PACE Massachusetts Financing

January 15, 2024


Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. Massachusetts has authorized local governments to establish such programs, as described below. 

In August 2016, Massachusetts Governor Baker signed H. 4568 into law, which allows local governments to establish commercial PACE financing programs. Municipalities may opt into the program by a majority vote of the city or town council, or board of selectmen. The Massachusetts Development Finance Authority, in consultation with the Department of Energy Resources, is administering the program.

Participation is open to commercial and  industrial buildings, as well as multi-family residential buildings with five or more units. Improvements eligible for financing include energy efficiency upgrades, renewable energy systems, and extending natural gas distribution to a property. Payback period for investments under this program is equal to the useful life of the longest-lived improvement financed, up to 20 years.

As of January 2024, 72 communities in Massachusetts have opted into PACE Massachusetts. To find which ones, check here.

To qualify for PACE Massachusetts financing, PACE projects must meet the savings to investment ratio (SIR) test. This means that the energy cost savings from the Energy Consumption Reduction or Renewable Energy Improvements must exceed the costs of the improvements over the life of the measures, including any financing costs and associated fees. For gas line extensions, energy costs and savings from Energy Consumption Reduction Improvements such as heating equipment upgrades will be considered in the SIR test and savings must exceed the total costs of the Energy Consumption Reduction Improvements and Gas Line Extension combined.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Massachusetts
Incentive Type: PACE Financing
Web Site:
Administrator: Massachusetts Development Finance Agency
Start Date:
Eligible Renewable/Other Technologies:
  • Solar - Passive
  • Solar Water Heat
  • Solar Space Heat
  • Solar Thermal Electric
  • Solar Thermal Process Heat
  • Solar Photovoltaics
  • Geothermal Heat Pumps
  • Daylighting
  • Lighting
  • Boilers
  • Heat pumps
  • Air conditioners
  • Energy Mgmt. Systems/Building Controls
  • Duct/Air sealing
  • Building Insulation
  • Comprehensive Measures/Whole Building
  • Custom/Others pending approval
  • Yes; specific technologies not identified
  • Wind (Small)
Terms: Up to 20 years


Name: M.G.L. ch. 23M
Date Enacted: 08/08/2016
Effective Date: 11/06/2016


Name: Massachusetts Development Finance Authority
Address: 99 High Street
Boston MA 02110
Phone: (617) 330-2000

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.