Setting the PACE in the Midwest

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Property assessed clean energy (PACE) financing is off and running in the Midwest. PACE enables homeowners and commercial building owners to finance energy efficiency improvements through a special assessment on their property that is paid back through their tax bill. To date, there are 15 active PACE programs in the MEEA footprint. PACE-enabling legislation exists in Minnesota, Wisconsin, Michigan, Missouri, Kentucky, Ohio and Nebraska, and legislation in Illinois has passed both state legislative houses and is awaiting the governor’s signature. This means that local governments or joint powers authorities (like the Toledo Port Authority) can establish a PACE district and launch PACE programs, should they choose to do so.

PACE is a financing tool that leverages private sector investments to make clean energy improvements. On-bill financing, green banks and energy savings performance contracting have also been deployed or are under consideration across the region. These tools help ratepayer-funded energy efficiency efforts go further and, in states without energy efficiency resource standards driving utility energy efficiency investments, they create a market for clean energy improvements.

Trends in PACE Projects [1]

Since 2010, more than $300 million dollars of private sector financing has been invested in energy efficiency and renewable energy projects via PACE programs. Nearly one-third of these funds ($80M) have been invested in the Midwest from 2012-2016, and a whopping 87% of the projects completed with PACE financing in the Midwest are strictly energy efficiency improvements. The high proportion of EE-only projects in the Midwest is unique in the national picture. Nationally, 51% of PACE projects are EE-only.

PACE projects in the Midwest are overwhelmingly large projects (requiring more than $750,000) while a quarter of the projects are medium-sized ($75,000 – $750,000). This breakdown closely mirrors national trends.

At the national level, PACE financing is most commonly used in the hospitality and office building sectors. In the Midwest, while office buildings are also the most common building type taking advantage of PACE, retail buildings are a close second and industrial facilities are third.

Multifamily housing has struggled to take advantage of PACE financing due to high interest rates (relative to other financing opportunities) and the complex capital stack of subsidized multifamily buildings. To help bring the benefits of PACE to low-income and multifamily sectors, MEEA has been working make PACE financing more accessible. 

MEEA’s Work

On February 22, MEEA kicked off this new campaign by hosting a workshop for affordable multifamily housing developers, lenders, advocates and energy efficiency stakeholders on PACE. In the months since, through the national Energy Efficiency for All (EEFA) initiative, MEEA has convened a working group in Missouri to explore ways to use PACE for improvements to this sector. The first in-person meeting of this working group will take place on August 23.

For additional information on MEEA’s upcoming PACE activities, please contact Julia Friedman, MEEA’s Senior Policy Manager, at jfriedman@mwalliance.org.


[1] All data in this section from the PACENation website.