Lawrence Berkeley National Laboratory

Greater use of Commercial Property Assessed Clean Energy (C-PACE) financing within communities where it is enabled will increase energy savings, drive economic development, and result in additional public benefits. Some states with active C-PACE programs have ramped up activity significantly while others have not achieved and sustained a high volume of transactions. This brief details C-PACE project origination trends, barriers, and market practices for state and local government C-PACE program sponsors looking to grow their C-PACE project pipeline. Based on the results of a questionnaire of C-PACE stakeholders, this brief provides new information on project origination trends and strategies for how state and local governments and third-party partners can increase the volume of projects leveraging C-PACE financing. The questionnaire results support the following observations about the C-PACE financing market: -Marketing and education: Program administrators and capital providers agree that direct outreach to property owners (e.g., one-on-one or in small groups) to explain the benefits of C-PACE financing is the most effective strategy to originate projects. -C-PACE capital providers: Specialty C-PACE capital providers—private lenders with deep knowledge of and a significant focus on C-PACE financing—are the primary source of capital for most C-PACE programs according to program administrator respondents. The share of capital provided by specialty C-PACE providers grew from 2019 to 2020. However, some C-PACE programs (two in this study) are structured so that they use exclusively public capital. -C-PACE project entry point into a program: Most program administrators report that over 75% of financing volume comes from projects with pre-selected capital providers,1 meaning that property owners have connected with capital providers before making contact with the C-PACE program. Transaction sizes for these projects grew from 2019 to 2020 (most are now over $1 million), helping to drive industry growth. -Smaller C-PACE projects: Small and medium projects often do not have a pre-selected capital provider and may need additional support from a program administrator to navigate the transaction process. This is significant given that some programs have goals to serve small- and medium-sized businesses.2 -Messaging to property owners: The features property owners find most attractive about C-PACE financing are the long repayment period and the fact that it does not require a personal guarantee. 1 In open C-PACE programs, multiple capital providers compete to fund C-PACE projects. Most program administrators in our questionnaire administer open programs; however, some administer closed programs and several administer both open and closed programs. It is unclear how to interpret the responses of program administrators who work entirely or in part in closed programs, where there is not a choice among capital providers. 2 For example, Minnesota, Michigan, and Colorado, which are profiled in Improving Access to C-PACE for Smaller Businesses (National Association of State Energy Officials, 2021).