Solar power has boomed across US homes and among utilities, but one area of installations that continue to flounder are commercial and industrial installations, like at businesses or factories. Now the solar industry is pushing to use Commercial Property Assessed Clean Energy (C-PACE) as an important tool to help grow the commercial solar in the US.
To help increase utilization of the tool, the Solar Energy Industries Association (SEIA) and Alta Energy released a white paper showing how C-PACE boost commercial and industrial (C&I) solar use across the US. The tool allows a commercial property owner to finance 100 percent of the cost of solar equipment as well as energy efficiency upgrades through a voluntary property tax assessment.
The assessment lasts for 10 to 30 years, depending on the financing needs of the project. The allure of C-PACE is that it offers low-interest financing over a long-term for such projects.
“In certain areas of the country, C-PACE has the unique ability to unlock markets by being the sole financing mechanism that allows amortization over a longer period than a 7 to 10-year traditional lease structure. In states where PPAs are prohibited, C-PACE is especially valuable,” the white paper explained.
“As we advise companies with facilities across the country about how to best meet their sustainable energy objectives, we must understand the unique challenges inherent to each client in each market and be able to present strategies and plans that provide the best possible outcome,” said Sam Lee, Alta Energy’s CEO. “Having C-PACE financing as an option in our toolkit removes a barrier some organizations have faced, and enables us to help more of our clients implement solar as a part of their energy management plans.”
The commercial sector of the solar market only represented 6.5 percent of new US solar installations last year. Some properties, like Coachella’s “The River” Mall, have already used C-PACE to install solar power. But SEIA and Alta Energy said further use of C-PACE could open the market further to more than 4.5 million properties across the country.
“C-PACE can open numerous state markets where third party-power purchase agreements (PPAs) are not allowed, or too ambiguous to finance, as well as provide a variety of other benefits,” said Mike Mendelsohn, SEIA’s senior director of project finance and capital markets. “Without a doubt, C-PACE has the potential to vastly expand solar markets across this country and we hope developers seriously consider it as a viable option moving forward.”
A version of the same tool, PACE can be used for residential solar and energy efficiency financing. Last year, for instance, Vivint Solar partnered with Renovate America to offer PACE financing where its available. However, its use has been limited for residential solar financing since Fannie Mae, the quasi-governmental residential financing company made it difficult to use PACE financing with its loans. It argued that an assessment on properties could interfere with its loans. In the commercial sector that’s not a limitation.Tweet