Home Efficiency Program Poised for Growth

A program to encourage homeowners to add solar panels and make their houses more energy efficient through higher property taxes aims to scale up.

A widely praised program to encourage homeowners to add solar panels and make their houses more energy efficient is on the verge of a ramp-up.

The model sets out to eliminate high up-front costs — a key reason why people resist making such improvements. It does so by allowing homeowners to pay for the renovations gradually, through higher property taxes, which can also be passed on to subsequent owners if the house is sold.

The initial cost is covered by the municipality, generally through a bond issue.

The two-year-old program is called Property-Assessed Clean Energy, or PACE, and 18 states have passed legislation allowing these programs. About a dozen more are considering similar legislation, according to Cisco DeVries, who helped develop the model and is now president of Oakland-based Renewable Funding, which helps administer the programs.

Mr. DeVries acknowledged that despite all the buzz, fewer than 2,000 properties had entered the program so far, with not all of those projects yet finished.

“It is pretty nascent,” he said.

He added, however, that several of California’s largest municipalities — San Francisco, San Diego and Los Angeles County — are poised to implement the programs in the next few months. California already hosts a particularly successful program, in Sonoma County.

Programs are also getting ready to start in Annapolis and Montgomery County, Md., and in Santa Fe County, N.M., among other places.

The federal government is helping.

“Most, but not all programs, are using federal stimulus dollars” to get started, Mr. DeVries said. Next week, he added, federal officials are expected to announce grants for governments seeking to start the program in their areas. Legislation introduced in Congress would provide further help, like federal guarantees and tax exemptions for the bonds.

“But that is longer term,” Mr. DeVries said.

One hitch: As the program spreads, it is encountering some tricky legal issues. Merrian Fuller, who works in the electric markets and policy group at Lawrence Berkeley National Laboratory, said that mortgage lenders were concerned about the program. That is because if the homeowner defaults, the lender is on the hook for the payments if the mortgage is greater than the home’s value. As a result, lenders group in several states are opposing the program.