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Solar PACE Financing for Homeowners by Matt McPherson

PACE Financing stands for Property Accessed Clean Energy. Basically funding energy efficient upgrades to homes and business with loans that are accessed on the county property taxes. In California there are many companies that have used Assembly Bill 811 (AB 811) and Senate Bill 555 (SB 555) to fund and finance energy efficient upgrades to homes and business. The ability to put your renewable energy project onto your property taxes is a great way to fund a project that benefits your home. When a homeowner adds a PACE loan to their property taxes they have the ability to write off more in taxes because of the larger property tax amount. I am not a CPA so please check with your CPA or tax consultant before taking my advice but the majority of homeowners write of the total property tax amount. A PACE loan is added to the property tax bill just like any other tax assessment line item. It goes on just like a sewer assessment or a mello-roos.

PACE Financing

PACE Financing can be used for all kinds of energy efficiency upgrades

One of the best renewable energy improvements you can finance with PACE is photo-voltaic solar or P.V. The 30% federal tax credit for solar installations is available through December 31st of 2016. With solar leasing companies such as SunRun, Solar City, Sungevity, SunPower & Vivint taking the federal tax credit for homeowners and giving them the after tax credit price up front. That ability to fund the lower, after tax credit, amount makes PACE funding even more viable for the residential customer. Some of the companies offering PACE financing are HERO, Ygrene, & California First. All have similar programs for terms set at 5, 10, 15 or 20 years. Ygrene also has a 30 year purchase program in the Coachella Valley only. With these wide variety of term options it is the interest rate and fees that these PACE financing companies are competing for homeowners business with. Most interest rates are currently in the 5-10% range with the lower rates coming to the lower terms. The longer you pay back the money the higher the interest rate. Many PACE loans cash flow positive immediately with solar due to the tax benefits and energy savings. You can pay less from day one and have it paid off in 5 years or less.

The sweet spot and the secret to PACE financing is the timing of when you fund the loan. Because the counties record on June 30th. That is the magic date. If you fund before June 30th your property taxes are accessed in the next property tax roll. For example if you fund the project on June 15th, 2015 your first property tax assessment comes in December 2015 and then again in April of 2016 for the second half payment.

The sweet spot is July or anytime after June 30th. If you fund your PACE loan after June 30th the county does not record it onto your property tax bill till until the next year. In this example not until June 30th 2016. Which means your don’t pay additional property taxes until December of 2016. With solar that means 18-19 months of not paying for electricity. That is if you size your system correctly and are net zero. Meaning you produce from the solar what you consume. Sizing of solar is critical. Many companies are out there selling small systems and promising 100% offset.

Make sure you talk with a solar professional from a reputable company like HelioPower Solar. We service all of California and can consult outside of the state and the country.

Contact me – Matt McPherson at 760-272-0131 or email at [email protected] – I have been with HelioPower for almost 7 years and I am an energy consultant expert. Please feel free to ask me any questions about your situation and how I can help you go solar and save money from your utility. Please check out more info on our website at www.heliopower.com