U.S. Department of Energy Energy Efficiency and Renewable Energy

Plan Quality Assurance and Control for Property-Assessed Clean Energy Financing

During the tenth step in the process to launch a commercial property-assessed clean energy (PACE) financing program, the local government (grantee) decides how the program will ensure that project work meets program quality standards and how to guard against fraud.

In addition to the advantages mentioned in Leverage Existing Utility Rebate and Incentive Programs, one important reason for recommending that commercial PACE programs leverage existing rebate or incentive programs is that those utility initiatives (especially the customized incentive programs) typically perform inspections of installed measures to verify completion and quality. Another way for the PACE program to check on project completion and quality is to require that applicants submit the finalized building permits (for those measures that require them) to the PACE administrator as part of the package of verification documents necessary for final payment.

In addition to the checks on completion and quality performed by utility and building inspectors, a recommended practice for a PACE program to adopt is performing independent inspections (by program staff or a third-party inspector) of completed projects. If program planners decide that inspection of 100% of projects is not warranted, or is not feasible (due to budget or resource constraints), then inspecting a subset is encouraged. Inspections on a subset of projects can have two components:

  • Inspection of a certain number of the first projects completed by each contractor under the PACE program (e.g., the first three projects, or some unstated number of the first five projects).

  • Inspection of a random sampling of projects annually beyond the first projects included in #1 above (e.g., 15% of total projects annually).

The purpose of independent inspections is to ensure quality expectations are met, to guard against fraud, and to make sure contractors are abiding by the terms of the program. As in any large industry, a few unethical companies can take advantage of certain situations and not complete the project work as expected or promised. Grantees should always use licensed contractors and make monitoring and verification of work, results, and savings a mandatory part of their commercial PACE programs.

Also, if an applicant has elected not to participate in a utility incentive program (if the PACE program decides participation is optional), or if some of the project’s measures are not covered by the utility incentive program and its associated inspections, then third-party inspections will likely be necessary for measures not otherwise subject to utility inspection.

In addition to independent post installation inspections, a PACE program may decide a pre-installation inspection is appropriate and necessary to verify the before conditions and to guard against fraud.