The Dernogalizer

March 9, 2010

Clean energy: Picking up the PACE

Filed under: Energy/Climate,MD Politics — Matt Dernoga @ 12:34 am
Tags: , ,

My column out March 9 about the need for Maryland to grant its municipalities the ability to do PACE.  Enjoy!  See more info here

Clean energy: Picking up the PACE

By Matt Dernoga

We don’t put all of our money down at once when buying a home; we take out a mortgage and pay it off during a long period of time. Our cars are bought in monthly payments. Even the total cost of college tuition is broken up during the course of four years into a bill each semester, and that’s assuming there wasn’t a student loan to start.

Can you imagine how much harder it would be to buy houses and cars or go to college if you had to pay all of the money from the start? This scenario was so frightening in 2008, we threw more than a trillion dollars at our banks and mortgage companies to try and keep them lending.

Yet, take a look at how Americans pay for clean energy technologies and energy efficiency upgrades. We treat this market the exact opposite way, where the cost to put solar panels on a house or upgrade the insulation is paid up front. To compensate for this, governments have offered clean energy and energy efficiency tax credits to try to offset some of that upfront cost. These are nice, but usually aren’t enough to make a difference. To a middle-class family, it doesn’t matter whether a solar installation costs $20,000 or more. Paying all of it upfront just isn’t financially reasonable.

We don’t even do this for other forms of energy. For coal or natural gas, the energy company pays for the capital costs and the cost of producing the energy. We pay the electric bill monthly. Can you imagine how ridiculous it would be if as you were moving into your house, you paid your energy company the estimated total cost of 15 years’ worth of power right at the start?

The issue with clean energy might have been cost three decades ago, but now it’s financing, and we’re lousy at it.   Fortunately, 16 states around the country have enabled their local governments to adopt an innovative kind of financing model for energy efficiency and renewable energy projects, called Property Assessed Clean Energy. Here, municipalities establish loan funds to give citizens full financing for substantial energy efficiency and renewable energy improvements on their property. The costs of the improvements are paid back on the person’s property taxes over a period up to 20 years.

Although PACE is new and only a few local governments have adopted it, the results have been incredible.   For example, Boulder County, Colo., was one of the first movers, and in only the programs first phase, $6 million worth of loans for clean energy and efficiency went out, funding hundreds of projects and creating jobs.

The Maryland Clean Energy Center was created by our state government to work on developing and deploying clean technologies in the state. One of the first programs they’re offering to assist in implementation, financing and administration is the PACE model for local governments. All municipalities in the state need is legislation from Annapolis enabling them to move forward, like what has already happened in 16 states. HB 1014 and SB 720 in the Maryland General Assembly will do just that. I implore you to call your state representatives and ask them to support it.

Matt Dernoga is a senior government and politics major. He can be reached at dernoga at umdbk dot com.

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