PACE financing is a loan from a county government that funds the construction of certain home improvements, mainly solar, and is paid back through property taxes. It stands for Property Assessed Clean Energy. HERO is one organization that administrates this for you and deals with the setup and bureaucracy so that you don't have to waste your time dealing directly with the county governments as a contractor. There are quite a number of PACE counties in California so working through HERO can streamline and standardize the process for you.
The big difference between PACE and other types of financing is that the responsibility to make payments stays with the property, not the individual. This can be an advantage if the homeowner has bad credit scores, because those are ignored (because the property will retain its value regardless of whether the homeowner keeps it). It also takes the burden off the homeowner having to feel committed to an investment whose ultimately payback may outlast their stay in the house.
With that said, for homeowners who don't have those concerns, a conventional home improvement loan from a bank is probably going to be cheaper money.