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We all want healthier and more efficient buildings. Between COVID-19 and climate change, the business case for making efficiency improvements like adding commercial solar panels and maintaining high performance building is clear, both in terms of  benefits to building occupants and bottom lines alike.

Despite the appeal of making these upgrades, however, many projects are abandoned because they’re viewed as economically infeasible due to limited financing options.

Fortunately, there is a little-known alternative that has been gaining attention both in Colorado and across the country because of its focus on clean energy improvements and its delivery of inexpensive, long-term capital.

The Commercial Property Assessed Clean Energy (C-PACE) program is an innovative financing mechanism in Colorado and other states designed to allow commercial and industrial building owners to install solar power systems and other eligible energy and water conservation improvements for little to no money down. In fact, in well-designed projects, the added energy savings from an improvement can outweigh the C-PACE payments resulting in an improved net operating income.


C-PACE financing was designed to be different from traditional financing options though it’s by no means meant to be a replacement. It’s merely another option with a number of unique and attractive features for building owners and developers to use to finance their projects.

One main feature of the C-PACE program is it can be used to finance up to 100% of eligible renewable energy, energy efficiency, and water conservation improvements for commercial and industrial buildings, including all of the soft and hard costs.

The financing terms for C-PACE loans are also typically longer, up to 25 years instead of the 5 to 10-year terms offered by commercial real estate lenders. This makes otherwise capital-intensive upgrades like roofing or commercial solar more accessible and financially attractive.


Commercial Solar Panels

One thing to note on finance terms is you cannot finance an improvement beyond its effective useful life (EUL). So, for example, an eligible upgrade with an EUL of ten years could not be financed over a longer-term. Thankfully this is not generally a concern when it comes to using C-PACE to finance solar PV projects as solar panels are typically warrantied to last at least 25 years or more. When making multiple improvements for a building, a weighted average for the EUL of all improvements is generally used to determine maximum finance terms. In any case, these terms are still usually much longer than traditional financing methods.

The key feature of C-PACE, however, is the voluntary special purpose assessment that is placed on the property (much like a sewer district assessment). This means a building owner repays the assessment through their property taxes, which now have an additional line item. The idea being that when an owner goes to sell the building, they can transfer future payments to the next owner (i.e., the assessment is tied to the property rather than the business). These non-recourse loans can be particularly compelling for building owners who plan to sell their buildings but also want to enjoy the benefits of something like solar PV in the meantime.



C-PACE was created to make it more economically feasible for building owners to make capital-intensive conservation improvements like solar and other energy modernization projects. If you are looking for ways to make your building stand out, to improve your occupant comfort, or to lower your energy costs, C-PACE financing can help. In Colorado, just over 50% of C-PACE financing goes towards existing building improvements.


Colorado C-PACE also applies to new construction, making it an innovative financing mechanism for commercial real estate developers looking to design and build high-performance buildings right from the start. So long as a building is designed to exceed the 2015 International Energy Conservation Code (IECC) by 5 percent or more, developers can access financing for up to 20% of a project’s total eligible construction cost. For developers, this can be a powerful way of reducing owner-equity contributions and filling in gaps in the capital stack. C-PACE for new construction also means more valuable and competitive buildings are entering the market.


Commercial Solar Panels


Below is a list of some of the many eligible building improvements that qualify for C-PACE financing. A more detailed list is available on the Colorado C-PACE website here. It should also be noted that Colorado C-PACE welcomes proposals for improvements that are not currently covered by C-PACE. The list of eligible improvements is expected to grow and evolve over time.

Renewable Energy Improvements

  • Solar PV
  • Solar thermal
  • Small wind
  • Geothermal systems
  • Waste heat recovery

Energy Efficiency Improvements

  • Automated building controls
  • Building envelope upgrades (insulation, glazing, windows)
  • High-efficiency lighting
  • HVAC upgrade
  • New roof (if proven to reduce energy consumption)

Water Conservation Improvements

  • Low flow fixtures (faucets, toilets, etc.)
  • Upgraded Irrigation systems

Eligible building types include commercial, industrial, agricultural, non-profit, and multifamily (5 or more units). Colorado does not currently have a Residential PACE program that covers private homes.


First and foremost, C-PACE financing allows building owners and developers to make substantial efficiency and conservation improvements to their properties with little to no upfront costs and no personal guarantees. Even if sufficient capital is available, owners are often better off using the affordable C-PACE financing and replacing more expensive pieces of the construction capital stack, like mezzanine debt or preferred equity.

Even better, the energy cost savings from these building improvements are often greater than the annual repayment amount, which means funds and resources can be redirected toward growing or enhancing other parts of a building or business. Financing a commercial solar power system for your building’s roof through the C-PACE program, for instance, could result in positive cash flow thanks to the energy savings, generous solar incentives like MACRS and the Solar Tax Credit, and more favorable financing terms.

All of the improvements eligible for C-PACE financing will increase the asset value and competitiveness of a building. These now-affordable upgrades can also improve occupant comfort and reduce operating costs. Now more than ever, potential tenants are looking for buildings with modernized infrastructure that prioritizes health and cleanliness, not to mention environmental friendliness. C-PACE provides an opportunity to prioritize both and have your building stand out from the rest.

The benefits of C-PACE extend to the surrounding community as well. It creates local jobs for the contractors who construct C-PACE eligible improvements. Communities benefit from the improved building stock, which also helps meet public policy goals like greenhouse gas reductions and renewable energy deployment. These public benefits are all achieved with private dollars too!

Commercial Solar Panels



The Colorado C-PACE program is an initiative of the Colorado New Energy Improvement District (NEID), which was enacted in 2014 following state legislation and statutory provisions (collectively, the “C-PACE Statute”) authorized by The Colorado General Assembly. The Colorado NEID is governed by a board of directors consisting of seven members from the Colorado Energy Office, the real estate development industry, banking, the energy efficiency, and renewable energy industries and public utilities. The program is administered by Sustainable Real Estate Solutions, Inc. (SRS), a 3rd-party entity with substantial C-PACE market experience.

Even though Colorado is one of only a few states to have a statewide program, not all counties are currently participating as they must first opt-in to the C-PACE program. As of July 2020, 32 Colorado counties are participating in the C-PACE program with 16 others in discussion. To date, there have been 69 C-PACE projects completed in Colorado, totaling $66 million in financing. These projects created nearly 700 jobs.

If a building owner or developer is interested in financing to upgrade their property, the process starts with a pre-qualification form sent to Colorado C-PACE program administrators. This is followed by a project kickoff discussion with a C-PACE representative to discuss the program and next steps. The contractor(s) responsible for the proposed improvements must then submit a project analysis to be reviewed for quality assurance purposes.

After the proposal review, the project is approved, and it is time for the building owner or developer to select a private capital provider. An open market of pre-qualified capital providers is available, allowing each owner or developer to select the financing structure that best meets their needs. All Colorado C-PACE projects are financed entirely through private capital, including banks, credit unions, and other financial institutions at competitive rates. Once a choice is made, a financial agreement is signed, and construction can begin.

Repayment is then completed as a separate item on the building’s property taxes. The C-PACE obligation is tied to the property, so the assessment can transfer to the next owner when the property is sold.


Learn more about commercial solar and using C-PACE financing by contacting one of our commercial solar specialists today. Independent Power has experience working with the Colorado C-PACE program and can help you navigate the financing process as well as any other available commercial solar incentive applications. Either give us a call at 303-443-0115 or sign up for a free commercial solar consultation.