C-PACE Lending Surges as States Expand Programs to New Construction and Resiliency Projects

Commercial Property Assessed Clean Energy (C-PACE) financing is experiencing a period of unprecedented growth, driven by recent state-level legislative changes that have significantly broadened the scope and accessibility of the funding tool for property owners and developers. Originations reached a record $2.42 billion in 2024, and preliminary data for 2025 indicates that volume will substantially surpass that figure, pushing cumulative originations over the $10 billion mark, according to the nonprofit advocacy group PACENation. This expansion marks a significant evolution for a financing mechanism that allows property owners to fund energy efficiency, water conservation, and climate resiliency upgrades through a voluntary assessment added to their property tax bills. While the capital is provided by private lenders, the loan is secured by a senior lien on the property, providing long-term, fixed-rate financing that can cover up to 100% of project costs. For business owners and real estate developers, this shift transforms C-PACE from a niche green-energy subsidy into a core component of a sophisticated capital stack. In our experience, many clients previously viewed sustainability upgrades as a cost center, an expense to be minimized. The expansion of C-PACE allows these projects to be financed with no upfront cash, generating immediate positive cash flow as energy savings outweigh the loan payments. This is a fundamental change in project finance. As specialists in capital raising and investor strategy, we guide clients through structuring these deals to maximize their financial and operational benefits. The key is to see this not just as debt, but as a strategic investment in asset value and resilience, a process C&S Finance Group LLC at csfinancegroup.com is equipped to manage. A key catalyst for the recent growth has been the move by states to expand program eligibility. In 2024, Florida updated its C-PACE program to remove look-back limits, enabling property owners to retroactively finance qualified upgrades completed far earlier, even as far back as a project’s inception. The state also broadened the types of eligible projects to include critical resiliency measures such as flood mitigation, wind resistance, storm hardening, and septic-to-sewer conversions, reflecting the growing need for climate-resilient buildings. Similarly, New York amended its C-PACE legislation to permit financing for new construction projects. Previously, the program was limited to retrofitting existing buildings. The New York State Assembly noted that developers often bypassed the most energy-efficient equipment in new builds to control upfront costs, effectively passing on higher long-term energy expenses and emissions to tenants and the community. By making C-PACE available for new construction, the state aims to incentivize developers to incorporate higher-efficiency systems from the outset. This evolution in state policy reflects a market that has matured significantly since its early days. “In the early days of the industry, the first-use cases of C-PACE financing were rooftop solar and energy-efficiency retrofit projects,” said Alexandra Cooley, CEO of Nuveen Green Capital, in a June 2 report. “Energy efficiency and resiliency went from being less than 50 percent of our financings in 2015 to over 95 percent today.” The scale of transactions has also grown dramatically. What began with deals ranging from $1 million to $5 million for retrofits has expanded to include major projects of $40 million and now new construction deals exceeding $100 million, according to a report from the University of Oxford's Saïd Business School. While the expansion presents a major opportunity, the landscape is becoming more complex. Each state program has its own rules, eligible measures, and underwriting standards. Integrating a C-PACE loan, which holds a senior lien position, with traditional senior bank debt requires careful negotiation and structuring. We have seen projects stall because the interplay between the C-PACE lender and the primary mortgage holder was not properly addressed early in the process. It is crucial for property owners to work with advisors who understand both the public policy goals and the private credit requirements underpinning these transactions. The surge in C-PACE adoption has also been fueled by increased acceptance from traditional financial institutions. As interest rates began rising in 2022, developers and owners sought alternative funding sources to fill gaps in their capital stack. Banks have become more comfortable partnering with C-PACE lenders, recognizing the value of the financing in making projects more viable and the underlying assets more valuable and less risky. Furthermore, mounting regulatory pressure in major cities is making C-PACE an essential compliance tool. Municipalities like New York City have begun implementing laws that will impose significant financial penalties on inefficient buildings. For building owners facing these mandates, C-PACE offers a direct path to finance the necessary upgrades to avoid future fines, turning a potential liability into a value-adding investment. Looking ahead, the momentum behind C-PACE is expected to continue as more states with enabling legislation launch active programs. Industry observers will be watching for greater standardization in underwriting and documentation across jurisdictions, which could further accelerate the securitization of C-PACE loans and attract more institutional capital into the market, solidifying its place as a mainstream financing tool for commercial real estate.