Clean-Energy Lender Renovate America Tops $1 Billion in Loans

Renovate America, a clean-energy lender, has topped $1 billion in loans for home improvements — a milestone for the San Diego company and a once-foundering government program to encourage projects that reduce electricity or water use.

Renovate America got into the business in 2011 as the Property Assessed Clean Energy financing program, or Pace, was struggling to overcome opposition from mortgage lenders and federal housing regulators that had stalled the clean-energy lending effort. Since then, the lender has provided money to 44,000 households for efficiency projects in partnership with local governments using the Pace program.

That represents not only a fast-growing source of revenue for Renovate America but also a gauge of the improving health of Pace programs.

PaceNow, a nonprofit organization that tracks use of the Pace programs nationwide, lists Renovate America as the top operation of lender among more than 100 members. Renovate America is the only one to reach $1 billion in financing, with more than 90 percent market share of all Pace programs, which work with local governments in 32 states and the District of Columbia.

The Pace program finances 100 percent of efficiency improvements such as new heating and cooling systems and solar power, requiring no upfront cash. The term of the financing is based on the useful life of the product, up to 20 years, which can lower monthly payments.

The payments are collected through property-tax payments.

The products installed must meet federal and state efficiency standards, enabling homeowners to lower monthly utility bills and help pay for the cost of the improvements over time.

Each year, more than 20 million of the 135 million homes in the U.S. will have systems replaced that affect energy or water consumption — such as air conditioners, heaters, windows, roofs and water heaters — in most cases because existing products are failing, according to Renovate America.

But Renovate America says most homeowners select the least-efficient replacement because they aren’t sure how long they’ll stay in their homes. Although cheaper initially, the inefficient choice can become the most expensive when energy or water costs are factored into the total cost of ownership, the company says.

Although about a third of the $1 billion has gone to solar projects, the most popular lately have been projects to reduce water consumption because of California’s long drought.