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tweetCommercial real estate remains an area of unfulfilled solar potential. Most deployment in this sector has been constrained to properties where large, creditworthy entities own or have long-term leases and sufficient control of the property to support the credit requirements of solar project developers and their financiers.
Luckily, a range of financing innovations has recently evolved to open untapped solar sectors. One of the most promising is property-assessed clean energy (PACE), via which a loan on a solar system can be repaid via a property tax assessment. A PACE loan stays with the property, not the tenant, and offers the ability to underwrite a project with a short-term tenant or other unrated offtaker.
According to PACENation, an association dedicated to opening PACE financing, PACE financiers invested $252 million in 734 commercial buildings across 14 states. More than half of those projects have included renewable energy improvements. GTM wrote in December 2015 that over $1 billion has been invested in entities that finance commercial PACE, or C-PACE, projects, so there should be ample investment capital for good projects in PACE-friendly locations.