Property Assessed Clean Energy (PACE) bonds have been used across the country to help many business owners and some homeowners find alternative, affordable financing to go solar. In Ohio, only a few communities have taken advantage of this and mostly for commercial properties. However, it still has delivered great value for larger solar systems. While a good portion of the funds have been leveraged for building efficiency upgrades, there are still success stories for solar PV additions. After all, adding solar to a structure also reduces the electricity demand on the local utility grid, or network.
This is an update from our first post explaining how it works. Here we look at the specific impact and use in Ohio.
How it works in Ohio
In 2009, Ohio H.B. 1 was passed allowing Ohio municipalities and townships to borrow money to pay for solar PV and solar thermal systems to be owned by individual property owners. These authorities are reimbursed via increased property value assessments.
Ohio requires a special improvement district (a “SID” or “Energy SID”) to be created to facilitate the financing of qualifying projects (“special energy improvement projects”). There are a number of steps that must be followed to originate and finalize this SID. Potentially interested businesses engage in this process from the start, which is briefly summarized below:
A petition to create the specific SID is created and interested parties sign. Solar developers and installers create specific plans for the associated solar systems to be installed. Legal incorporation papers are included (usually by the developer).
The appropriate authorities review the components of the request and follow appropriate legal fillings detailing the special assessments in response. This includes value estimates.
The petitioning parties and authorities negotiated valuations as needed.
The authorities adopt required ordinances. The SID is formally created.
Installations and property assessment proceed.
Ohio may differ from other states. And the summarized steps above are only for reference. Appropriate and knowledgeable counsel should be sought to learn exactly how it will work for each municipality or government.
A Few Examples
Through the Toledo-Lucas County Port Authority, BetterBuildings Northwest Ohio is administered to offer financing for projects that focus on conserving energy and generating savings through equipment upgrades to existing facilities. It works in conjunction with the Toledo Ohio Advanced Energy Improvement Corporation— the local energy SID. It is one of the largest PACE programs in the country. Two significant success stories are worth noting, each with multiple benefits:
The Collins Park Water Treatment Plant in East Toledo. A 1MW system, costing over $5M, requiring over 12,000 panels. Paid for through a mixture of public and private funds, the field is expected to supply about a quarter of the treatment plants' energy needs. A third party, IPS Energy Ventures, will own and operate the system selling the electricity to the city at a contracted, discounted rate. It was completed around August of 2011. In 10 years the property will revert back to the city, after which the energy will be free. A net win as they save early, realize a small margin on the portion of the costs returned through property assessment, and have a period of no cost energy. Read more about it here.
General Motors Toledo Transmission plant. A 1.8 MW system. It is third party owned and partially financed by a $2.2 million PACE loan. Combined with a local landfill-gas generating system, GM is able to offset almost a fifth of the total electricity demand. The third party contract locks the company in at 6 cents/kWh for the first 10 years, with very moderate escalation after that. A savings for GM. A significant environmental impact. And many financial and service benefits for Toledo and the local utility grid. Read more about it here.
Closer to Cleveland, the Lake County Port Authority has an active PACE program which has facilitated a number of sizable energy improvements. The most notable may be the Great Lakes Mall, where nearly $3.5 million on bonds were used. To date, solar generation projects have not been as popular as in Toledo or as original predicted.
In several other communities, such as Lake County, Boardman Township and the City of Hilliard, individual property owners have been able to establish ESIDs and use PACE financing to construct special energy improvement projects on their properties.
Next for Cleveland and Ohio – Increase the Use
The reason we are updating our first post about PACE programs in Ohio is because we are disappointed that we cannot cite more examples of value and success. In some communities, such as Lake County, Boardman Township and the City of Hilliard, individual property owners have been able to establish energy SIDs and use PACE financing to construct special energy improvement projects on their properties. Other communities, like Cincinnati, Dayton, Columbus and Beachwood are in the process of establishing energy SIDs and funding special energy improvement projects.
The City of Cleveland and its interior suburbs have partnered in the creation and administration of the Northeast Ohio Advanced Energy District (NOAED), which has administered 17 special energy improvement projects. But leveraging the legislation for solar projects has been slow to happen.
There is good news in our view. The process described above makes the use of the program an obstacle for many. Recently introduced Senate Bill (S.B.) 185 could simplify PACE financing in all of Ohio by providing property owners with alternatives. Most importantly, this bill could do several things:
Eliminate the need to join an energy SID if that is preferred.
Make it easier to join existing or new energy SIDs.
It would also make it possible to join energy SIDs within other townships to improve economies of scale, reducing government administrative costs.
The bottom line is that we at YellowLite will keep a close eye on any pending legislation that benefits our customers. The outcome of S.B. 185 could lead to an exciting and powerful new way to make going solar more affordable and less complicated to finance.
Interested in learning more about YellowLite’s renewable energy solutions? Reach out to us today to learn more.