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Property Assessed Clean Energy (PACE) is an innovative financing tool which building owners and developers can use to upgrade their building's energy performance, install renewable energy systems and reduce resource consumption with no money down and with the financing repaid through their property's tax bill. (Typically, not always)
The program provides access to long-term financing, over and above the bank’s primary loan, for specific building measures that have a quantifiable positive impact on energy savings. These building systems include heating, ventilation, and air conditioning, lighting, windows, roof, insulation/envelope, plumbing, solar, and geothermal (among others).
Because these items generate energy savings, the designers of PACE realized these savings in the future could be used to reduce the cost of capital in the present. The key innovation, which allowed PACE to have a lower risk profile – and, thus, more sponsor-friendly terms than mezzanine debt, is repayment through the property tax assessment.