Growing global awareness of climate change has ushered in a new era demanding policy, financial and behavioural innovations to accelerate the transition to a clean energy economy. Dramatic price decreases in solar photovoltaics (PV) and public policy have underwritten the expansion of solar power, now accounting for the largest share of renewable energy in California and rising fast in other countries, such as Germany and Italy. Governments’ efforts to expand solar generation base and integrate it into municipal, regional, and national energy systems, have spawned several programs that require rigorous policy evaluations to assess their effectiveness, costs and contribution to Paris Agreement’s goals. In this study, we exploit a natural experiment in northern California to test the capacity of Property Assessed Clean Energy (PACE) to promote PV investment. PACE has been highly cost effective by more than doubling residential PV installations.

1. Can the US keep the PACE? A natural
experiment in accelerating the growth of
solar electricity
Nadia Ameli1*, Mauro Pisu2, Daniel M. Kammen3
1* University College London, UK (n.ameli@ucl.ac.uk )
2 OECD, France
3 University California Berkeley, USA
Ameli et all (2017). Applied Energy 191, 163-169
https://doi.org/10.1016/j.apenergy.2017.01.037

2. What’s PACE?
• Upfront costs for efficiency / renewable is financed by
local government, by issuing bonds whose proceeds are
used to finance loans to homeowners
•Property owners pay back the loan though an assessment
added to property taxes
• Loan is tied to the property itself, not the borrower - the
assessment stays with the beneficiary (homeowner)
• PACE assessments have a senior lien position over
existing mortgages in the event of foreclosure

3. PACE financing authorized by the state*
CA: 2008
NM: 2009
CO: 2008
WI: 2009
ME: 2010
VA: 2009
OK: 2009
TX: 2009
LA: 2009
IL: 2009
OH: 2009NV: 2009
OR: 2009
NY: 2009
NC: 2009
FL: 2010
HI: Existing
Authority
DC
MN: 2010
VT: 2009
MD: 2009
GA: 2010
DC: 2010MO: 2010
NH: 2010
MI: 2010
MA: 2010WY: 2011
CT: 2011
NJ: 2012
http://pacenation.us/pace-programs/ June 2017
UT: 2013
AR: 2014
PACE financing authorized in 33 States

4. Active PACE residential programs
Active PACE residential programs*
CA: 2008
FL: 2010
http://pacenation.us/pace-programs/ June 2017
MO: 2010

5. Fannie Mae and Freddy Mac

6. Motivation
Investigate the effectiveness of governmental policies
• Studies on renewable portfolio standards (RPS)
• Studies on Feed-in Tariff (FiT)
• Studies on tenders and tax incentives
• First evaluation of the PACE program done by
Kirkpatrick and Bennear (2014)
Our study:
- Regression Discontinuity Design
- longer period (up to 2012)
- larger set of cities (with population below 20 000)

7. Regression Discontinuity Design
Sonoma
Mendocino
Napa
Lake
Marin
Solano
15 km
20 km
30 km
40 km

8. Regression Discontinuity Design
1. Spatial border introduces a sharp discontinuity in the variable of interest
2. All other covariates evolve “smoothly” at the spatial discontinuity
Variables
15 km
(mean)
20 km
(mean)
30 km
(mean)
40 km
(mean)
Ownership (% rate)
Sonoma - treatment
45.54
(11.60)
48.23
(11.12)
48.61
(10.75)
48.14
(10.91)
Neighboring counties – control
45.46
(9.23)
45.43
(10.33)
50.57
(12.28)
50.59
(12.62)
Difference 0.08 2.8 1.96 2.45
Home value (dollars)
Sonoma – treatment
434 180
(81 250)
410 154
(72 595)
389 038
(81 238)
385 316
(82 849)
Neighboring counties – control
457 873
(206 370)
450 430
(173 024)
441 255
(228 567)
458 688
(270 935)
Difference 23 693 40 276 52 217 73 372
HH income (dollars)
Sonoma – treatment
66 071
(14 696)
63 775
(13 414)
61 657
(12 909)
61 657
(12 802)
Neighboring counties – control
66 886
(11 943)
67 723
(11 561)
69 681
(26 272)
69 992
(30 283)
Difference 815 3 948 8 024 8 335
Number of cities
Sonoma – treatment group 13 24 34 36
Neighboring counties – control group 9 14 36 60

9. Data
• California Solar Initiatives (CSI) + US census data
• Solar PV installations at city level
• 770 observations (2007-2012)
• Focus on six counties: Sonoma (treated)
- Lake (control)
- Marin (control)
- Mendocino (control)
- Napa (control)
- Solano (control)

10. 𝑦𝑖𝑗𝑡 = 𝑒𝑥𝑝 𝛼0 + 𝛾1 𝑍𝑗𝑡 + 𝛾2 𝑍𝑗𝑡 ∗ 𝑦𝑒𝑎𝑟 + 𝛼1 𝑃𝐶𝐴𝑖𝑗𝑡 + 𝛼2 𝐶𝑆𝐼𝑗𝑡 + 𝐶𝑗 + 𝑇𝑡 + ℇ𝑖𝑗𝑡
Poisson pseudo-maximum-likelihood estimation
Econometric model
𝑦𝑖𝑗𝑡 - new solar installations of city i in county j and year t
Zjt - binary policy variable for the presence of a PACE program in county j at time t
(𝑍𝑗𝑡 ∗ 𝑦𝑒𝑎𝑟) policy variable*time trend (how the treatment effect varies over time)
PCA - first principle component of ownership rate, home value and median households’
income
CSI - solar incentive in county j at time t,
Cj and Tt - county and year fixed effects
ℇijt - heteroskedastic error term

11. Results
0
5
10
15
20
25
30
35
2006 2007 2008 2009 2010 2011 2012 2013
Sonoma Sonoma's border counties California
Watt/pop
Source: Authors calculation based on CSI database.
Note: California trend does not include installed solar PV power in Sonoma. Sonoma’s border counties include Lake, Marin,
Mendocino, Napa and Solano.
Residential cumulative installed PV wattage per capita (Watt/population)

12. Results
Source: Authors calculation based on CSI database
2007 2012
Residential installed PV wattage per capita (Watt/population)

13. Results
Independent variable: new PV wattage per capita
VARIABLES 1 2 3
PACE program
2.261***
(0.118)
0.741***
(0.107)
0.443*
(0.258)
CSI
0.0428
(0.0279)
0.296
(0.411)
0.296
(0.412)
Household wealth
0.666***
(0.205)
0.667***
(0.206)
0.667***
(0.206)
PACE over time
0.0764
(0.0661)
Time dummies NO YES YES
County dummies YES YES YES
Constant
0.191
(0.134)
-1.045
(3.749)
-1.101
(3.723)
Observations 774 774 774
R-squared 0.097 0.149 0.150
Estimated effects on new solar installations
Standard errors are clustered by counties and reported in parentheses; superscripts ***, ** and * indicate statistical significance at the 1%, 5%
and 10% level, respectively.

14. Marginal effects of the PACE program over time
Results
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2007 2008 2009 2010 2011 2012
Coef.
95% Conf Interval
95% Conf Interval

15. Estimated effects on new solar installations in cities up to 15 km, 20 km,
30 km and 40 km
VARIABLES
15 km 20 km 30 km 40 km
1 2 1 2 1 2 1 2
PACE policy
0.418***
(0.0952)
-0.0603
(0.149)
0.433***
(0.025)
-0.12
(0.0849)
0.633***
(0.127)
0.0221
(0.135)
0.622***
(0.171)
0.124
(0.164)
CSI
-0.854
(0.55)
-0.85
(0.544)
-0.401***
(0.0389)
-0.379***
(0.038)
0.00444
(0.227)
0.00752
(0.223)
0.203
(0.451)
0.2
(0.452)
Household
wealth
0.429
(0.317)
0.429
(0.316)
0.639*
(0.352)
0.639*
(0.351)
0.971***
(0.318)
0.970***
(0.318)
0.699***
(0.204)
0.699***
(0.204)
PACE over time
0.125***
(0.0209)
0.144***
(0.02)
0.159***
(0.0265)
0.129***
(0.0333)
Time dummies YES YES YES YES YES YES YES YES
County dummies YES YES YES YES YES YES YES YES
Constant
9.918**
(4.637)
9.756**
(4.687)
5.444***
(0.169)
5.068***
(0.19)
-0.348
(1.962)
-0.537
(1.929)
-0.148
(4.191)
-0.235
(4.159)
Observations 126 126 216 216 390 390 546 546
R-squared 0.204 0.204 0.144 0.146 0.312 0.318 0.145 0.147
Standard errors are clustered by counties and reported in parentheses; superscripts ***, ** and * indicate statistical significance at the 1%, 5%
and 10% level, respectively.

16. Marginal effects of the PACE program on new solar installations computed for
different distance bandwidths
-0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2007 2008 2009 2010 2011 2012 2013
Coef.
95% Conf Interval
95% Conf Interval
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2007 2008 2009 2010 2011 2012 2013
Coef.
95% Conf Interval
95% Conf Interval
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2007 2008 2009 2010 2011 2012 2013
Coef.
95% Conf Interval
95% Conf Interval
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2007 2008 2009 2010 2011 2012 2013
Coef.
95% Conf Interval
95% Conf Interval
15 km 20 km
40 km30 km

17. Median Single-Family Housing Prices (detached homes only)
Source: Authors calculation based on California Association of Realtors (2015)
Year CA Lake Marin Mendocino Napa Solano Sonoma
2003 $371,522 $205,433 $737,127 $280,871 $461,339 $311,658 $425,320
2004 $451,068 $260,729 $859,287 $337,322 $540,532 $378,507 $505,238
2005 $525,960 $301,097 $976,316 $387,015 $652,959 $459,475 $622,577
2006 $560,641 $311,877 $963,123 $425,067 $679,279 $475,755 $621,709
2007 $554,450 $277,824 $1,028,988 $438,099 $657,528 $424,803 $575,177
2008 $360,790 $209,603 $961,129 $348,766 $460,819 $287,629 $406,982
2009 $276,700 $157,053 $772,914 $261,541 $363,484 $205,017 $348,780
2010 $305,631 $131,773 $805,172 $256,730 $359,304 $211,327 $362,137
2011 $287,523 $109,705 $754,929 $216,355 $339,287 $191,453 $332,557
2012 $321,389 $123,293 $780,121 $225,866 $371,717 $201,843 $356,154
2013 $407,528 $150,558 $928,317 $270,928 $484,990 $271,455 $438,382
2014 $448,655 $172,775 $1,026,182 $298,828 $568,048 $318,762 $490,022
(April) 2015 $451,485 $193,155 $1,074,785 $311,023 $531,068 $336,760 $508,880
2008-2012 % -0.109 -0.412 -0.188 -0.352 -0.193 -0.298 -0.125
2003-2007 % 0.492 0.352 0.396 0.560 0.425 0.363 0.352
2008-2015 % 0.251 -0.078 0.118 -0.108 0.152 0.171 0.250
Difference
2008-12 - 2003-07
-0.601 -0.764 -0.584 -0.912 -0.619 -0.661 -0.477

18. Conclusions
Policy evaluation based on an experimental framework,
still rare in the environmental and energy field
• PACE more than doubled solar installations in Sonoma
compared to its neighboring counties:
- 2008 installations increased by 45%
- 2009/2010 installations increased by 82%
- 2011/2012 installations increased by 76%
• Solar installations had a positive effect on the residential
market
- Sonoma’s house-price growth rates decreased
much less (-45 pp) than in neighboring counties (on
average -69 pp) or whole California (-60pp)

19. Limitations
• PACE evaluation is based on six counties in Northern
California
- need to consider the experience of other states
• PACE evaluation based on the residential solar market
- need to assess the commercial sector
• Solar PV supported the residential market, no causal
interpretation can be attached to this finding
- need to conduct more empirical analyses

20. Annex

21. Annex
new PV wattage per capita
PACE 2008
0.448**
(0.048)
PACE 2009-2010
0.817***
(0.197)
PACE 2011-2012
0.755**
(0.213)
CSI
0.307
(0.423)
Household wealth
0.668***
(0.206)
Time dummies YES
County dummies YES
Constant
-1.149
(3.814)
Observations 744
R-squared 0.149
Standard errors are clustered by counties and reported in parentheses; superscripts ***, ** and * indicate statistical significance at the 1%, 5%
and 10% level, respectively.
Estimated effects of PACE overtime on new solar installations