Solar Financing and Incentives

Montanans looking for help in financing a solar energy system have lots of choices, including loans, tax breaks and grants. Financial help is also available to homeowners and businesses who want to save energy-the first step in making a building worthy of a solar energy system. Below are listed dozens of links to information about renewable energy financial incentives. Before you begin, however, you should answer some basic questions.

How much does a solar electric system cost?

There is no single answer. System price depends on a number of factors, including whether the home is under construction or whether the PV is integrated into the roof or mounted on top of an existing roof. The price also varies depending on the PV system rating, manufacturer, retailer and installer. The size of your system may be the most significant factor in any equation measuring costs against benefits. Small, single PV-panel systems with built-in inverters that produce about 75 watts may cost around $900 installed, or $12 per watt.

These small systems will offset only a small fraction of your electricity bill. A 2-kilowatt system that will offset the needs of a very energy-efficient home may cost as much as $20,000 installed, or $10 per watt.

At the high end, a 5-kilowatt system that will completely offset the energy needs of many conventional homes may cost $40,000 to $50,000 installed, or $8 to $10 per watt. These prices, of course, are just rough estimates, and your costs will depend on the way your system is configured, your equipment options, and other factors. Your local PV installers can provide you with estimates or bids.

Calculating Electricity Bill Savings for a Net-Metered Grid-Tied PV System

Step 1: Multiply the kWh / kW-year times the PV system rating (in kW) to get the yearly PV system production in kWh/ yr.

Step 2: Multiply the PV system kWh / year times your retail rate in $/ kWh to get the annual bill savings. Example: A 2-kW system in Helena, at an electricity rate of $0.07/ kWh, will save about $236 per year (1,691 kWh/ kW- year x 2 kW x $0.07/kWh = $236/ year).

Photovoltaic System Production (kWh/ kW-yr)

Photovoltaic system production estimates are for a 1-kW rooftop PV system facing due south at a 20° tilt. Example: A 2-kW rooftop PV system located in Helena, MT, will produce about 3,382 kWh per year (2 kW x 1,691 kWh/ kW-year)

How can you finance the cost of your PV system?

There is nothing magical about financing the cost of purchasing and installing your PV system. Although there are some special programs available for financing solar and other renewable-energy investments, most of the options will be familiar to you.

The best way to finance PV systems for homes is through a mortgage loan. Mortgage financing options include your primary mortgage, a second mortgage such as a U.S. Department of Housing and Urban Development (HUD) Title 1 loan, or a home-equity loan that is secured by your property.

There are two advantages to mortgage financing. First, mortgage financing usually provides longer terms and lower interest rates than other loans such as conventional bank loans. Second, the interest paid on a mortgage loan is generally deductible on your federal taxes (subject to certain conditions).

If you buy the PV system at the same time that you build, buy, or refinance the house on which the PV system will be installed, adding the cost of the PV system to your mortgage loan is likely to be relatively simple and may avoid additional loan application forms or fees.

If mortgage financing is not available, look for other sources of financing, such as conventional bank loans. Remember to look for the best possible combination of low rate and long term.

This will allow you to amortize your PV system as inexpensively as possible. Because your PV system is a long-term investment, the terms and conditions of your PV financing are likely to be the most important factor in determining the effective price of your PV-generated power. PV systems purchased for business applications are probably best financed through a company's existing sources of funds for capital purchases-usually Small Business Administration loans or conventional bank loans.

Who sells and installs PV systems?

Montana is home to many reputable contractors with experience in installing PV systems. Here are a couple of suggestions for finding a contractor near you:

Check out our directory of renewable energy businesses.

Solar water heater costs

Solar water heating is economically competitive with electrical and propane heating. It also competitive with dedicated heat pumps and heat recovery units, depending upon individual situation.

An installed solar water heating system can cost anywhere from $2,500 to $4,500 in Montana. Why the large range? System cost depends upon certain variables, such as following:

Size of family to be served
Size and type of solar system
Type of financing available
Type of roof on which the collector is to be installed
Amount of possible utility rebate incentive
Building code requirements
Professional versus do-it-yourself installation.

Financing and Incentives Links