Residential-PACE Unlocks $33 Billion to Rebuild America's Cities
Today, Rocky Mountain Institute (RMI) revealed a $33 billion market opportunity in the U.S. for new net-zero energy (NZE) homes that can be scaled across the country with a special application of residential property assessed clean energy (R-PACE) financing.
In the wake of devastating natural disasters like Hurricane Harvey and Irma, which have caused the U.S. economy damages of over $150 billion, R-PACE offers a significant opportunity to use private capital to help fund rebuilding efforts. Florida, for example, already has R-PACE programs that can help finance hurricane protection improvements in existing homes and, if R-PACE was enabled for new residential construction, could jumpstart NZE and resilient home construction that would save Florida homeowners money while also offering superior and more resilient homes.
R-PACE has broken open the market by financing energy efficiency retrofits in over 158,000 homes in California, Florida and Missouri since 2008. But, many states across the country still do not offer this financing option to their residents. At the same time, states have limited the use of this instrument to retrofits by making it ineligible for new residential construction.
“R-PACE has shown its potential for the retrofit of existing buildings, and can be a game-changer for the residential new construction sector,” said Iain Campbell, managing director of RMI’s buildings program and chair of PACENation’s consumer protection committee. “By enabling R-PACE for new construction, city and state leaders can scale NZE and resilient homes that cut carbon emissions by incentivizing builders and developers to construct NZE homes at no up-front incremental cost while also offering their homeowners $1,635 in average energy savings year-on-year.”
The market for NZE and zero-energy ready homes and apartments has risen 103 percent nationally over the last two years—signaling a sea change in market demand. NZE homes not only offer superior energy performance, comfort, safety and affordability but are also significantly more resilient to grid failures. With drastic increases in consumer demand, RMI asserts that NZE homes are going to be the next big frontier for innovation and competition in the U.S. real estate market.
R-PACE helps to scale NZE homes by allowing the incremental cost of NZE construction to be financed through R-PACE financing secured by a special incremental property tax assessment. The ongoing savings to the owner—with a now negligible energy bill—more than covers the payments due under the R-PACE financing. In addition to scaling NZE homes, R-PACE for new construction can help states achieve complementary policy goals and outcomes such as:
- Meeting more ambitious environmental goals and targets: 58 percent of U.S. states have renewable energy portfolio requirements and/or have instituted statewide climate goals. NZE new construction can reduce the residential sector’s big carbon footprint while adding renewable energy to the grid. It is also important to note that the aggressive carbon-reduction goals set by states such as Colorado, Connecticut, Vermont, Massachusetts, and others are likely to be achieved only when the majority of their new building stock is NZE.
- Generating economic opportunity in the local construction and real estate sectors: Investment in new residential buildings contributes between 3 and 5 percent of GDP. RMI research confirms that NZE homes in particular present an incremental market opportunity of $33 billion for the U.S. real estate industry by 2037, which will translate to overall job and economic growth.
“Putting the buildings sector on a pathway to zero carbon emissions is of critical importance. We seldom come across ways to do so that have such a compelling value proposition,” continued Campbell. “Regardless of a legislator’s motivation, they should not hesitate to take advantage of this opportunity.”
Media Enquires please contact:
Nick Steel, Senior Media Associate
Rocky Mountain Institute
Tel: +1 347-574-0087
About Rocky Mountain Institute
Rocky Mountain Institute (RMI)—an independent nonprofit founded in 1982—transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables. RMI has offices in Basalt and Boulder, Colorado; New York City; Washington, D.C.; and Beijing.
More information on RMI can be found at www.rmi.org or follow us on Twitter @RockyMtnInst
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