CPACE Financing California: How Commercial PACE Works for Solar

CPACE — Commercial Property Assessed Clean Energy — is a California financing structure specifically designed for commercial clean-energy projects (solar, storage, efficiency upgrades). It's repaid via an assessment on the property tax bill rather than as a conventional loan. The terms are longer, the structure is non-recourse, and the obligation transfers with the property if you sell. For commercial property owners evaluating how to pay for solar, CPACE is worth understanding alongside direct purchase, lease, and PPA.

How CPACE Works

The mechanics: your property's taxing authority places a special assessment on the property equal to the financed amount. You repay the assessment via your property tax bill over the loan term (up to 30 years). The lender is secured by the assessment, not by your personal or corporate credit. If you sell the property, the remaining assessment stays with the property and transfers to the buyer.

Because CPACE is property-secured rather than personal/corporate-credit-secured, it's structurally closer to a mortgage than to a conventional business loan. Approval is based on the property's loan-to-value, existing mortgage consent (if applicable), and the project's energy-savings economics.

California CPACE Program: CSCDA Open PACE

California's statewide commercial PACE program is the CSCDA Open PACE program, administered by the California Statewide Communities Development Authority. Most major California cities and counties have opted in; property owners apply locally through a PACE administrator.

Program features as of 2026:

• •Term: up to 30 years
• •Rate: fixed for the full term
• •Structure: non-recourse; no personal or corporate guarantee
• •Repayment: property tax assessment; transfers with property sale
• •Max loan-to-value: approximately 30% of property value
• •Eligible uses: solar, battery storage, energy efficiency upgrades, water conservation
• •Status in 2025-2026: program continues unchanged

Who CPACE Fits

Commercial property owners with long-term hold horizons. The 30-year term only makes sense if you expect to own the property long enough for the solar savings to offset the PACE assessment. If you're planning to sell in 3 years, PACE transfers with the property — which is fine but makes your sale more complex.

Property owners who need non-recourse structure. CPACE is secured by the property, not by personal or corporate credit. For owners who don't want solar debt on their corporate balance sheet or who don't want personal guarantees, CPACE is uniquely useful.

Property owners whose existing mortgage lender consents. Most commercial mortgage lenders have to consent to the PACE assessment because it takes super-priority ahead of the mortgage lien. Getting lender consent is one of the main hurdles to overcome before CPACE funds.

CPACE vs Direct Purchase vs PPA

For a quick comparison:

How to Apply

CPACE applications go through PACE administrators (third-party companies that originate PACE loans in partnership with CSCDA Open PACE or other California PACE districts). Your commercial solar EPC typically has relationships with multiple PACE administrators and can introduce you. The process:

1. Apply through a PACE administrator with property financials and project specs
2. Get preliminary underwriting (typically 2-4 weeks)
3. Obtain existing mortgage lender consent (most important gate)
4. Close the PACE assessment (paperwork is routed through the county recorder)
5. Project funds disburse to the EPC and construction begins

From application to funded close typically takes 60-120 days for a commercial solar project.

Frequently Asked Questions

What is CPACE in California?

Commercial Property Assessed Clean Energy — a property-secured financing structure for commercial clean-energy projects in California. Up to 30 years, fixed-rate, non-recourse, repaid via property tax assessment.

Does CPACE transfer when I sell the property?

Yes. The assessment stays with the property. The buyer takes over the remaining PACE payments. This is sometimes framed as a benefit (no payoff required at sale) and sometimes a complication (sale process includes disclosing the PACE assessment).

What are CPACE interest rates in California?

Fixed-rate, typically in the 6-9% range in 2026 depending on term, property quality, and market conditions. Rates are higher than traditional commercial mortgages but the 30-year term and non-recourse structure make up for it in many scenarios.

Who administers CPACE in California?

CSCDA Open PACE is the statewide program. Most California cities and counties have opted in. Individual PACE administrators (third-party companies) originate the loans in partnership with the program.