Originally published on the ECOreport
Ygrene operates one of America’s largest property assessed clean energy (PACE) financing programs and it is about to get much bigger. It just raised $30 million in operating capital to finance its expansion into six states. According to President and CEO Stacey Lawson, Ygrene expects to quadruple its business.
A Very Compelling Offering
“The market is becoming educated as to PACE’s benefits over other types of financing, like home improvement lands, or vendor financing or credit cards. They are seeing PACE as a very compelling offering,” said Lawson.
PACE is not a loan. Homeowners do not have to pay anything down. Companies like Ygrene set up arrangements with arrangements with local councils, whereby the funds they put up to make clear energy home improvements can be paid back through an addition to their customer’s property taxes. Thus it becomes a tax on the home, has no effect on the property owner’s credit rating, and can be paid back over periods of up to 20 years.
Lawson says that from the inception of the first PACE law until the end of last year, about a billion dollars of financing were approved. She expects to see $2 billion of PACE financing by the end of this year.
Though the media has been focusing on the imminent release of Federal Housing Authority guidelines on how a PACE assessment can exist in conjunction with its mortgages, Lawson sees it more a sub-context for PACE.
“We hope it will provide more clarity, transparency and understanding for people, but the industry’s expansion is being driven by the market,” she said.
Ygrene has approved more than $1 billion in funding to date. Eighty percent of that has been in California, where it is the second largest residential PACE provider and number one in the commercial sector. The remainder of those approvals are in Florida, which makes Ygrene the first PACE program to expand beyond its home state.
“In California water conservation is a big and growing measure, due to job conditions and water mandates across the state. There are also mandated seismic updates that are unfunded and PACE can help fund,” said Lawson. “In Florida there is a lot of emphasis on hurricane protection: things like impact glass, foundation strengthening and other kinds of structural strengthening.”
In its press release, Ygrene says it has “completed $300 million in contracts nationally, producing more than $750M in economic stimulus, 4,500 jobs and 19MW of energy. Together these projects have saved 1.3 billion gallons of water and enough energy to power 300,000 homes for a full year, while also keeping 360K metric tons of CO2 from entering the atmosphere.”
To which Mack McNair of the Virgo Investment Group, one of the investors who put in money for the PACE company’s expansion, added, “Ygrene’s capital- efficient model has enabled it to become one of the fastest growing PACE administrators in the market, servicing rapidly growing project demand with the most efficient operations and world-class service quality.”
Expanding Into Five States
Ygrene has begun to expand into five states.
The invitation to Georgia came from Atlanta Mayor Mohammed Kasim Reed, who has been a proponent since the early days of PACE. Now it is one of the tool he intends to use to reach his goal under the better buildings challenge. Ygrene hopes to start a commercial program by late summer, and the city is talking about the possibility of layering in a residential program as well.
Aside from Georgia, all of its planned expansions into other states are currently in the residential sector.
“We have talked about flood mitigation, like secondary water barriers, in Arkansas and Missouri, but those are proposed amendments to the PACE law to allow for disaster recovery,”said Lawson.
Regardless of whether that amendment is made, she expects to have a program in Arkansas by the end of the year.
It is also “possible” Ygrene will have a third program in 2016, but Lawson said this is not certain and she is not ready to make an announcement.
She added that there is a “potential” project in Virginia and “we are looking at Connecticut as well.” A distinctive element in these states, as well as others along the Eastern Seaboard, is “elements that are water related and also resiliency.”
There are also projects like installing solar panels, which are an integral component of PACE programs wherever they are found.
Image Credits: Front of Chula Vista Building with solar installation; Ygrene President and CEO, Stacey Lawson; Florida Inform; Roof of Solar installation in Chula Vista CA – All images are courtesy Yygene Energy Fund
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