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LOCALLY GROWN: Energy legislation can put Missouri on pace

Saturday, July 10, 2010 | 9:25 a.m. CDT; updated 2:43 p.m. CDT, Saturday, July 10, 2010

Remember those solar panels I mentioned? Soon they just might be within my reach.

Somewhere in the office of Missouri Gov. Jay Nixon a bill that could make energy efficiency improvements and renewable energy generation much more affordable awaits his signature.

Like most bills, House Bill 1692 includes multiple issues but Property Assessed Clean Energy, or PACE, is what I’m tracking. Gov. Nixon has until Wednesday to act on the legislation. Signing it next week would create strong momentum for the Thursday conference Advancing Renewables in the Midwest at MU. 

PACE works like this: financing for energy efficiency improvements and renewable energy generation is done through an additional property tax assessment over the course of 20 years. It removes the biggest obstacle to making large-scale energy upgrades — the initial cost.

“It’s a financing tool that has swept the nation because of its tremendous potential to unlock energy savings, create jobs and cut pollution,” said Steve Frenkel, director of the Midwest region for Renewable Funding. Frenkel said the jobs created in Missouri could number in the thousands.

“It’s a win-win because it creates local green jobs at a time when our construction industry needs them most and helps Missourians save on their energy bills,” said Erin Noble, co-director of Renew Missouri

More than 20 states have authorized PACE, and Missouri could be next. Many cities in Missouri, including Columbia, Springfield and St. Louis, have expressed interest in PACE.

“By signing the bill Nixon would unlock the private market, allow property owners to cut utility bills, spur local investment and create jobs in a way that no other financing tool has been able to deliver,” Frenkel said.

Developed in Berkeley, Calif., in 2007, (I know, big surprise) PACE enables cities or counties to establish Clean Energy Development Boards that can issue low-interest bonds to home and business owners to fund renewable energy systems and energy improvements.

The yearly energy savings at the property must be greater than the yearly assessment to qualify for the program. The assessment — and the energy savings — stay with the property.     

Participation is completely voluntary, so if Columbia adopts the program, opting in is up to you. Only PACE participants pay the tax assessment.

I can almost see the solar panels lining my rooftop and my electric meter spinning backwards. In eager anticipation, I got an estimate for a solar PV system for our home.

Even to power our modest needs, we would need a solar array that costs around $10,000 installed, after local and federal rebates. That’s a large chunk of change at once, but spread out over 20 years makes it manageable.

But then Fannie Mae and Freddie Mac clouded my plans with concerns that if property owners default on their mortgages, PACE paybacks would take priority.

The Federal Housing Finance Agency issued this statement Tuesday, which has brought residential PACE programs to an abrupt halt — for now.

This shouldn’t give the governor pause in considering PACE legislation though, as commercial and industrial electric consumers don’t borrow from Freddie Mac and Fannie Mae, so that portion of the program can surge forward.

In Boulder, Colo., PACE has been taking off. Since May 2009, 612 residential upgrades from attic insulation to solar panels generated about $10 million for the local economy, said Ann Livingston, sustainability coordinator for Boulder County.

Local advocates of PACE aren’t worried about Fannie Mae and Freddie Mac’s critiques of the program. Jason Hughes of Renew Missouri said they’ll be able to forge ahead with commercial and industrial PACE projects.

By the time they have the details worked out with interested cities and counties, he’s confident there will be national legislation that smoothes out the wrinkles in the residential program.

Hughes said a good PACE program is one that’s available to lots of people, has flexibility, stability and easy access to information so homeowners can make decisions based on hard data.

According to U.S. Energy Information Administration data, Missouri produces about 3 percent of its electricity from renewables, and the bulk of that comes from hydroelectric power. There is plenty of room for growth in the industry and PACE could be a great tool to stimulate it and help cities and the state reach their renewable energy benchmarks.

Buildings account for about 40 percent of carbon dioxide emissions and energy use, so this program could help Missouri soften its carbon footprint while saving its residents money.

“Without reducing energy consumption in buildings, we won’t be able to reach our energy security and environmental goals,” Frenkel said.

Ron and Irene Neely aren’t waiting around for the legislation. They’re adding to their current solar system near Ashland on Saturday. Look for a slideshow early next week covering the installation.

Michael Burden is a journalism graduate student at MU, a graduate instructor and the MU campus representative for the Peace Corps.


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Comments

Mark Foecking July 10, 2010 | 10:38 p.m.

"The yearly energy savings at the property must be greater than the yearly assessment to qualify for the program."

What does that mean? Please explain what the assessment is (property tax assessment, average electric bill, what?).

I'm not denigrating you. It's just not clear from the article what one needs to do to qualify for these bonds.

$10,000 is not a big chunk of change if one lives frugally. You save for it, if it's a priority. My solar power system cost $18,000 without rebates (the cost of complying with the conditions of the rebates would have made it even more expensive), and none of it was paid for with a loan, bond, or any other form of deferred payment. I'm not rich either (at least not in the traditional sense). A lot of people spend a lot of money on things they could do without, or things that are needlessly expensive.

DK

(Report Comment)
John May July 11, 2010 | 8:35 a.m.

Be careful about jumping on a train until you know whether it’s headed for a train wreck. PACE is a great idea, and we need it in Missouri. But provisions of HB 1692 also regulate at least the following: --which school districts can have a recycling facility; --how death certificates should be filed and how cemetaries should be operated; --sewer district assessments; --the registration of outboard motors; --the regulation of real estate brokers and appraisers; --mechanics liens; --and child support. Bills that combine such widely varying provisions are monstrosities, and they are unconstitutional in Missouri. They are vulnerable to being struck down by the courts. While it is true that Missouri passes lots of omnibus bills, some of the provisions of HB 1692 are controversial. The risk of a court challenge is high.

A PACE district would make you a loan for your energy project, then package that loan into a bond that would be sold in the capital markets. What would happen to that loan and that bond if they are declared unconstitutional? What a mess! Imagine the legal fees!

PACE is a good idea, and Missouri needs PACE. But we need it done right.

(Report Comment)
Jay Egg July 11, 2010 | 9:31 p.m.

PACE legislation and funding are good for a lot of energy efficiency items in a home or business. The most effective paybacks often come from the basics of insulation upgrades and weather sealing related items, which normally only amount to a few thousand dollars. Though Solar PV is attractive and has a definate payback, Solar Thermal (hot water) is often the best solar answer. The best major investment is going to be a geothermal air conditioning system. With federal tax credits and incentives totaling 30% or more, the payback, or ROI is often under 5 years, and the systems last for 30 or more years, reducing energy consumption dramatically and permanently. Another good article on PACE is posted here http://www.greenandsave.com/green_news/g... . A great website to explain the process and provide more links can be found here http://www.pacelegislation.com/index.htm... .

(Report Comment)

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