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Show Me the Money: Financing and Incentive Updates and Changes in 2020

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As the cost of renewable energy continues to drop, more Montanans are choosing to install distributed energy systems like rooftop solar and small wind. When considering an installation, there are important financing and incentive options to keep in mind. Some of these have gone through some changes - or nearly so - in the past year. In this blog post, we highlight three updates and changes to important financing and incentives that Montanans should be aware of as you look to install small solar and wind systems at your home, business, farm or ranch in 2020 and beyond.

Net metering – Update: no changes!

On November 25th, 2019 the Montana Public Service Commission (MPSC) ruled in favor of MREA and Vote Solar, preserving rooftop solar and unanimously rejecting Northwestern Energy's proposal to change the way net metering customers would be charged. Their proposal had three key elements: 1) create a new, separate rate class for residential net metering customers, 2) lower the value of credits that net metering customers get for energy exported to the grid, and 3) create a new, punitive demand charge for net metering customers. These changes would have made it impossible for Montanans to save money by installing solar or wind at their home. During their work session, not only did the MPSC vote unanimously to reject NWE's proposal, they specifically cited MREA/Vote Solar's advocacy in their ruling!

What changed? Nothing - which is a good thing!

MREA net metering explanation
Click image for larger version

What this means for 2020 and beyond: Retail-rate net metering is preserved for the time being. Anyone with rooftop solar or small wind systems will continue to get a 1-for-1 credit for energy they provide to the grid. NWE can only make changes to net metering rates within a general electric rate case. Those take a lot of time and resources to put together, and must be filed with the Montana Public Service Commission. Our expectation is that it will be a few years, at least, before we see another proposal to change net metering rates. Learn more about net metering here.

Federal Investment Tax Credit – Step down begins

The Federal Investment Tax Credit (ITC) is one of the most successful tax credits the country has ever seen. Since the ITC was enacted in 2006, the U.S. solar industry has grown by more than 10,000% (SEIA.org). The ITC was a 30% tax credit available for the installation of solar, wind, and other technologies. It was scheduled to expire in 2016, but thanks to advocacy efforts by numerous different groups our elected officials in Washington D.C. extended the credit for several more years. However, the ITC was set on a phase out schedule. The first step down was from 30% to 26% as of 2020. Despite significant advocacy efforts in the past several months, Congress has not yet moved on renewing and extending the 30% credit. The credit will step down to 22% in 2021. In 2022, the credit will drop to 0% for residential customers. For commercial customers, it will drop to 10% and remain there.

What changed? As of 2020, the ITC is now at 26% for both residential and commercial customers.

What this means for 2020 and beyond: While national advocacy efforts to extend the ITC continue, in the nearterm it looks as if the credit will continue its phase out. Still, a 26% credit will significantly reduce the total cost of the system! Montanans interested in taking advantage of this tax credit should reach out to a local installer and start a discussion about installing solar or wind

Solar Loans Available

There are several entities in Montana that offer loan products for those looking to finance a solar or wind system. There are two important ones that we want to highlight. The first is the state's Alternative Energy Revolving Loan Program (AERLP), which is managed by the Department of Environmental Quality (DEQ). This is a state program that offers low-interest loans to Montanans installing renewable energy systems. The interest rate for 2020 will remain at 3.25% - this is a great deal! DEQ does charge origination and closing fees, and those details can be found on their website. They usually get quite a bit of interest, and you should reach out to them if you are interested in learning more.

Clearwater Credit Union offers solar (and energy efficiency) loans. The APR is 3.9%, which is slightly higher than the interest rate for the DEQ loan, but there are no fees and the application is pretty easy. It is worth comparing to see how the numbers pencil out for you. If you don’t live in Clearwater’s service area, you can still qualify for membership by joining an organization headquartered there, like MREA. This means that any MREA member across the state can access a CWCU solar loans. (Shameless plug: join MREA today! To celebrate our 20th Anniversary, MREA household memberships are only $20 this year.)

What's changed? The DEQ interest rate remains at 3.25% for 2020. The CWCU APR is 3.9%.

What this means for 2020 and beyond: As more Montanans are installing solar and other renewable energy technologies, more financing institutions are offering options to help finance these projects. Be sure to shop around and ask questions about interest rates, fees, terms, and other important details that go into a loan.


You can find out more about Financing and Incentives options in Montana here.