|Solar Financing and
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
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
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
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
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
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 Montana Green
Power’s 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
- 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
- Building code requirements
- Professional versus
Here is a quick guide to
financing a solar electric or solar water heating system: