Overview of the C-PACE Program
C-PACE, short for “Commercial Property Assessed Clean Energy”, is an innovative new financing program that Connecticut introduced in early 2013. C-PACE allows property owners to finance clean energy projects (like solar photovoltaic projects) on extremely favorable terms through an additional assessment on their property tax bill.
C-PACE and Connecticut’s Solar ZREC Program
For CT businesses interested in exploring solar, C-PACE can provide long-term financing (up to 20 years) with highly attractive interest rates. The financing itself is repaid through an assessment on a business owner’s property taxes. Solar projects are rugged and durable, with a useful asset life in excess of 30 years, and are therefore a great fit for C-PACE since the cost of the solar project is appropriately amortized over a long period.
The ZREC Program is also a great complement to C-PACE. Under the ZREC Program, CL&P and UI provide solar system owners with a 15-year contractual revenue source which pays them a fixed price for every kilowatt-hour (“kWh”) of solar electricity generated, in addition to the savings on their electric bill.
C-PACE can provide funding for up to 100% of the cost of a new solar project, thereby reducing or even eliminating the need for businesses to contribute new capital. For tax-paying corporate entities, financing a new solar project with C-PACE can actually be cash-generative due to the significant upfront tax incentives attributable to solar projects.
The amount of the PACE assessment must be less than the utility savings and ZREC revenue being generated by the solar project, providing immediate positive cash flow from day one (and allowing a project to pay for itself without upfront costs).
C-PACE Solar Project Candidates
Eligible solar projects must be located in municipalities that have opted into C-PACE, and currently there are over 30 participating municipalities with new additions every week. In terms of capital providers, there are 9 lenders who are currently providing capital for C-PACE transactions, with additional lenders expected to join over time. C-PACE uses a “Lending Tree” model which ensures highly competitive bids from pre-qualified lenders. To participate in the ZREC program, solar project sites must be located in either CL&P or UI service territory.
The C-PACE “Bottom Line” for Connecticut Businesses
C-PACE enables businesses in Connecticut to enhance the value of their property by installing onsite solar photovoltaic systems with little to no capital outlay. When combined with the ZREC solar incentive, C-PACE allows solar projects to pay for themselves with their own utility savings and revenue generated through the sale of ZRECs.