Alberta to Roll out New Green Financing Tool

On June 6 Alberta’s government passed a new legislation to allow municipalities to begin offering a new program that will allow homes, farms and businesses to gradually pay off the expenses of energy-efficient upgrades such as solar panels, high-efficiency windows and efficient heating and cooling systems, merely by paying extra on their property tax bills. Alberta’s Property Assessed Clean Energy (PACE) initiative is expected to be the most comprehensive and advanced program of its kind in Canada.

What Is PACE?

The PACE program allows property owners to retrofit their buildings with energy-efficient add-ons without paying any money down. Building owners and developers can use this financing tool to upgrade their building’s energy performance, install renewable energy systems and reduce resource consumption, then repay the financing costs through their property taxes. PACE financing capital primarily comes from private sources who are seeking long-term secure investments.

The first PACE program began in California in 2008, and many other U.S. cities, along with Toronto and Halifax, have instituted some version of the initiative.

PACE eliminates the financial barrier, which is arguably the most significant deterrent to widespread adoption of energy-efficiency measures. PACE not only removes the up-front costs of investing in the equipment, but can also be structured so the projected annual savings of retrofitting is greater than the amount of the property’s annual tax assessment.

By taking advantage of PACE financing, home and business owners can upgrade their buildings for greater efficiency and reap significant energy savings, all without committing any money on the front end or relying on public grants and incentives. Therefore, PACE programs are self-perpetuating and pay for themselves. PACE financing is also now being used for new construction, and some building owners who have already made environmentally friendly upgrades are getting their benefits retroactively.

PACE in Alberta

Though participation in PACE is optional, Calgary Mayor Naheed Nenshi says he hopes his community will fully embrace it once they see how much easier it will become to finance energy-efficient upgrades for their properties.

“As people are concerned about emissions, as we see changes in the cost of traditional energy in the city, more people will start to look at this,” he said.

The provincial agency Energy Efficiency Alberta will administer the new PACE program, relying on financial institutions to provide loans. While the costs will include interest, government officials have pledged the rates will be low because a variety of lenders will be supporting the program.

The Alberta Construction Association and the Building Industry and Land Development Association have already publicly stated their support for the program.

Meetings to develop the regulations will be held over this summer, with a goal of implementing PACE in Alberta by 2019.

Environment Minister Shannon Phillips explained she expects the PACE program to generate excitement throughout the province of Alberta, and not just in large cities like Calgary and Edmonton.

“PACE can be successful in any municipality, rural or urban, and we hope this program will take off in communities across the province,” she said. “We are giving communities a choice. Absolutely.”