A Guide to C-PACE
CHAPTER THREE:
Energy Study & Eligible Improvements
How C-PACE Financing Works
C-PACE is designed to encourage and incentivize energy-efficient building development. As such, each development benefiting from this financing must demonstrate a level of energy efficiency via an analysis performed by engineers with experience in building optimization and design. The amount of funding available and the duration of the amortization term through C-PACE are determined by this energy study. One firm provides in-house engineering support – PACE Equity Finance – to maximize the funding amount and amortization term.
Most C-PACE capital providers suggest third-party engineering firms to perform this analysis. These firms can be unfamiliar with C-PACE and the specific considerations required for an energy study that optimizes funding and terms. PACE Equity Finance’s dedicated C-PACE Engineering Team performs these analyses on behalf of clients as part of an end-to-end transaction process. As such, PACE Equity Finance is the only C-PACE capital provider capable of providing a guaranteed funding amount at the time of commitment.
Any hard or soft costs of a construction budget pertaining to energy efficiency, water consumption, renewable energy production, or resiliency (available in most states) are eligible to be 100% funded via C-PACE. For new developments and major redevelopments, this funding typically covers 30 – 35% of the building’s total value. For renovations, C-PACE may account for 100% of the construction budget.
C-PACE Eligible Improvements
The most popular eligible improvements are shown below, but are not an exhaustive list. Other upgrades may also be eligible, such as the installation of efficient manufacturing equipment, which can reduce energy use in a factory.
HVAC equipment
& controls
Indoor air
quality
Seismic &
resiliency
Indoor &
outdoor lighting
Elevator/
escalator
Windows
Insulation &
envelope
Water Efficiency
& Plumbing
Roofing
Renewable Energy & Energy Storage
EV Charging
Energy Recovery
C-PACE Funding Term
The maximum amortization term for a C-PACE project is determined by the energy study. The life of a C-PACE loan cannot exceed the weighted average lifespan of the financed equipment or upgrades. Through this energy study, PACE Equity Finance engineers calculate the longest potential useful life for each measure– ensuring optimized funding terms. The average C-PACE assessment has an amortization term of 25 – 30 years.
SIR Compliance
Some C-PACE programs require a positive Savings-to-Investment Ratio (SIR), which is calculated in the energy study. This ratio is determined by comparing the savings realized by C-PACE financing with the cost of the financed equipment/upgrades. Accepted savings often include energy savings, water savings, operations & maintenance savings, and tax benefit savings. Tax benefits refer to the savings accrued by pursuing low-cost C-PACE financing rather than more expensive options like mezzanine debt.
SIR requirements are required in a limited number of C-PACE program guidelines. Your PACE Equity Finance financing professional can let you know if this is required in your area.
C-PACE Engineering Experts
PACE Equity Finance is the only C-PACE capital provider with an in-house energy engineering team, often referred to as the Low Carbon Center of Excellence. They are dedicated professionals with decades of experience in energy-efficient design, building code compliance, energy modeling, and building optimization. The Low Carbon Team works with architects, designers, and engineers to ensure client designs deliver the best buildings possible, with lower energy and operational expenses.
Design Guidance
Offered at no additional cost, PACE Equity Finance’s in-house Engineering Team provides expert technical guidance for standard or CIRRUS C-PACE projects. Whether seeking to qualify for the CIRRUS C-PACE program or simply pursuing building efficiency to meet local building codes, these engineers are available to answer questions and consult throughout the transaction process.