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PACE Solar Loans – What is the PACE Program?

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PACE Solar Loans and the PACE Program

What are PACE solar loans?

PACE solar loans are loans that are paid back through an additional payment on your property taxes and are sponsored by your city or state.

PACE stands for Property-Assessed Clean Energy. PACE loans are authorized by local and state governments which borrow money to fund PACE programs by issuing a bond, and then the money is provided by different private financing companies.

They qualify as tax liens, so they have first priority over any other loan on the property, including the mortgage.

Should you consider PACE financing for your solar panels?

PACE isn’t for everyone, but it definitely has its advantages.

We break down the advantages and disadvantages of PACE loans in the table below:

Advantages and Disadvantages of PACE loans for solar:

Pros: Cons:
Are available for lower credit borrowers Interest rate is much higher than comparable solar loans.
There is no upfront cost Have first priority over any other loan on the property, including a mortgage.
Since you own the solar panels, you get all associated tax credits and benefits

Where do you get a PACE loan for solar?

PACE loans are usually available through almost any solar installer who operates in a region with a PACE program – we list states with PACE programs in the table below titled: “Where is PACE financing for solar available?”.

Should I get a PACE loan instead of a regular solar loan?

Unless your credit is relatively low, we don’t think so. The high interest rates on PACE loans versus regular solar loans is why we say this – PACE loans can be almost twice the interest rate of a regular solar loan. If you prefer a loan secured on the house instead of on your credit, we recommend considering home equity loans for solar – the rates are much lower.

What do solar PACE interest rates look like versus other solar loans?

PACE rates will vary depending on your municipality and home value, but they are based on the value of your property, as opposed to your credit rating, which determines your rates for traditional loans.

All loan rates depend on the homeowners’ credit score, but a good range is:

– Solar PACE loan interest rates in many states can range from 7-10%

– Regular solar loans   3-7%

– Home equity loans for solar can also be 3-7%

How do PACE programs work?

PACE loans are pretty unique – essentially, a private company (the PACE provider) will help a city or other municipality issue bonds, and then lend that money to homeowners to purchase solar or other energy or water-efficiency improvements. The bonds are paid back through an increased rate on the home’s property taxes. In general, PACE financing is a good choice for those with poor credit scores and they allow you to enjoy the benefits of solar without worrying about a big upfront cost.

Are PACE loan payments tax deductible?

Yes, similar to a mortgage, interest paid on PACE financing is tax-deductible.

Where is PACE financing for solar available?

This is a tricky one – PACE isn’t available everywhere.

Currently PACE programs are available in the following states. As we get more information on specific area’s PACE availability we will put together specific pages on the programs.

California

Oregon

Utah

Colorado

Texas

Minnesota

Missouri

Arkansas

Wisconsin

Michigan

Ohio

Kentucky

Florida

New York

Why do PACE solar loans have so many different names?

This confuses a lot of people – while cities and states fund the PACE programs, sometimes private entities administer them – and sometimes it’s public agencies or non-profits.

Some of the bigger PACE lenders are:

– CaliforniaFirst (state-run)

– Hero Program (private)

– Ygrene (private)

– Mpower (private)

– Texas PACE Authority (non-profit)

– Energyze NY Finance (state-run)

– The Florida PACE Funding Agency

Interested in learning more?  

Some sites we really like that describe PACE more in-depth:
Department of Energy: http://energy.gov/eere/slsc/property-assessed-clean-energy-programs
The Solar Energy Industries Association:  http://www.seia.org/policy/distributed-solar/property-assessed-clean-energy
PACENation (a PACE industry group): http://pacenation.us/

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