Renovate America, a PACE provider, announced the figure this week. The $1 billion financing equates to around 44,000 homes benefiting from the financial backing to make the properties more energy and water efficient. Renovate America began providing PACE financing through its Home Energy Renovation Opportunity (HERO) Program in 2011. Renovate America has provided PACE financing in California only until now and plans to expand its provision into other US states.
"American residential energy efficiency is at a tipping point. PACE financing is accelerating the adoption of renewable energy, energy efficiency, and water efficiency in the housing sector.
“Today's billion dollar milestone is a tribute to California's elected leaders, the small business contractors who install this technology, and families who choose to lower the operating costs of their homes and realize the promise of an energy-efficient future."
In 2014, JP Morgan produced a report which showed that 75% of HVAC systems bought in 2013 did not meet the minimum U.S. Department of Energy efficiency standards (1 JPMorgan, March 2014. "2014 HVAC Report"). Another report by McKinsey in 2009 suggests that homeowners are reluctant to install the most efficient systems because they appear to be too difficult to finance. However, PACE is a viable option.
The UK Government's 'Green Deal' financing was a supposed to be the British solution to helping homeowners finance energy efficiency solutions. However, the initiative was criticised for being too complicated and expensive compared to other finance options.
UK homeowners who want to take advantage of the domestic 'Renewable Heat Incentive' have to pay up front for the installation of energy efficient heating solutions, such as heat pumps or solar thermal, before receiving payments from the Government. This is a barrier to the wider adoption of heat pumps, for example, in the UK, particularly when the price of oil and gas is cheap.
PACE financing, however, needs no up front payments and it funds the energy efficient products for up to 20 years. This makes monthly payments lower which are collected through 'regular property tax payments'.
Renovate America's 'HERO' program is thought to have saved homeowners around $2 billion on their energy bills so far, or around 6.7 billion kWh of electricity. The HERO program has created around 8,400 jobs and $1.7 billion in local business.