New PACE Guidelines Add Market Value For Home Energy Upgrades

New partnerships for the Residential PACE program will provide more funding that allows homeowners to make affordable clean energy investments in their homes.

This week the U.S. Department of Energy announced new partnerships and resources that will bring the benefits of energy efficiency and renewable energy to more states and communities. As a part of this announcement, the Energy Department is releasing updated guidelines for residential Property Assessed Clean Energy (PACE) programs.  Residential PACE is an innovative financing mechanism that allows homeowners to make affordable clean energy investments in their homes.

In a blog post, Dr. Kathleen Hogan, deputy assistant secretary for energy efficiency in the Department of Energy, reviewed the PACE program and the new guidelines.

Residential PACE programs allow state and local governments, where permitted by state law, to offer this financing option for homeowners to fund energy efficiency, renewable energy, and water conservation improvements to their homes.  Homeowners are able to benefit from energy improvements immediately and pay back the costs over time through their property taxes. If the property is sold, including through foreclosure, the remaining PACE assessment will stay with the property, meaning the next owner is responsible for the outstanding PACE assessment and will benefit from the lower energy bills.   

The Energy Department is now seeking stakeholder input on the draft revised Best Practice Guidelines for Residential PACE Financing Programs. Visit the State and Local Solution Center to learn more and submit comments.

Making the value of energy efficiency visible to homeowners, purchasers and sellers is an important component of PACE financing programs.  The Energy Department is working in partnership with appraisal organizations and the real estate industry to help ensure homeowners realize the investment value and benefits of energy efficiency.

These activities and partnerships are highlighted below:

  • Launched last year, the Better Buildings Home Energy Information Accelerator brings together 28 national and local partners who are making home energy information, such as a home’s efficiency certification or its estimated energy usage, readily available at relevant points in residential real estate transactions. Through this program, the Energy Department is developing replicable, sustainable approaches that make energy-related information – important data for the home buying process – easily available to home buyers and sellers through multiple listing service (MLS) and other reports.  These partners are also improving how energy efficiency is captured in appraisals and real estate transactions.
  • In coordination with The Appraisal Foundation, the Energy Department is sponsoring the development of appraisal resources focused on valuation of energy efficiency and high performance features in residential and commercial buildings.  The Appraisal Practices Board has adopted two Valuation Advisories that identify areas where high-performance building features and market conditions impact the valuation assignment process, including scope of work, information gathering and analysis techniques, and core competencies for appraisers.
  • The Energy Department is also working in partnership with the Appraisal Institute, which delivers training and education to appraisers and real estate agents. The Appraisal Institute developed training resources, valuation tools, including the residential green and energy efficient addendum.

The Energy Department is also developing tools and resources and hosts webinars and peer exchanges focused on the topic of capturing energy efficiency in real estate transactions and appraisals, including the following:

  • The Energy Department’s Home Energy Score is similar to a vehicle's miles-per-gallon rating. It helps homeowners and homebuyers understand how much energy a home is expected to use and provides suggestions for improving its energy efficiency. It also allows an energy performance comparison to other homes nationwide.
  • The Energy Department’s Better Buildings Residential Program Solution Centerprovides informational resources, step-by-step guidance, case studies, and descriptions of programs that have integrated energy efficiency into appraisals and real estate transactions.

We look forward to continue working closely with states and communities, PACE program administrators, and the residential real estate and home improvement industries to continue advancements in methods for incorporating energy efficiency into appraisals and real estate transactions.

PACE Key Facts

  • Newly announced partnerships and resources by the Energy Department will bring the benefits of energy efficiency and renewable energy to more states and communities.
  • The Energy Department is releasing updated guidelines for residential Property Assessed Clean Energy (PACE) programs, which is an innovative financing mechanism that can make clean energy home improvements more affortable.
  • Where permitted by state law, homeowners are able to benefit from energy improvements immediately and pay back the costs over time through their property taxes.

Topics: Building Green, Energy Star, Sustainability Trends & Statistics

Companies: U.S. Department of Energy


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