Residential-Property Assessed Clean Energy (R-PACE) is a residential property assessed clean energy financing programme which offers a significant opportunity to use private capital to help fund rebuilding efforts in the wake of devastating natural disasters like Hurricane Harvey and Irma, which have caused over $150 million of damage to the US economy.
Some states, like Florida, have already implemented R-PACE programmes in existing homes. If R-PACE was enabled for new residential construction, it could jumpstart NZE and resilient home construction that would save money for homeowners in the state while also offering superior and more resilient homes.
R-PACE has broken open the market by financing energy efficiency retrofits in over 158,000 homes in California, Florida and Missouri since 2008, but many states across the country still do not offer the financing option to their residents. At the same time, states have limited the use of this instrument to retrofits by making it ineligible for new residential construction.
“R-PACE has shown its potential for the retrofit of existing buildings, and can be a game changer for the residential new construction sector” said Iain Campbell, managing director of RMI’s buildings programme and chair of PACE Nation’s consumer protection committee. “By enabling R-PACE for new construction, city and state leaders can scale NZE and resilient homes that cut carbon emissions by incentivizing builders and developers to construct NZE homes at no up-front incremental cost while also offering their homeowners $1,635 in average energy savings year-on-year.”
The market for NZE and zero-energy ready homes and apartments has risen 103 percent nationally over the last two years - signalling a sea change in market demand. NZE homes not only offer superior energy performance, comfort, safety and affordability but are also significantly more resilient to grid failures. With drastic increases in consumer demand, RMI asserts that NZE homes are going to be the next big frontier for innovation and competition in the US real estate market.
R-PACE helps to scale NZE homes by allowing the incremental cost of NZE construction to be financed through R-PACE financing secured by a special incremental property tax assessment. The ongoing savings to the owner - with a now negligible energy bill - more than covers the payments due under the R-PACE financing. In addition to scaling NZE homes, R-PACE for new construction can help states achieve a range of complementary policy goals and outcomes, including meeting more ambitious environmental goals and targets and generating economic opportunity in the local construction and real estate sectors.
58 percent of U.S. states have renewable energy portfolio requirements and/or have instituted state-wide climate goals. NZE new construction can reduce the residential sector’s big carbon footprint while adding renewable energy to the grid. It is also important to note that the aggressive carbon-reduction goals set by states such as Colorado, Connecticut, Vermont, Massachusetts, and others are likely to be achieved only when the majority of their new building stock is NZE.
Investment in new residential buildings contributes between 3 and 5 percent of GDP. RMI research confirms that NZE homes in particular present an incremental market opportunity of $33 billion for the U.S. real estate industry by 2037, which will translate to overall job and economic growth.
“Putting the buildings sector on a pathway to zero carbon emissions is of critical importance” added Iain Campbell. “We seldom come across ways to do so that such a compelling value proposition. Regardless of a legislator’s motivation, they should not hesitate to take advantage of this opportunity”.
Image: R-PACE funded solar PV in California
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