What Is a Property Assessed Clean Energy (PACE) Program?
Property Assessed Clean Energy isn't technically a loan at all. It's a voluntary assessment added to a property's tax bill instead. That distinction is what makes PACE different from a home equity loan or a personal loan. It's also the source of most of its benefits, and its controversy. This article covers what PACE actually is, how repayment works, and where it's available for homes versus businesses. It also covers the real benefits and risks, and how battery storage fits into a PACE-financed project.
What Property Assessed Clean Energy Financing Actually Is
A property assessed clean energy program works differently than most home financing people have used before. That's the whole idea behind a pace energy program in the first place, and the difference starts with how it's legally structured.
A Lien, Not a Personal Loan
PACE is a financing tool that lets a property owner cover the upfront cost of qualifying energy, water, or resilience improvements. That cost gets repaid over time through a special assessment on the property tax bill, according to the EPA. It's structured as a lien on the property itself, not personal debt tied to the owner's credit. That's why PACE providers typically de-emphasize traditional credit checks, evaluating the property's equity and the owner's ability to pay instead.
What Typically Qualifies
A wide range of upgrades qualify under most property assessed clean energy pace financing programs, though the exact list varies by state and administrator.
Solar panels and other renewable energy systems.
Battery storage and resiliency equipment.
High-efficiency HVAC, insulation, and windows.
Water conservation fixtures and systems.
Wind- and storm-resistant roofing or shutters.
For the solar piece specifically, running the actual numbers on payback still matters. That's true under PACE financing just as much as with any other funding source.
Knowing what PACE covers is one thing. Understanding how the bill actually shows up is what most homeowners want to know next.
How Repayment Actually Works
The mechanics behind a PACE assessment follow a fairly consistent pattern, whatever state the property sits in.
From Application to Repayment
A property owner applies through an approved PACE provider and gets the project approved. The provider typically funds up to 100% of the project's upfront cost, with no money down from the owner. That financing gets added to the property's tax bill as a special assessment. It is usually repaid at a fixed rate, typically over 10 to 20 years (and up to 30 years depending on the equipment's useful life) for residential and commercial projects alike.
What Happens at Sale, or at a Missed Payment
If the property sells, the remaining PACE assessment transfers automatically with it as part of the tax bill, not as a separate negotiation. If a payment gets missed, though, a lien tied to that missed assessment can move ahead of the mortgage in a foreclosure. That's a detail that matters more than it might first appear.
That repayment structure looks a little different depending on whether the property is a home or a commercial building. Availability varies quite a bit between the two as well.
Commercial vs. Residential PACE: Where It's Actually Available
The first question is whether you can get PACE at all. Your state answers that. So does the kind of building you own.
Commercial PACE (C-PACE) | Residential PACE (R-PACE) | |
Availability | More than 38 states plus D.C. have enabling legislation; 30 plus D.C. run active programs, per the EPA | A handful of states, including California, Florida and Missouri |
Eligible properties | Commercial, industrial, multifamily, and nonprofit buildings | Single-family homes |
Typical terms | Usually 10 to 20 years, up to 30 years, depending on the equipment's service life | Similar, though consumer protections vary more by state |
Scale | More than $4 billion across over 2,900 projects as of November 2022, per the EPA | Smaller and more fragmented, run mostly by private third parties |
Commercial PACE is the more established version of the program. Residential PACE is far more limited. It also carries more documented consumer protection concerns, according to the EPA.
Scale and availability are one part of the picture. Whether the deal is a good one depends on what it costs you.
Weighing the Benefits and the Risks
Every PACE pitch sounds appealing on the surface. The real picture only shows up once you weigh both sides side by side.
What Makes PACE Appealing
No money down, since the provider covers the full project cost upfront.
Underwriting that leans on property equity rather than a traditional credit check.
The assessment transfers automatically to a new owner if the property sells.
Fixed interest rates and long repayment terms can make otherwise expensive upgrades affordable.
Energy savings from the improvements can help offset the added tax assessment.
What to Watch Out For
The Federal Housing Administration stopped insuring mortgages on homes with PACE liens back in 2017, which can complicate refinancing or selling.
A missed PACE payment can create a lien that takes priority over your mortgage in a foreclosure.
Interest rates on PACE financing often run higher than a home equity loan or HELOC. They typically land in the 6 to 10 percent range.
Some homeowners have reported high-pressure sales tactics from contractors who don't clearly explain the repayment terms.
Mae won't purchase a mortgage secured by a property with an outstanding PACE loan that takes lien priority over the first mortgage.
The federal residential solar tax credit expired at the end of 2025. More homeowners are now looking at financing tools like PACE to cover upfront costs instead. Understanding exactly what changed with that federal credit is worth doing before comparing it against PACE terms.
Solar tends to dominate the PACE conversation, but it's not the only resiliency upgrade the financing covers.
Where Battery Storage Fits Into a PACE Project
Battery storage is increasingly bundled into PACE-eligible resiliency upgrades right alongside solar. A battery is what actually lets a household use and store the power a rooftop system generates. For anyone already exploring PACE financing for solar, adding a battery to that same project changes what the system can actually do. It's often the difference between generating clean power and being able to rely on it during an outage. Getting a real sense of how efficiently a battery stores solar output helps set expectations before signing on to a bundled project. The two EcoFlow systems below represent two common scales for that kind of upgrade.
Not every project starts at that scale. If you mainly want the fridge, the lights, and a few phones covered while the grid is down, the EcoFlow DELTA 3 Max handles that job without installation.
The financing mechanics and the upgrade options are both on the table now. The last question is whether any of it fits your situation.
Is PACE Financing Right for Your Project?
PACE makes the most sense for an owner who wants a specific efficiency, solar, or resiliency upgrade. It also fits best when the owner doesn't have the cash upfront. Staying in the property long enough to benefit from the improvement matters too. It makes less sense for anyone planning to sell or refinance soon, given how mortgage lenders and the FHA currently treat PACE liens. Before signing anything, get a full breakdown of the interest rate and total repayment amount. Compare the added assessment against your property's annual tax bill today too.
Conclusion
PACE financing lets property owners cover solar, storage, and efficiency upgrades with no money down by repaying the cost through their property tax bill. That structure offers real advantages, but it comes with documented risks around mortgages, foreclosure priority, and contractor sales practices. Confirm whether PACE is available in your state, and compare its rate and terms against a HELOC or personal loan. Ask directly whether battery storage can be bundled into your project alongside solar. EcoFlow's DELTA Pro Ultra X and DELTA 3 Max both fit that role.
FAQs
Is PACE financing a loan or a tax assessment?
Legally, it's a special assessment on your property. That's why approval doesn't hinge on a traditional credit check. It also means the charge follows the property. A missed payment gets treated much like unpaid property taxes.
What improvements qualify for PACE financing?
Every state writes its own list of eligible PACE program energy measures. Solar, battery storage, efficient HVAC, insulation, windows, and water conservation upgrades are common. The Department of Energy notes broader coverage too. Some programs include wind resistance, flood mitigation, and stormwater management.
Is PACE financing available for homeowners in every state?
No. Commercial programs are active in 30 states plus D.C. Residential availability is much narrower. The EPA lists California, Florida and Missouri as states with residential programs. Check with your county or state energy office before you plan around it.
What happens to a PACE assessment if I sell my home?
In theory, the remaining balance transfers to the property. In practice, buyers, lenders, and title companies often require a payoff at closing. Plan for that if a sale is anywhere on your five-year horizon.
Can battery storage be included in a PACE-financed project?
Often, yes. Storage is often listed as an eligible measure in a pace energy program. That is true when it's paired with solar. Confirm it with your program administrator first, since the eligible equipment list is set locally.
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