R-PACE: A GAME-CHANGER FOR NET-ZERO ENERGY HOMES

This insight brief by the Rocky Mountain Institute (RMI) argues that Residential Property Assessed Clean Energy (R-PACE) financing can accelerate the adoption of net-zero energy (NZE) new construction in the United States. By attaching financing to the property rather than the owner, R-PACE addresses key market barriers such as high up-front capital costs and the split incentive between builders and homebuyers.

• R-PACE financing is presented as a mechanism to enable the construction of net-zero energy (NZE) homes with no additional up-front costs for the homeowner. RMI estimates that NZE residences represent an incremental market opportunity of over $33 billion for the U.S. real estate industry by 2037.
• There is growing consumer demand for NZE homes, particularly among Millennials, who are the fastest growing group of homebuyers. A National Association of REALTORS® study found that 9–10 percent of millennials identify green/energy-efficiency as the primary reason for purchasing a specific home.
• The scaling of NZE homes is hindered by three primary market barriers: high up-front capital costs, uncertainty in how energy performance affects home valuations, and a split incentive where builders pay for improvements but homeowners reap the operational savings.
• RMI's analysis of six U.S. states indicates that the incremental up-front cost to build an NZE home ranges from 5.2 percent to 11.5 percent of total construction costs. The average incremental up-front cost for an NZE single-family home was calculated at $24,811, excluding tax credits and incentives.
• R-PACE resolves the builder-homeowner split incentive by allowing the incremental construction costs to be transferred to the homeowner via a property tax assessment. RMI's modeling suggests that NZE homes financed via R-PACE provide homeowners with annual cost savings that exceed the annual PACE assessment payments.
• RMI proposes a framework for states to enable R-PACE for new construction, which includes amending legal provisions, limiting eligible loans to 10-15 percent of construction costs based on performance standards (such as IECC 2015 or ASHRAE 90.2 2013), and requiring a savings-to-investment ratio (SIR) greater than 1.

APA

Lalit, R., & Petersen, A. (2017). R-PACE: A GAME-CHANGER FOR NET-ZERO ENERGY HOMES. RMI. https://rmi.org/app/uploads/2017/10/RMI_R-Pace_for_NZE_Insight_Brief_2017.pdf

Chicago

Lalit, Radhika, and Alisa Petersen. R-PACE: A GAME-CHANGER FOR NET-ZERO ENERGY HOMES. RMI, 2017. https://rmi.org/app/uploads/2017/10/RMI_R-Pace_for_NZE_Insight_Brief_2017.pdf.

Wikipedia

{{cite report |last1=Lalit |first1=Radhika |last2=Petersen |first2=Alisa |title=R-PACE: A GAME-CHANGER FOR NET-ZERO ENERGY HOMES |publisher=RMI |date=September 2017 |url=https://rmi.org/app/uploads/2017/10/RMI_R-Pace_for_NZE_Insight_Brief_2017.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lalit2017rpace, author = {Lalit, Radhika and Petersen, Alisa}, title = {{R-PACE: A GAME-CHANGER FOR NET-ZERO ENERGY HOMES}}, institution = {RMI}, year = {2017}, month = sep, url = {https://rmi.org/app/uploads/2017/10/RMI_R-Pace_for_NZE_Insight_Brief_2017.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }