Buildings represent 40% of total energy use in the United States, much of which wasted due to poor insulation and aging heating and cooling equipment. Additional losses occur in the transmission of electricity across our aging grid. This waste can becost effectively reduced by implementing energy-efficiency measures such as increasing insulation, replacing old hot water heaters with new tankless ones, or installing solar panels. While property owners desire such improvements, they often donít follow through because the upfront capital costs are significant.
With the 2008 passage of the AB 811, California lead the nation in allowing municipalities to pay for the upfront costs of energy efficiency improvements and solar panels for improved real property. These costs are repaid by the property owner, plus interest, via an amortized assessment that is collected with the property taxes.
Many other states have now adopted legislation providing for Property Assessed Clean Energy (PACE) programs to allow properties to operate more efficiently, save occupants money on their utility expenses, and stimulate local job growth.
The current challenge with PACE programs is that municipalities do not have access to the large sums of money required to pay for these energy efficiency improvements.
There exists a compelling investment opportunity for the private market to replenish this municipal capacity. Such a solution allows more buildings to be upgraded while creating more jobs and providing investors with an extremely safe fixed-income investment.