Texas Develops Statewide "PACE in a Box"
The non-profit business association, Keeping PACE in Texas, will spend the next year assembling “PACE in a Box” for the state of Texas. It will offer some of the streamlined advantages of state-run programs like the one in Connecticut, such as standards for program underwriting. But it will also take advantage of the various ways PACE has been implemented in cities and counties across the country, whether programs are run directly by the governments or a third-party administrator.
“We want a workable, voluntary, sustainable, marketplace solution,” said Charlene Heydinger, executive director of Keep PACE in Texas. “We want to take advantage of the best practices that are already out there, and then Tex-ify it.”
Texas has about 1,400 municipalities. The PACE programs will likely be successful in some of the big cities, but the real goal of PACE in a Box is to get it out to the 200-plus counties where much of the industrial and agricultural sector is located.
The legislation does not specify what will qualify for a PACE loan, only that it is a permanent improvement for a privately owned commercial or industrial facility that decreases water or energy consumption or demand.
The open-ended language is empowering, and also potentially dangerous if not executed correctly. If PACE in a Box doesn’t offer enough guidance, the loan programs could be so disparate that they might not scale as quickly as some stakeholders would like, or worse, they might not be adopted at all by the industrial sectors that they hope to target.
Texas consumes more electricity than any other state in the U.S. and heavy industry accounts for half of the energy used in the Lone Star state, compared to a 32 percent share for the U.S. as a whole.
The state, which has its own electrical grid, is plagued by low margins for electricity reserves and water shortages. Governor Rick Perry addressed the latter this summer by signing various water conservation bills into law, which could get a boost from the PACE legislation, which could unlock funding for water conservation upgrades, especially in agricultural regions.
One model Keep PACE in Texas is exploring is building programs that would cross various regional councils, such as where most of the industrial processing is located, to build enough scale of projects to attract lenders.
For lenders that are looking for at least a half a billion dollars in PACE deals, Heydinger doesn’t think that scale will be a problem. She noted that replacing a boiler at just one refinery in 2011 was an $80 million project. “If we can reach the industrial sector it will be a scale no one has ever seen,” she said. “ And if we can get them in one PACE district… holy cow!”
No one has done a full study of the potential market size for PACE programs in Texas, although Keep PACE in Texas is interested in having that data available as it educates local governments on PACE in the next year.
For now, Keeping PACE in Texas is focused on building a clear, yet flexible program in a box that will appeal to stakeholders, from local governments to contractors to lenders to industry and real estate executives.
Many of the stakeholders are already at the table, but the details of program design and technical and underwriting standards still need to be hashed out. PACE in a Box is expected to be designed within six months and implemented in 2014.
Photo Credit: Clean Energy in Texas/shutterstock
Katherine Tweed writes on smart grid, demand response, energy efficiency and home networking for Greentech Media. Her freelance work has appeared in a range of media outlets, from Scientific American and FoxNews to Audubon Magazine and Men’s Health. She has a master’s degree in Science, Health and Environmental Reporting from New York University. Katherine never leaves her electronics in ...
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