An innovative and rapidly growing method of enabling homeowners and businesses to finance clean energy and energy efficiency upgrades could soon be a possibility in communities across the state of Montana, provided the 2017 Montana Legislature passes legislation to enable it. The innovation, called PACE loans, helps to remove the substantial upfront investment required to pay for energy efficiency and renewable energy upgrades to homes and businesses. These upgrades can include adding more efficient insulation or installing a solar system.
Most Montanans would love to maximize energy efficiency and renewable energy opportunities in their homes. The trouble is they often don’t have the cash to invest. A 2015 survey by a leading personal finance website found that 62 percent of Americans have less than $1,000 in savings. A PACE loan would remove this barrier for homeowners, small businesses, nonprofits, agricultural producers and industry in urban and rural areas across the state.
PACE stands for "Property Assessed Clean Energy." Here’s how it works. Let’s say you want to upgrade the insulation in your house. You would contact your local PACE program office who would help you find a qualified local contractor. The insulation installer would visit your home and prepare a bid. The PACE office would then connect you with a PACE loan provider who would provide 100 percent financing for the project, enabling the contractor to start the work. The repayment of the PACE loan would be attached to the property owner’s tax bill. Should the property be sold, the PACE loan would stay attached to it. The new property owner, who would obviously enjoy the benefits of the energy upgrades, would pick up the payments.
Not only will the homeowner or business save significant amounts of money over the long term, they also typically experience immediate positive cash flow as the reductions in monthly energy bills are often larger than the monthly PACE loan payment, due to the extended repayment period, usually 20 years.
Of course, such a program could be expected to create new jobs in energy efficiency and renewable energy in Montana, as well as tax revenue for governments. A 2011 study by ECONorthwest found that $4 million in PACE project spending on average produced $10 million in gross economic output, $1 million in local, state and federal tax revenue and 60 jobs.
Montana is a vast field of opportunity for energy efficiency. The 2016 State Energy Efficiency Scorecard produced by The American Council for an Energy Efficient Economy ranked Montana 37th of the 50 states for energy efficiency performance across its economy. There are opportunities in our state everywhere you look in homes, small businesses, nonprofits, agriculture and industry.
Members of Montana’s banking and financial services industry have shown interest in PACE enabling legislation, broadening the potential base of support.
The remarkable power of PACE loans was recognized by Scientific-American magazine, which called it one of 20 “world-changing ideas.” Thirty-two states have already enabled PACE loans. Montana is not one of them. We urge all members of the 2017 Montana Legislature to work to change that early next year.