Who thinks Energy Efficiency is having a hard enough time gaining traction due to lack of credibility and accountability for performance already, we don't need specious forms of financing further harming our efforts to build brand?
My comment to DOE on PACE - originally posted HERE:
PACE financing is another opaque, complex, perverse financing mechanism that, like NINJA and Teaser Loans, creates short, medium and long term harm to the exact financially unsophisticated and vulnerable demographic that it was intended to help.
Pace allows people whose only asset might be their home, to tap into those assets to finance dubious investments that usually have little to no residual value. These assets are often labeled "energy improvements' although all evidence suggests energy savings associated with these improvements are usually geometrically overstated.
Pace in practice does nothing to help create meaningful wealth for the poor and middle class. Instead, by creating the appearance of credibility, it actually steals wealth from a class who can ill afford it. It is a wealth creation experiment that places at risk the wealth of those who can least afford the loss.
When compared to other secured financing, Pace interest rates are abusive. The cost of initiating financing is high and confusing, options for prepayment are complex. The only argument for this financing seems to be "look at all the sales this is creating!" This argument has no integrity. It is the same argument used to justify the bad loans that led to the housing crisis, the harms of which are still causing harm to the poor and the general economy nearly a decade later.
Here are links to two well written articles that express problems with PACE more eloquently than I can:
If we are to move Residential Energy Efficiency mainstream, there needs to be more cost and benefit transparency, not less. There needs to be on-going direct correlation between cost and savings.
On Bill Recovery Financing, securitized by the energy meter, possibly financed by Utilities as a capital asset (very low capital cost) is a much better solution. The cost and benefit are accounted for on the same bill, providing clarity of net benefits. These programs are having good success in many places (most NY utilities, Midwest Energy, etc...)
On Bill Recovery has numerous ancillary benefits beyond transparency, low cost, and accountability. On Bill Recovery allows strengthening of the relationship between utilities and their customers. This provides additional incentive for utilities to focus on more comprehensively serving the client instead of simply serving the meter. This alignment of interests and partner creation will help accelerate deployment of Energy Efficiency.
Pace financing should be relegated to the heap of "bad ideas implemented quickly during desperate times." It is a bad idea whose time has come and gone.
Energy Efficiency Specialists
One Knob Consulting
What I have heard is that the presence of PACE in a jurisdiction has encouraged other entities and programs to step up and provide better financing for EE improvements.
It has been awhile since they tried Pace in my community and it did not go very well. I admit i haven't and will not need to review their program as it is being offered now, but what I saw was a lot of extra requirements for work that could have been done for less.
Adding anything extra to a struggling home owner needs careful consideration and as Ted has often stated, much of the energy efficient work done never lives up to the promised savings.
Most HVAC system upgrade - change outs and attic seals-R-49 end up $20-30K Most house - holds just have $4-6K cash to put into a large repairs. So I sell cost per MO