Closing the "Energy-Efficiency Gap": An Empirical Analysis of Property Assessed Clean Energy

Abstract

Until federal regulators halted operations, a handful of municipal PACE programs across the US offered property-secured loans from city or county funds to homeowners for residential clean energy investments. These loans, repaid through property tax assessments, addressed multiple non-price “market barriers” to residential investments commonly identified in the literature on the “energy-efficiency gap” – information barriers, transferability of investment, and cognitive failures common to high up-front cost investments. To elucidate the magnitude of the “energy-efficiency gap”, this analysis uses difference-in-differences models as well as a synthetic counterfactual to estimate the effect on residential photovoltaic installation rates of three California PACE programs operating between 2008 and 2010. When applied statewide, results predict an increase in installations by approximately 25 homes per year for an average-size Californian city, or 14,170 installations per year statewide.