Between 2013 and 2018, property-assessed clean energy (PACE) financing from a leading lender added $134.7 million and $51 million per year to the economies of California and Florida, respectively, according to a new report conducted by the University of Southern California and funded by the Ygrene Energy Fund.
Using California and Florida data from PACE lender Ygrene, which has provided $1.16 billion for 54,500 property improvements between 2013 and 2018, analysts found that projects added 1,305 full-time equivalent jobs in California and 603 in Florida annually*.
In the 33 states (plus Washington, D.C.) with authorized programs, PACE provides financing for residential and commercial projects in energy — including renewables and energy efficiency — water efficiency and “hazard mitigation.” Owners pay off the costs over time through an addition to their property tax bill.
In the past, the program has received criticism for predatory lending and lack of regulation, but USC’s study points to significant macroeconomic benefits. Analyzing the period from 2013 to 2017, from lending through the end of the operative life of improvement projects, the study’s authors found even larger impacts: $661.4 million in net present value of GDP added in California and $608.2 million added in Florida. Jobs added during that same period are forecasted at 9,774 for California and 11,716 for Florida.
“One of the key features, and unique features, of our study is we factored in not just the direct spending…but also how they ripple throughout the economy,” said Dr. Adam Rose, a study author and a research professor at USC’s Price School of Public Policy.
Rose added that the results are “conservative estimates” of PACE benefits. The study looked at “co-benefits” including a reduction in electricity consumption in California of 3.63 million megawatt-hours and a reduction of 1.15 million metric tons of emitted greenhouse gases. But it did not consider all positives, like benefits to public health.
Interestingly, during the study period, PACE lending was used most in Florida for hurricane mitigation. California lending focused on solar projects.
“The environmental benefits are very significant, especially in California, in terms of a cleaner environment and reduced use of natural resources,” said Rose, who added that that has economic benefits as well. “The shift to various other sources including renewable energy means more of these good are produced in the state of California, as opposed to importing the gas that you use for electricity from other states or importing a lot of the electricity itself from other states.”
With increased scrutiny on energy resilience, the study also suggests PACE’s role in hazard mitigation may grow.
As an example, Rose points to public-safety power shutoffs in wildfire-prone California as a potential impetus for solar or wind projects. Those may help customers island from the grid if their utility turns power off because of wildfire conditions.
“Looking into the future, PACE has great potential for expansion,” said Rose. “A new area is likely to pop up in the face of societal needs.”
Though the study quantified benefits in just Florida and California, and PACE regulations and financing differ by market, Rose said the “impacts should be somewhat similar” in other states.
*Updated to indicate these figures are annual.