Efficiency Maine PACE ProgramUPDATE: As of 7/17/12, we have a listing of towns in Maine with a PACE ordinance

While it’s faced legal hurdles in other parts of the country, Property Assessed Clean Energy (PACE) financing may finally be arriving for Maine residents as early as mid-November according to Efficiency Maine. UPDATE: As of April 4, 2011, PACE Solar Loans are now available.

This unique program allows residents in towns that have passed a PACE ordinance to get low-interest loans on energy efficiency and renewable energy systems, everything from insulation and caulking to solar hot water and solar electric systems.

The program allows homeowners to get an energy efficiency loan that is tied to their property – rather to them personally – so that they will not be liable for the loan if they decide to sell the house. In the meantime, however, a home with improvements financed through the PACE program will benefit with improved comfort and reduced fossil fuel energy costs and carbon emissions.

How Does PACE Work?

PACE loans will be available for up to $15,000 on what Efficiency Maine calls “energy saving improvements,” that is, either work that “result[s] in increased energy efficiency and substantially reduced energy use” or a “renewable energy installation or an electric thermal storage system.” Which means that residential solar hot water systems and grid-tied solar electric systems qualify for loans under the program (from the Model PACE Ordinance (PDF)).

These loans are intended to be tightly entwined with performance of efficiency upgrades so that the cost of the loan payment is comparable to or less than the current utility payment. PACE loans will not be allowed for terms longer than the expected life of the improvement.

Biddeford, Maine - Solar Hot Water
Solar hot water systems, such as this one in Biddeford, Maine, will save the homeowner more than $15,000 in utility bills over its first 20 years of operation.

This is certainly a good model for solar energy systems which will last more than 20 years, and are most affordable when taking a long view of energy savings.

For instance, a typical solar hot water system saves 300 gallons of home heating oil per year, worth roughly $780/year at today’s prices, for a savings of more than $15,000 over the life of the system. With an out of pocket cost of $5,500 to $6,000 once you factor in state and federal rebates, it will take about 8 years for the system to pay for itself.

The same system, benefiting from a 15-year PACE loan at 5% interest, results in a payment of roughly $71/month, or $852/year.  Since the PACE loan is based on net installation cost of the system, you would still benefit from the $3,150 federal tax credit, which if applied to your monthly payment would bring your average payment down to $57/mo, or $684/year.  A financed system saves money from day one!

How Can I Get a PACE Loan?

Getting access to the fund requires a few things:

  • You must live in a town that has passed a PACE ordinance. So far that includes Cumberland, Yarmouth, Arrowsic, Waterboro, Fayette, South Portland, Old Town, Hampden, and Belfast with dozens more in process. If you’re unsure whether your town has passed an ordinance, now is the time to call your town office!
  • You must have an energy audit done, and the energy auditor must be able to show that your proposed system will meet Efficiency Maine’s performance requirements. PACE will be managed through Efficiency Maine’s existing Home Energy Savings Program (HESP), which requires a computer model that demonstrates a 25% energy savings from the proposed efficiency improvement.This modeling biases towards weatherization, though solar hot water can also be considered (since combined with boiler improvements solar hot water achieves dramatic decreases in home heating oil use). It’s not clear how solar electric systems will be evaluated for PACE loans just yet.

What About PACE in New Hampshire?

Unfortunately, PACE legislation has hit a big snag in New Hampshire. SeacoastOnline reported it this way:

Last year, the New Hampshire Legislature passed House Bill 1554 to create the framework for municipalities to develop PACE, according to Eric Steltzer, a policy analyst for the state Office of Energy and Planning. New Hampshire set up PACE as assessment districts, such as a water or sewer district. As such, PACE became a priority lien holder.

Freddie Mac and Fannie Mae, the Federal Home Mortgage Corp. and Federal National Mortgage Association, respectively, balked at being put in a secondary lien position. The mortgage giants said they would not support PACE in states in which those loans are given a priority status on liens, said Steltzer.

This means, said Steltzer, “When you sell your house, they will not offer a mortgage on a property that has PACE on it. I do not foresee any communities in New Hampshire creating PACE entities.”

In contrast, Maine’s program specifically states that the PACE loan is secondary to the primary mortgage to avoid this road block. However, New Hampshire citizens still can take advantage of terrific state rebates and a growing number of private financing options.

We’ll keep you posted as the program evolves in both Maine and New Hampshire, and of course alert you to any new rebate programs, incentives, or solar financing options!

Resources on PACE