CPACE Renewable Energy Installations 2 — Questions and Answers
Question 1: Under a CPACE program, which component of a solar PV system is typically the primary collateral securing the assessment lien?
- The inverter unit
- The racking and mounting structure
- The permanently affixed improvements to real property (Correct answer)
- The solar panels as personal property
Correct answer: The permanently affixed improvements to real property
CPACE assessments are secured by a lien on the real property, so permanently affixed improvements—including the entire installed system—serve as the collateral.
Question 2: A commercial building owner wants to add a 200 kW wind turbine via CPACE. Which site consideration is MOST critical before project approval?
- Prevailing wage requirements for installation crews
- Zoning approval and setback compliance for the turbine height (Correct answer)
- The building's existing natural gas consumption
- Proximity to a public transit corridor
Correct answer: Zoning approval and setback compliance for the turbine height
Wind turbine installations require local zoning approval and must meet setback requirements based on turbine height and local ordinances.
Question 3: What is the primary purpose of a production estimate (energy model) in a CPACE renewable energy project application?
- To determine the property tax assessed value increase
- To demonstrate the project's expected energy savings relative to financing costs (Correct answer)
- To calculate the contractor's profit margin
- To satisfy federal renewable portfolio standards
Correct answer: To demonstrate the project's expected energy savings relative to financing costs
CPACE underwriting requires an energy model showing projected savings exceed or justify the assessment payment, ensuring the project is economically viable.
Question 4: A CPACE-financed rooftop solar system on a leased commercial property requires consent from which party in addition to the property owner?
- The local utility company
- The state energy office
- The mortgage lender holding a senior lien (Correct answer)
- The building's insurance carrier
Correct answer: The mortgage lender holding a senior lien
Most CPACE programs require existing mortgage lender consent because the CPACE assessment lien can have super-priority over the mortgage in some states.
Question 5: Which renewable energy technology qualifies for CPACE financing specifically because it reduces a building's reliance on grid power during peak demand periods?
- Decorative solar facade panels with no electrical output
- Battery energy storage systems paired with solar PV (Correct answer)
- Passive daylighting skylights
- Low-flow plumbing fixtures
Correct answer: Battery energy storage systems paired with solar PV
Battery storage paired with solar PV shifts energy use away from peak grid periods, qualifying as an energy efficiency/resilience improvement eligible for CPACE.
Question 6: In a CPACE transaction, the 'savings-to-investment ratio' (SIR) is used to:
- Set the contractor's licensing fee
- Confirm that projected lifetime energy savings equal or exceed the total financing amount (Correct answer)
- Determine the property's new assessed value for tax purposes
- Allocate risk between the capital provider and the property owner
Correct answer: Confirm that projected lifetime energy savings equal or exceed the total financing amount
An SIR ≥ 1.0 confirms that the present value of energy savings over the assessment term covers the total financed amount, a core CPACE underwriting requirement.
Question 7: A geothermal heat pump system installed at a commercial property under CPACE primarily qualifies because it:
- Produces electricity sold back to the grid
- Significantly reduces heating and cooling energy consumption (Correct answer)
- Increases the building's market value above the loan amount
- Uses federally mandated refrigerants
Correct answer: Significantly reduces heating and cooling energy consumption
Geothermal heat pumps qualify for CPACE by dramatically cutting HVAC energy use, meeting the program's energy reduction eligibility requirement.
CPACE Renewable Energy Installations 2
Under a CPACE program, which component of a solar PV system is typically the primary collateral securing the assessment lien?