energy.  However, a provision overlooked by most news outlets is enabling language for Property-Assessed Clean Energy (PACE).  PACE is a tool that helps overcome one of the largest barriers for homeowners to energy efficiency and renewable energy projects: upfront costs.  Local governments (cities and counties) sell bonds which are paid back through voluntary assessments on the properties of individuals who participate in the program.  Loan paybacks are much longer (15 to 20 years) than typical home equity loans or existing energy improvement loans, so the amount of energy savings can sometimes be greater than the loan payback cost.

Another advantage to these programs is that  the assessment stays with the property, not the individual, so homeowners do not have to assume they will live in one place for 20 years to see the benefits of a renewable energy system, for example.  These programs can also have significant benefits for the local economy.  Boulder County’s Climate Smart Loan Program, which distributed its first round of funding in 2009, has already paid out over $7.5 million to contractors for energy efficiency and renewable energy projects.  The vast majority of this work was done by local contractors, and the 75% of the bonds were sold locally, providing “green” investment options to residents.

PACE programs already exist in many cities and counties.  The enabling legislation that became law today means that cities and counties in Minnesota can begin building their own PACE programs.  If you’re interested in making it easier to do energy efficiency and renewable energy projects, start pestering your local elected officials now.  Tell them they now have the power to build these programs and you are interested!

5 thoughts on “Property-Assessed Clean Energy could be coming to Minnesota

  1. Brendon- Do you know of any creative ways of finance clean energy now? I would like to consider solar power or solar hot water heating with a roof redo, but don’t know if there are any good ways of doing it aside from existing tax credits.

    • Emily, assuming you already know about the state and federal rebates, I would suggest you check out Xcel’s Solar Rewards program. They are giving a great payment ($2.25 per watt) that you don’t have to wait until tax time to redeem. If you combine all three programs (State, Federal and Xcel), you can drastically reduce your cost. However, I know the state program is notorious for running out of funds very quickly.

      If you’re considering solar hot water, you could also look at CEE’s Home Energy Loan program, which is just straight financing at 5.99% for up to $10,000 with a loan length of 5 years. CEE also has a number of programs for financial assistance tied to specific neighborhoods and other eligibility requirements. Check this page to see what is available in your neighborhood.

      Finally, their are organizations out there that are trying to pool individual’s buying power to get discounts on renewable energy installations (like rooftop solar). One Block Off The Grid (1bog.org) allows you to “sign up” indicating your interest, and then assuming their is a critical mass of people in the area, will help organize group purchasing. At least that is the concept as I understand it.

      Hope this helps. Good luck in your quest for solar!

      • Also Emily, don’t forget there are also traditional financing tools like Home Equity loans and lines of credit. These vary in loan length, interest rates and terms based on your bank.

  2. Brendon, I just recently found your blog. Great insights. Regarding the new PACE legislation, what municipalities do you expect to see setting up these programs in the near-term? Metro counties (Hennepin, Ramsey, Dakota, etc.)? Minneapolis/St. Paul? Others?

    Thanks for all the great analysis, and I love the mix of planning, sustainability, and energy. These all seem to me like important ingredients in the same pie, but they seem to be addressed in a piecemeal way by most policy discussions.

    • Sean, I know that a number of Twin Cities-area municipalities and counties are interested in PACE and actively investigating. I would expect to see someplace like Hennepin County be one of the first, however I know there is talk of exploring a joint-powers arrangement to combine multiple counties or cities. Basically, it’s up to each local government at this point, so it’s hard to say.

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