This blog continues a series examining Property Assessed Clean Energy (PACE) programs, active in 32 states and the District of Columbia, which enable residential and commercial property owners to undertake energy efficiency, water conservation, renewable energy, and resiliency improvements. PACE programs provide the upfront financing for these projects by using the borrowing authority of municipal governments. New Jersey’s PACE program, which will provide opportunities for commercial property owners in participating municipalities, has been authorized and is advancing toward activity in early 2025. In this post, I review evidence from some scholarly research on the effectiveness of the program in achieving its stated goals.
Measuring the environmental impacts of PACE programs is difficult. Proponents of PACE programs, including the nonprofit advocacy organization PACENation, tend to focus on how many projects have been financed, the dollar amount of investments, and estimates of the jobs created by the program. While these numbers are significant, they don’t guarantee that the goals of the program (increasing the efficiency and resiliency of residential and commercial properties) are achieved. Some concerns along these lines include the effectiveness of the projects being financed and how many projects would have occurred anyway through more conventional means such as bank loans.
Peer-reviewed research on the effectiveness of PACE programs is limited. Few studies exist and those that do tend to focus on single states or even specific programs due to data constraints. Several studies show that areas with PACE programs see an increase in the installation of solar panels (Kirkpatrick & Bennear 2014; Ameli et al. 2017; Deason & Murphy 2018). Measuring changes in the amount and type of energy use is more difficult. Two studies evaluate the usage of grid-tied electricity and natural gas from California, though their data, approaches to analysis, and findings differ (Winecoff & Graff 2020; Deason et al. 2021). Both studies find that the amount of energy generated by solar panel systems increases in municipalities where PACE is active, relative to places where it isn’t. On the other hand, they disagree on whether the amount of grid-tied electricity and natural gas decreases. Finally, research based on model-based simulations using California data estimate significant savings in natural gas, electricity, and water use, as well as reductions in greenhouse gas emissions (Rose & Wei 2020).
As New Jersey launches its C-PACE program, stakeholders should keep these research findings in mind while establishing metrics to evaluate the program’s effectiveness. I’ve introduced modest evidence that PACE can drive positive environmental impacts but mixed results and limited scope of what we know so far indicate the need for New Jersey’s implementation to be well-monitored so we can understand whether the program delivers more sustainable, resilient communities.
References:
Ameli, N., M. Pisu, and D. M. Kammen. 2017. “Can the US Keep the PACE? A Natural Experiment in Accelerating the Growth of Solar Electricity.” Applied Energy 191: 163–69.
Deason, J., and S. Murphy. 2018. Assessing the PACE of California Residential Solar Deployment: Impacts of Property Assessed Clean Energy Programs on Residential Solar Photovoltaic Deployment in California, 2010–2015 (LBNL-2001143). Lawrence Berkeley National Laboratory.
Deason, J., S. Murphy, and C. A. Goldman. 2021. “Empirical Estimation of the Energy Impacts of Projects Installed through Residential Property Assessed Clean Energy Financing Programs in California.” Energies 14 (8060). https://doi.org/10.3390/en14238060.
Kirkpatrick, A. J., and L. S. Bennear. 2014. “Promoting Clean Energy Investment: An Empirical Analysis of Property Assessed Clean Energy.” Journal of Environmental Economics and Management 68: 357–75.
Rose, A., and D. Wei. 2019. “Impacts of the Property Assessed Clean Energy (PACE) Program on the Economy of California.” Energy Policy 132: 1092–1100.
Winecoff, R., and M. Graff. 2021. “Innovation in Financing Energy-Efficient and Renewable Energy Upgrades: An Evaluation of Property-Assessed Clean Energy for California Residences.” Social Science Quarterly 101: 2555–73.