C-PACE Financing Aids Developers in 2025

As interest rates stay elevated and traditional debt becomes harder to secure, one financing tool is quietly gaining traction in the CRE market: Commercial Property Assessed Clean Energy financing, or C‑PACE.

Once seen as a niche option for energy upgrades, C‑PACE has evolved into a powerful, flexible capital source being used across the full lifecycle of development—including post-construction recapitalization. Below are the key necessities to know.

C-PACE Fundamentals

C‑PACE allows property owners to finance energy efficiency, water conservation, renewable energy, and resiliency improvements through a long-term, fixed-rate loan that is repaid as a tax assessment on the property.

In 2025, developers are using C‑PACE for much more than solar panels.

From Construction to Completion: A New Role in the Capital Stack

C‑PACE has matured beyond its original use cases. Today, it’s being deployed in three main ways. 

•  During construction to lower blended capital costs
•  Mid-construction to fill funding gaps when other capital falls short 
•  Post-construction to recapitalize the project, reduce cost of capital, and improve liquidity

This evolution makes C‑PACE not just an energy finance tool, but a strategic capital stack solution.

Why It’s Gaining Ground in 2025

• Rates as low as 6–7%: Often 300–400 basis points below traditional mezzanine or preferred equity options
• Non-recourse and fixed-rate: Ideal for developers trying to stabilize cost exposure
• $9.7B+ in 2024 C‑PACE funding: A record-setting year that shows institutional adoption is accelerating
• Widely available: 38 states (and counting) have enabled legislation, with broader eligibility expanding into seismic resilience, hurricane protection, and low-carbon building materials

Case in Point: Real Projects Using C-PACE

• Black Desert Resort, Utah: Used $153 million in C‑PACE to fund energy efficiency, water savings, and seismic upgrades
• Multifamily & Mixed-Use Assets: Borrowers are leveraging C‑PACE to cash out equity post-construction or cover rising material/labor costs mid-build
• Retail and Hospitality: Owners are rolling in upgrades like LED lighting, HVAC systems, and even EV infrastructure—with flexible repayment over 20–30 years

Takeaways

C‑PACE is no longer just about being green—it’s about building smarter capital stacks in a tough market.

For developers, owners, and even equity partners looking for ways to unlock liquidity, reduce interest costs, or strengthen DSCR, C‑PACE is proving to be a compelling, underutilized tool.

For projects that are stalled, nearing completion, or need creative recapitalization, C-PACE may be a perfect fit.