Choosing to install a renewable energy system is a great way to take control of your energy costs, support local jobs, and reduce your energy footprint. There are numerous financing options and incentives available for renewable energy projects, including loans and tax credits, that can save you significant amounts of money. In addition to the information below, we highly recommend you always ask your installer for information about financing and incentive opportunities. Installers are well versed and can talk through the options with you.
Solar Financing Explained
Be sure to check out Part 1: How to Go Solar!
What sort of tax credits might apply to my renewable energy installation?
Federal Energy Investment Tax Credit
Eligible technologies: solar PV, solar water, wind, geothermal, certain others.
A federal income tax credit of for the installation costs of a solar PV, solar water heating system, a wind turbine no larger than 100 kilowatts, geothermal heat pump and certain other technologies is available to qualifying individuals and businesses, with no upper dollar limit. The federal tax credit was 30%, but stepped down to 26% in 2020 and will continue to step down. In 2020, the phase-out schedule was extended two years as part of the spending bill that Congress negotiated. The ITC will remain at 26% until 2023, when it will step down to 22% for all customers. In 2024, it will expire for individuals while stepping down to 10% for businesses. Find out more about the business investment tax credit or the residential energy investment tax credit.
Montana Alternative Energy Systems Income Tax Credit*
Eligible technologies: solar PV, solar thermal, wind, hydro, geothermal, certified pellet/wood stoves
A $500 income tax credit is available to qualifying individuals living and paying taxes in Montana who have installed a new alternative energy system in their primary dwelling. If you and your spouse both pad for the system, and the cost is $1,000 or more, you may both claim $500. Eligible technologies include solar PV, solar thermal, geothermal, EPA certified low emission pellet or wood stove, wind turbine, and hydroelectric plant under 1 megawatt. For more details and the applicable tax form, click here.
*Senate Bill 399, which passed the 2021 Legislative Session, repealed the Alternative Energy Systems Tax Credit as of tax year 2022. This credit will not be available for installations that happen in 2022 or later.
Montana Geothermal Systems Income Tax Credit
Eligible technologies: geothermal
A $1,500 income tax credit is available to qualifying individuals living and paying taxes in Montana who have installed a geothermal energy system or ground source heat pump for heating or cooling their principal dwelling. For more details and the applicable tax form, click here.
Montana Property Tax Exemption for Buildings using Renewable Energy
Eligible technologies: solar PV, wind, solid waste, geothermal, non-hydrocarbon fuel cells, certified pellet/wood stoves
Certain amounts ($20,000 for a single-family residential dwelling or $100,000 for all other structures) of the assessed value of non-fossil forms of energy generation equipment or low-emission wood or biomass combustors are exempt from property taxes for 10 years following installation. For more details and the applicable tax form, click here.
Are loans available for a renewable energy project?
Alternative Energy Revolving Loan Program
Eligible technologies: solar PV, solar thermal, wind, micro-hydro, geothermal, certified pellet/wood stoves.
The Alternative Energy Revolving Loan Program (AERLP) provides zero-down, low interest loans of up to $40,000 to individuals, small businesses, nonprofit organizations and government entities in order to increase investments in alternative energy systems and energy conservation measures in Montana. The program, which is managed by the Montana Department of Environmental Quality’s Energy Office, has financed more than 500 renewable energy installations across the state since its first loan in 2003 for an off-gird solar array in Belt. Eligible technologies include solar PV, solar thermal, geothermal, EPA-certified low-emission pellet or wood stoves, wind, and micro-hydro. Energy conservation measures may be included in a loan when installed in conjunction with an alternative energy system. For program terms and an application form, click here.
Clearwater Credit Union Home Energy Loans
Eligible technologies: solar PV, energy efficiency improvements
Clearwater Credit Union offers two home energy loans: an unsecured, easy-access Home Solar Loan, and a Home Energy Efficiency Loan. The Home Solar Loan is an unsecured, easy-access loan for residential solar systems. They usually offer a decision in minutes. You can find out more and apply online, over the phone at (406)-523-3300, or in person at any branch. *
Are there any grants or other incentives available?
Universal System Benefit (USB) Incentives
Eligible technologies: solar PV, small wind, hydro, and others considered as appropriate
NorthWestern Energy administers Universal System Benefits (USB) incentives through its E+ Renewable Energy Program to qualifying non-profit organizations, government agencies, and schools in NorthWestern’s Montana service territory. Projects receiving these funds often provide civic value including education and visible representation of renewable energy technologies to a broad audience. For more information, click here.
USDA Rural Energy for America Program (REAP)
Eligible technologies: solar, wind, hydro, biomass, geothermal, energy efficiency
The U.S. Department of Agriculture’s Rural Energy for America Program (REAP) provides grants to qualifying agricultural and small businesses for 25% of the cost of a renewable energy project, up to $500,000. Energy efficiency grants and loan guarantees are also available through the program. For more details, click here.
Photo credit (this page): Jordan Solar