Energy Efficiency and pace model

Nadia Ameli , UC Berkeley

An economic transition is needed to a low-carbon, sustainable, and job producing model. In thatprocess, improving commercial and residential building energy efficiency is vital given than structures are the site of more than 70 percent of the electricity use1 and almost 40 percent of greenhouse gas emission2 in the United States.

To trigger this change, more stringent laws are needed that reduce energy use in buildings, improveenergy efficiency and encourage use of renewable energy such as solar photovoltaic and solarthermal. Regulatory approaches have proven effective, like in United States and Europe. Many barriers exist to the reduction energy consumption: high cost of investment needed for this to happen, lack of information, uncertainly of savings and long payback time.

Our research group from the University of California, Berkeley, are evolved in the development of tools that can used to overcome the financing barriers. The Energy Financing Districts were first proposed by the City of Berkeley, California in 2007 and they have received an increasing attention as a mechanism for financing residential or commercial clean energy projects.The Energy Financing District enables the local governments to raise money through the issuanceof bonds to fund these clean energy projects. The financing is repaid over a set number of years through a “special tax” or assessment on the property tax bill of property owners, who choose to participate in the program. The financing is secured with a lien on the property, and then if the

property is sold before the end of the repayment period, the new owner inherits both the repayment obligation and financed improvements3. This mechanism is better known as PACE (Property Assessed Clean Energy) referred to mechanism of land-secured financing. To establish these programs it is important to evaluate the cost of energy project and resulting energy savings. The net present value of energy saving has to increase the cost of property tax payment.

The program has taken a different approach according to the design in each case for each area.Local government that chooses to offer a PACE financing program must determine the eligibleenergy efficiency or renewable energy technologies, identify a funding source, develop the terms of the loan and program specifics