Understand C-PACE vs. R-PACE

What are the differences between Residential PACE (“R-PACE”) and Commercial PACE (“C-PACE”)?

PACE programs exist for both residential properties (commonly referred to as Residential PACE or R-PACE) and commercial properties (commonly referred to as Commercial PACE or C-PACE). There are some key differences between Commercial PACE and Residential PACE, which has resulted in different rates of adoption and implementation across the U.S.

Commercial and Residential PACE programs share a common foundation. PACE programs allow a property owner to finance the up-front cost of energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment. The unique characteristic of PACE assessments is that the assessment is attached to the property rather than an individual.


3 Key differences:

  1. Income Generating: The key difference between C-PACE and R-PACE is that C-PACE is for properties that generate income from lease payments or revenues from businesses occupying those properties. In general, CleanFund only provides financing to properties that can demonstrate savings from the investments in renewables or energy/water efficiency measures – and demonstrate the ability to repay the C-PACE assessment.


  1. Lender Consent: In every C-PACE transaction, existing lienholders are asked to provide Acknowledgment and Consent to the C-PACE financing. In the vast majority of PACE enabled States, the state law requires the consent. CleanFund requires acknowledgment from any senior lien holder prior to closing of the C-PACE financing. We understand that a commercial real estate lender has an expectation of their lien priority and the amount of debt, and if that is going to be altered, then they have the right to know about that and in certain circumstances, mitigate that.


  1. Underwriting Standards: We cannot speak for all C-PACE financing companies, but CleanFund maintains strong underwriting standards. CleanFund’s underwriting is similar to what property owners would might find from traditional mortgage lenders – but simpler and more streamlined. Our approach is reinforced by the fact our credit team comes from a commercial real estate lending background. Our team has the ability to take what we know from underwriting commercial real estate loans and apply the most relevant aspects to our C-PACE underwriting process.


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