Investment

EuroPACE: Innovative Financing for Europe

Exploring the viability of on-tax financing for home and commercial building renovation in Switzerland and Norway

EuroPACE can be used to pay for energy efficiency, renewable energy, and water conservation upgrades to homes and commercial buildings. EuroPACE financing covers up to 100% of a project’s costs and is repaid as a special charge added to a property tax bill over a term of up to 20 years. EuroPACE financing is attached to a property, not an individual, thus it stays with a building upon sale. This feature of EuroPACE financing provides investors with an enhanced repayment security.

EuroPACE is led by South Pole, GNE Finance, the Norwegian University of Science and Technology (NTNU)
and Climate-KIC

The challenge

EuroPACE overcomes typical barriers to energy efficiency investments on the demand side by offering simple and clear value proposition that speaks directly to people’s needs. The EuroPACE mechanism is beneficial in that it can provide investors a pipeline of standardized, financeable, energy efficiency transactions. EuroPACE bonds will be able to obtain “green bonds” certification, while EuroPACE financing is secured via a lien on the property thus it offers investors security of repayment. Plus, EuroPACE helps meet divesting mandates through an investment in projects that help reduce CO2 by means of building retrofits. For cities and energy agencies, EuroPACE contributes to meeting climate and energy goals by enabling home and commercial building renovation.

A new approach

The concept of EuroPACE is inspired by the success of an on-tax financing model called PACE, launched in 2008 in California. EuroPACE is a property-tax based financing mechanism that provides up-front financing for energy efficiency, renewable energy and water conservation upgrades to almost any type of building. For cities and public authorities, EuroPACE is a highly effective instrument that does not represent a liability for the public balance, and has the potential to build a scalable, standardized pipeline of securitizable projects.

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How it works

EuroPACE can be used to pay for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation and more to homes and buildings. EuroPACE financing covers up to 100% of a project’s costs and is repaid as a special assessment added to a property tax bill over a term of up to 20 years. It works the same way as other financed public benefits e.g. water & sewage services, and is uniquely positioned to boost energy efficiency investment in existing buildings, ranging from homes to offices, hotels, multi-family and mixed-use properties. EuroPACE offers people more than just an innovative form of financing – it also simplifies and digitalizes what is often a stressful and complicated renovation process. Homeowners simply contact their local PACE programme (often the local government), who connects them with local contractors and organizes the financing.

Getting involved

If you’re a city/government/energy official, an investor or developer, an energy efficiency policy expert or legal/fiscal expert in Switzerland or Norway, contact us (l.fraenkl@southpole.com) to take part in a short interview to help us assess demand and feasibility of a EuroPACE financing tool in your country.

If you’re interested in learning more about EuroPACE, join a growing EuroPACE Community by signing up for a monthly update (www.europace2020.eu).

Please contact us to take part in a EuroPACE Roundtables in Zürich, Switzerland, on May 31st and in Trondheim, Norway, on May 16th. 

Contact details

Lea Fränkl
Consultant, South Pole

l.fraenkl@southpole.com
+41435013563

Contact details

Kristina Klimovich
Head of Communication and Marketing, GNE Finance

k.klimovich@gnefinance.com
+31 6 40747627

Facts and figures

In the US, the PACE market reached over $5 billion in funded projects, including the retrofit of over 200,000 homes, which resulted in more that 42,000 new local jobs and the creation of hundreds of new companies.

Where would we be without our partners