Innovation in Financing Energy‐Efficient and Renewable Energy Upgrades: An Evaluation of Property Assessed Clean Energy for California Residences

Ruth Winecoff and Michelle Graff

Social Science Quarterly, 2020, vol. 101, issue 7, 2555-2573

Abstract: Objective We examine whether Property Assessed Clean Energy (PACE) programs, an innovative financing mechanism using municipal bonds to finance the up‐front cost of household energy conservation projects, reduced conventional energy purchases by residential customers and increased energy generated through residential solar panel and fuel cell installations. Methods Using data on municipal bond issuances, electricity and natural gas purchases, and self‐generated energy, we use a difference‐in‐differences design to estimate the effect of PACE bonds issued in California between 2009 and 2017 on purchases and self‐generation. Results We find more residential energy self‐generation in counties with PACE programs. Results are inconclusive for conventional energy purchases, suggesting a possible rebound effect. Conclusion While innovative financing mechanisms facilitate access to otherwise prohibitively expensive technologies, governments must consider that behavioral responses may result in lower efficacy than desired and should consider pairing financing tools with instruments that concurrently promote reduced energy consumption.

Date: 2020
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https://doi.org/10.1111/ssqu.12919

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