Last week Rhode Island’s General Assembly passed a new bill that will enable residential property assessed clean energy (PACE) financing to make it easier for homeowners to go solar. It’s one of few states that have enacted a PACE program for residents. While 28 states and Washington, D.C., have passed PACE bills, most only cover commercial properties and municipalities. The bill is now awaiting the Governor’s signature to become law.
Residential PACE programs are hard to come by because when they were first proposed Fannie Mae and Freddie Mac, the quasi-governmental mortgage giants, contended that such programs could invalidate their mortgages. Since then, however, some states, like Vermont, Florida and now Rhode Island have started to allow residential PACE loans. The PACE loans can carry much lower interest rates than other residential solar financing options.
“PACE will make it practical for mainly middle-class homeowners who might otherwise be unable to afford energy improvements to make them, saving them money on their energy bills now and in the future and adding to the value of their property. Besides helping those homeowners, PACE will contribute to our economy by generating construction and renovation activity, and will help reduce our state’s carbon footprint. This legislation is a win-win-win for our state,” said State Rep. Arthur Handy (D), a sponsor of the bill in the House.
“This is an innovative and fair way to make improvements that will benefit not only the current owner of a property, but anyone who might live there in the future, as well as our communities, our environment and our economy,” added Sen. William J. Conley Jr. (D), who sponsored the bill in Senate. “PACE is a great opportunity for Rhode Island in so many ways.”
The new PACE bill will allow homeowners in participating municipalities to finance solar, wind or other clean energy improvements to their home through an assessment on their property, which will be repaid over 20 years when the homeowners pay their property taxes. “In the Rhode Island plan, municipalities will recoup the funding through an assessment paid over time to a third-party lender,” according to the New England Clean Energy Council’s Andrew Greenough. “PACE loans stay with the property if ownership changes before the repayment of the loan, ensuring stability to the system as the loans increase property value.”
“The bill passed the State Senate last month by a 36 to 0 vote, reflecting the widespread support of the affordable, long-term financing provisions of the PACE program,” Greenough said. “Rhode Island’s PACE program will complement growing efforts to bring clean energy benefits to residential consumers. Under the state’s re-envisioned Renewable Energy Fund, over $263,000 of small grants and loans has supported residential solar projects.”
To qualify for PACE financing in a municipality that allows it, a homeowner must meet certain requirements. Among them, the homeowner must have an energy savings analysis approved by the Office of Energy Resources or under plans approved by the Public Utilities Commission (PUC). The project must also meet criteria approved by the Office of Energy Resources and have a commitment from a financial institution to fund the project.