White House doubles down on solar, revs up PACE programs

Source: Christa Marshall, E&E reporter • Posted: Wednesday, July 20, 2016

The White House is renewing its efforts to deploy solar power, bring more people into solar jobs and finance clean energy projects with a funding mechanism that has proved controversial in the past.

As part of the Clean Energy Savings for All Initiative, which does not require new congressional appropriations, the departments of Energy, Agriculture, Housing and Urban Development, and Veterans Affairs and U.S. EPA are backing new initiatives to reach a goal of bringing 1 gigawatt of solar to low- and moderate-income families by decade’s end.

The administration is releasing new guidance on property-assessed clean energy (PACE) programs, which allow loans for clean energy projects on buildings to be repaid over multiple years through property taxes. Typically, local or state governments in eligible markets cover the upfront costs.

“We’ve seen extraordinary technological progress, and we’ve seen the cost of installed solar coming down,” Brian Deese, senior adviser to the president, told reporters on a conference call.

The new guidance from HUD and Veterans Affairs outlines how PACE properties can be purchased and refinanced with Federal Housing Administration mortgage insurance and clarifies the use of PACE financing for Veterans Affairs-insured mortgages. For example, the HUD guidance states that a PACE assessment transfers from one property owner to the next and requires appraisers to analyze the impact of PACE-related changes to the property value.

Simultaneously, DOE released updated guidelines for residential PACE financing for public comment.

The first PACE programs were in California. Currently, PACE covers almost 10 percent of the California residential market, according to GTM Research.

The financing structure has faced pushback, though. It took a severe hit nationally after the Federal Housing Finance Agency — which oversees Fannie Mae and Freddie Mac — opposed the program in 2010. The concern was that PACE loans take precedence over mortgages in case of a default.

That opposition caused California to sue, a path that has not succeeded, California Gov. Jerry Brown (D) said today. He said Fannie Mae and Freddie Mac are “stubborn” and are acting like “East Coast bankers.”

As Fannie Mae falls under the oversight of the Federal Housing Finance Agency, its 2014 position on PACE “remains unchanged,” a spokesperson said. That position states that a homeowner with a first-lien PACE loan cannot refinance his or her mortgage with a Fannie Mae or Freddie Mac mortgage and that a home purchase with a first-lien PACE loan cannot use a Fannie Mae or Freddie Mac loan.

“Not all homeowners will be able to take advantage of all the policy features of PACE, even with [Federal Housing Authority] clarity. … PACE homeowners will continue to receive clear disclosures that they may need to pay off any remaining balance when they sell or refinance — as they would with other asset-backed financing options,” Renovate America said in a statement.

“The VA and the FHA … they are going to hopefully set the example, and someday Fannie and Freddie will get on board,” added Brown.

Tom Kimbis, interim president of the Solar Energy Industries Association, said the PACE “guidance makes it easier for homeowners who go solar using PACE financing to use FHA mortgage insurance and Veterans Affairs (VA)-insured mortgages. Strong public policy allowing more veterans and low- and moderate-income American households to go solar mirrors the commitment of the solar industry to these same communities.”

Additionally, DOE is planning a community solar challenge that will award communities up to $100,000 in assistance to develop “innovative models” for solar power. DOE’s SunShot Initiative is releasing a request for information to gather feedback on the challenge, which will cover shared solar systems of 2 megawatts or less in low- and moderate-income areas.

DOE and HHS said they would further make it easier for grantees of the Low Income Home Energy Assistance Program to use funding for renewable energy.

The administration also announced several initiatives to employ and train more workers for the solar industry. DOE is launching a solar training network run by the Solar Foundation that will connect “solar workforce trainers, solar employers and individuals working in the solar industry,” according to the White House. DOE’s job strategy council announced an investment program to boost employment and provide training in the solar industry in Baltimore.

The administration has helped train more than 50,000 workers for the solar industry during Obama’s terms, Deese said. The initiatives will help ensure “we are on track” to reach 75,000 workers by 2020, Deese said.

Separately, more than 100 housing authorities, power companies, electric co-ops and organizations said they would invest at least $287 million to put in about 280 MW of solar energy. For example, Community Green Energy said it would develop 10 MW of community solar in New York.