PACE Financing Begins to Take Off in Michigan

finance-key Michigan

Making energy efficiency projects pay off, right away

Michigan Radio, January 5, 2017

The U.S. EPA estimates that companies in Michigan waste up to a third of the energy they buy because of inefficient buildings and equipment.

But most of the companies just keep paying those high energy bills, month after month, because they can’t make a business case for a big energy efficiency project. The payback for the upgrades takes too long – often ten or more years.

But thanks to a new financing tool, there’s a way for companies, non-profits, and government agencies to save energy and save money.

Lean and Green Michigan runs Michigan’s PACE program, which stands for Property Assessed Clean Energy.

It works like this: a company takes out a 15 or 20-year loan, but it’s not paid back the traditional way. It’s paid back through an assessment on the company’s property taxes.

The loan costs the company nothing or very little up front – but it gets the benefit of lower energy bills right away. And the assessment (along with the lower bills) transfers from one owner to the next.

Levin says PACE projects in Michigan are starting to really take off. Since counties collect property taxes, they have to join the PACE program for companies to be able to participate. Twenty Michigan counties have already joined. Michigan had one PACE project in 2015. There are nearly 50 in the pipeline today.

Currently, PACE is for commercial projects only. Homeowners in Michigan cannot get a PACE loan to pay for energy efficiency projects like geothermal systems, solar panels, and weatherizing.

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