PACE Questions and Answers

A. A Property Assesed Clean Energy District is a way of providing viable financing options to address the barrier of high upfront costs of renewable energy and weatherization improvements. Many property owners do not have easy access to favorable conventional financing terms or sufficient cash reserve to commit to making these improvements, especially under the current economic conditions. The district aims to develop an alternative that will offer relative long term and low cost financing with repayment accomplished by a special assessment on property tax bills. Residential and commercial property owners will in turn be able to leverage this program to make renewable energy improvements in an accessible and affordable manner. Equally important, Vermont residents will contribute significantly to the reduction of climate change by reducing the carbon footprint and greenhouse gas emissions for the region. Property owners opt into the district and therefore participation is on a voluntary basis.

Vermont enacted legislation in May 2009 (Act 45) that authorizes local governments to create districts (Clean Energy Assessment District) to provide financing to property owners for renewable energy and energy-efficiency projects. Voter approval is required to establish a financing district. Eligible renewable-energy technologies include solar water or space heating, photovoltaics (PV), biomass energy heating systems, small wind systems, and micro-hydroelectric systems. Eligible energy-efficiency projects have been determined by Efficiency Vermont and Burlington Electric Department and include efficiency measures that are permanently attached to the property and reduce the net energy requirements of the building. Some examples include insulation, window replacements/renovations, energy efficiency heating systems, among others. See their Eligibility of Projects for Vermont Clean Energy Assessment District (CEAD) Financing Guide for more information. Participating property owners must conduct an energy audit to quantify project costs, energy savings and carbon impacts.

Property owners may opt in to a program by signing a contract with the municipality's Clean Energy Assessment District. The contract specifies the amount of the loan, the terms of repayment and the associated risks. The property owner must agree to a special assessment and lien on the property. The municipality is responsible for administering the program and providing financing.

The Vermont Energy Investment Corp has additional resources on their website.

A. There are several components of community benefits potentially supported by this program that include long term and ongoing financial, environmental and local economic impact.

On the financial level, property owners may yield energy costs savings and in situations where federal and state tax incentives are applied, affordability of the improvement will likely be enhanced as well. Currently, residents and commercial operators may qualify for PNM Renewable Energy Credits (REC's) and this may also positively impact energy costs savings. In general, the intent of the district to offer long term low costs financing, along with energy savings, make the overall reduction to the costs of renewable energy improvement for the average community member possible.

Environmental impact reflects partly on how much fossil fuel can be avoided in generation of energy needed for local consumption in the region and the related efforts to reduce greenhouse gas emissions and address climate change. As example, a typical 3.4kW covering about 50% of a home's energy use (habits and other factors will determine energy consumption and this is, therefore, variable) and assuming that the average kilowatt hour from PNM's grid is produced in a way that releases approximately 1.504 pounds of CO2 into the atmosphere. As this system produces 5,624 kilowatt hours of electricity per year, the system would save 8,458 tons of carbon from going into the atmosphere. One kilowatt hour is equivalent to saving 3.412 kBTUs. This system's production is therefore equivalent to 19,194 kBTUs.

Local economic effects may be observed by activities stimulated from renewable energy systems being installed and skilled workers being employed and trained in green jobs. This, in turn, is a vital part of the region's transition into a green sustainable economy and in times where unemployment rate continues to rise and greater economic conditions remain challenging, local policy and program may offer a form of community- based economic stimulus working collaboratively with the natural environment, local resources and talents.

A. There will be an application process to qualify appropriate installations and property status. Putney and several other towns in VT are currently developing processes in the most efficient and expedient manner. Application period will likely be defined within a set timeframe and the initial stage of the program may cap the number of systems. This attempts to ensure that adequate resources and program administration are available and effective at the initial stage of the program. Announcements related to the application and size of the program will be available in the near future.

A. Residential and commercial property owners may be eligible to opt into the district and qualify for
installation of renewable energy improvements so long as the property is not in default or behind in property tax payments. The eventual district ordinance will address this issue in greater detail.

A. Eligible Renewable/Other Technologies include: Solar Water Heat, Solar Space Heat, Solar Thermal - Hot Water, Photovoltaics, Wind, Biomass, Geothermal Heat Pumps, Daylighting, Small Hydroelectric.

Eligible Efficiency Technologies include: Water Heaters, Lighting, Furnaces, Boilers, Heat recovery systems, Programmable Thermostats, Energy Mgmt. Systems/Building Controls, Duct/Air sealing, Building Insulation - including: Replacement Windows & Doors, and replacement of high horsepower motors, Motor-ASDs/VSDs, or other Comprehensive Measures that affect Whole Buildings energy usage.

Guidelines are being developed and based on existing state, local or national standards to ensure quality control is addressed.

Applicable Sectors: Commercial, Industrial, Residential, Multi-Family Residential, Low-Income Residential, Agricultural, Institutional

Financing Terms: Financing may not exceed 15% of assessed property value; combined amount of assessment and outstanding mortgages may not exceed 90% of assessed property value. In the case of an agreement with the resident owner of a dwelling, the maximum amount to be repaid for the project shall not exceed $30,000 or 15%, whichever is less.

A. The application process establishes eligibility of both the property owner and the system proposed for installation. Subject to criteria being met and execution of all relevant agreements, the district will in turn finance the system and payments for the systems will be made to installers once all necessary inspections have taken place. The district has various options to capitalize the program including third party arrangement, issuance of taxable bonds, and/or access to federal tax credit bond authorizations, as available and feasible. The long-term goal of the program will be to achieve sustainable sources of funding and maintain low interest costs to eligible participants.

Federal: Established by the federal Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 (H.R. 1424) extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016, the ability to take the credit against the alternative minimum tax, and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009 (H.R. 1: Div. B, Sec. 1122, p. 46), which removed the cap or maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

30% Tax Credit
A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for onsite preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit can be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

100% Business Solar Tax Credit
Vermont offers the "Business Solar Tax Credit" for installations of solar energy equipment on business properties. The credit was created in March 2008 by S.B. 209, and amended by the Vermont Energy Act of 2009 (H. 313, June 2009). The credit is equal to 100% of the "Vermont-property portion" of the federal business energy tax credit for solar from 2008 through 2010.* In effect, this constitutes a 30% state-level credit for systems and equipment that use solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems are those that use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. The credit is generally not available for public utility property, passive solar systems or pool heating equipment. Any unused tax credit may be carried forward for no more than five years.

Vermont allows municipalities the option of offering an exemption from the municipal real and personal property taxes for certain renewable energy systems (Note: state property taxes would still apply). Eligible systems include, but are not limited to, "windmills, facilities for the collection of solar energy or the conversion of organic matter to methane, net-metered systems ... and all component parts thereof including land upon which the facility is located, not to exceed one-half acre." Adoption of this exemption varies by municipality, but the exemption generally applies to the total value of the qualifying renewable energy system and can be applied to residential, commercial, and industrial real and personal property.

Vermont has NO sales tax on renewable energy system sales.
Vermont's sales tax exemption for renewable-energy systems, originally enacted as part of the Miscellaneous Tax Reduction Act of 1999 (H. 0548), initially applied only to net-metered systems. The exemption now generally applies to systems up to 250 kilowatts (kW) in capacity that generate electricity using eligible "renewable energy" resources (as defined under 30 V.S.A. § 8002), to micro-combined heat and power (CHP) systems up to 20 kW, and to solar water-heating systems. The exemption is available for grid-tied systems and off-grid systems alike. Vermont's sales tax rate is 6%.

Incentive Type: State Rebate Program
Eligible Renewable/Other Technologies: Solar Water Heat, Photovoltaics, Wind, Micro-hydro
Applicable Sectors: Commercial, Residential, Schools, Local Government, State Government, Multi-Family Residential, Low-Income Residential, Agricultural
Amount: PV: $1.75/W DC for individuals/businesses, schools, farms, government; $3.50/W DC for multi-family, low-income
Solar water heaters: $1.75 per 100 Btu/day for individuals/businesses, schools, farms, government $3.50/100 Btu/day for multi-family, low-income
Wind: $2.50/watt - $4/watt for individuals or businesses, low-income multi-family (higher amount for commercially available, Vermont-made equipment) $4.50/watt DC if owned by schools, farms, or government entities;
Micro-hydro: $1.75/3 ft-gal/min for individuals and businesses; $3.50/3ft-gal/min for multi-family low-income, schools, farms, government

Maximum Incentives: PV and solar water heaters: $8,750 individuals/businesses, schools, farms, government; PV and solar water heaters for multi-family, low income: lesser of $35,000 or 50%
Wind: $12,500 individuals/businesses, low-income multi-family; lesser of $20,000 or 50% for schools, farms, and local/state governments
Micro-hydro: $8,750 individuals/businesses; lesser of $17,500 or 50% of total installed cost for schools, farms, government and low-income multi-family

Please view the complete listing at DSIRE

Applying available federal and state incentives may significantly impact the costs of financing renewable energy systems.

A. In March of 2010 the towns of Putney, Brattleboro, Dummerston and Westminster VT should have PACE votes. This is a vote to authorize the selectboards to study and impliment PACE when feasable. Essientially to formally proceed with the creation of this policy and program. Steps will then be taken to establish the structures (legal, financial and program) of the PACE initiative. Barring any unforeseen obstacles, we anticipate that application processes may begin in late October or early November. The towns will perhaps need a second vote to approve funding for this program - we will continue to provide updates on a regular basis regarding the effective dates of the program.

A. To learn more about this program, or if you would like to place your name on a list for potential eligible applicants, please contact your local energy committee or town energy coordinator.

Brattleboro Climate Protection
Paul Cameron 
230 Main St., Suite 202 
Brattleboro VT 05301 
802-251-8135 
email: pcameron@brattleboro.org 
Website: http://www.brattleboro.org 

Dummerston Energy Committee
Alex Wilson 
39 Leonard Road 
Dummerston VT 05301 
802-257-0091 
email: alex@buildinggreen.com 

Putney Energy Committee
Daniel Hoviss 
PO Box 628 
120 Main St. Putney VT 05346 
802-387-4141 
email: daniel@putney.net 
Website: http://pec.putney.net 

Westminster Energy Committee
John Bower 
Westminster VT 
802 387 4141 
email: jb@gmail.com 

Whitingham Energy Committee
Jennifer McNary 
7333 VT Route 100 
Whitingham VT 05361 
802-368-2277