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

The briefing presents a business case for applying R-PACE financing to new residential construction to achieve net-zero energy (NZE) goals. It identifies key market barriers—such as high up-front costs and split incentives between builders and buyers—and proposes a policy framework to integrate R-PACE into new builds. RMI's analysis across six U.S. states suggests that NZE homes can be delivered with no additional up-front cost to the buyer, providing annual energy savings that exceed the PACE assessment payments.

• NZE residences represent a potential incremental market opportunity exceeding $33 billion for the U.S. real estate industry by 2037.
• Three primary market barriers hinder the scaling of NZE residential development: high incremental up-front capital costs, uncertainty in how energy performance affects home valuations, and the split incentive between builders (who pay for upgrades) and homeowners (who benefit from savings).
• RMI's analysis of six U.S. states (California, Missouri, Florida, New York, Colorado, and Georgia) shows that the incremental up-front cost to construct an NZE home ranges from 5.2% to 11.5% of total construction costs before incentives.
• R-PACE financing can resolve the builder-homeowner split incentive by attaching the cost of NZE upgrades to the property tax bill, allowing the cost to transfer to the homeowner who realizes the operational savings.
• Financial modeling indicates that NZE homes financed via R-PACE provide homeowners with annual cost savings that are greater than the annual PACE assessment payouts across all six analyzed states.
• RMI proposes a framework for 'R-PACE for new construction' that includes limiting eligible loans to 10-15% of construction costs, requiring lender consent, and mandating 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} }