There is Hope: Energy Efficiency and Solar Energy Tax Credits & Grants for 2011

Over 80% of Montana’s housing stock was built prior to 1980. These homes offer the largest opportunity for Montana to reduce energy consumption through retrofitting and consumer education, as well as a huge opportunity to bolster our local economy by growing the green-collar job sector with verifiers and installers to do this work.

The fact remains that the majority of residents in these 1980 and older homes tend to be first-time home buyers, the elderly, and working-poor. Even when the desire is there, the main sticking point in Montana seems to be the ability for a consumer to cover first-costs on a project. There is a fair amount of assistance out there for those who qualify and are willing to do the work to recover it.

As of late, there has been much debate and confusion over the continuation of certain tax credits, grants and rebates that were implemented during or enhance as part of the American Recovery and Reinvestment Act (ARRA). In many cases, a project must be third-party verified or certified to qualify for some of these rebates or credits.  There is good news and bad news:

The bad news is that a few of these options have shrunk back to pre-recession era levels.

The good news is that there is still a lot of money out there for Energy Efficiency and Renewable Energy applications in the residential and commercial sectors.

ENERGY EFFICIENCY TAX CREDIT:  There has been an Energy Efficiency tax credit around for a while. It was traditionally a 10% credit, maxing out at $500. For the past couple years this was increased to 30% and $1500 cap. For 2011 we are back to the originally levels of 10% and $500 cap. This article offers a great overview of the information for 2011 as well as eligible projects, mounts and forms to get started, scroll down to point 3 for 2011 info.

RENEWABLE ENERGY TAX CREDIT:  The big kicker that keeps on giving is the 30% renewable energy tax credit. It has no monetary cap and is still in place through 2016. This credit can also be carried forward for a few years should you expect a year in the future where it might be more helpful. In addition to the website above, the information at Energy Star is also quite good.

NEW HOME TAX CREDIT:  While these credits are for retrofitting to existing buildings, there are great incentives for new construction as well. A credit of $2000 is still available to home builders who build homes (including both site-built and manufactured homes) projected to save at least 50% of the heating and cooling energy of a comparable home that meets the standards of the 2004 International Energy Conservation Code (the 2003 code including the 2004 supplement). A $1000 credit is available to manufactured home producers for models that save 30% or that qualify for the federal Energy Star Homes program.

In most cases a third-party verifier is needed to qualify that the home is indeed projected to save at least 50% over a comparable home. Businesses should have RESNET or BPI certification and the ability to offer a REM/Rate reading. Other incentives are offered through Northwest Energy Star homes and the NAHB Green program.

CHECK LOCALLY:  It is also a great idea to see what sort of complimentary tax credits or rebates are offered by your state governments and local utilities. In Montana, the Energy Conservation Installation Credit is a tax credit applied against a taxpayer’s income tax liability. Montana resident individuals can claim the credit for energy conservation investments made to a home or other building. The credit is equal to 25% of expenses, up to a maximum credit of $500. Two or more people may each qualify for the credit, as long as the building in which the investment is made is owned by all of the people claiming the credit.

As well, The Alternative Energy System Credit is a tax credit against income tax liability for the cost of purchasing and installing an energy system in a Montana resident’s principal home that uses: (1) a recognized nonfossil form of energy such as, but not limited to, solar energy, wind energy, solid waste, and organic waste; or (2) a low emission wood or biomass combustion device such as a pellet or wood stove. The credit cannot exceed $500. Two or more people may each qualify for the credit, as long as the building in which the investment is made is owned by all of the people claiming the credit. For further instructions on the alternative energy system credit, and to calculate this credit, see Montana Form ENRG-C.

SOLAR PV GRANT IN MONTANA:  As far as utilities go, there Co-Ops and others tend to have different offerings and you’ll have to check with yours for the best information. For much of Montana, Northwestern Energy offers a $6000 grant for Solar PV installations that are at least 2kW in size. The installer must be NABCEP certified for the project to qualify for the grant. Here at SBS both of our installers have the NABCEP certification, so we have a handful of these grants to give away to customers in 2011 and were able to do apply over 10 of these grants to projects in 2010.

MT REVOLVING LOAN FUND FOR RENEWABLES:  As well, here in Montana, we have access to the MT DEQ revolving loan fund. This is a 10-year note at 4% for renewable energy implementation. Each project must be at least 80% renewable energy and can have up to 20% energy efficiency in the mix. That would mean on a $10,000 loan a minimum of $8000 would have to go to renewable implementation and up to $2000 for efficiency implementation. We find that at least half of our customers take the time to go through this application as it is well worth their while.

Here is the breakdown on the rebates for a basic 2kW qualifying solar system for a Missoula household with 2-income earners. A system of this size tends to offset 20-30% of the average MT home’s energy use. Coupled with basic energy efficiency measures and small changes in behavior, it is not uncommon to find 35-50% of energy use offset in the end:

$15,000 2kW Solar PV system
-$6,000 NWenergy PV grant
=$9,000 NET COST

-$2,700 30% Federal Tax Credit
-$1,000 MT Alternative Energy System Credit
=$5,300 NEW Net Cost

If this couple also wanted to implement energy efficiency measures and get the MT DEQ loan, this is a plausible breakdown. They could choose to take the loan based on the gross amount of the System or the net cost at the bottom. If they take it on the gross, this couple would end up having much more than the $3500 allocated below for their efficiency work:

$15,000 2kW Solar PV system (including parts, labor, permits, engineering, etc…)
+ $3,500 extra for some energy efficiency work
= $18,500 TOTAL MT DEQ Loan amount

$ 180 approx. monthly payment

In addition to the federal& state tax credits as well as the utility solar grant in the example above, this customer would also qualify for the additional $500 in federal tax credits from the Energy Efficiency tax credit listed above, as well as numerous rebates from Northwestern Energy with a few more here.

Here at Sustainable Building Systems (SBS) we have the needed certifications listed above in order to work with you on your energy efficiency projects.  Of course, SBS is not a licensed tax preparer and more information on tax credits and energy efficiency incentives is available at www.dsireusa.org .  This summary in no way constitutes guaranteed savings; we recommend consulting an accountant to verify how tax credits apply to you.

If you would like more information of getting started with an energy audit, implementing energy efficiency measures or a renewable energy application, give a call today: 406/541.8410 or visit us at www.SBSlink.com. Here you’ll find access to our Solar Calculator and a basic questionnaire on getting started with SBS.

Remember, the Greenest Energy is the Energy We Don’t Use.

Molly Bradford
Marketing Director
mbradford@sbslink.com

2 replies on “There is Hope: Energy Efficiency and Solar Energy Tax Credits & Grants for 2011”

  1. Chase Jones says:

    Nice synopsis Molly. Thanks for the great info.

  2. Great blog! I genuinely love how it is easy on my eyes as well as the facts are well written. I have bookmarked your site! Clean Energy is green energy. It will be interesting to see how the design of photovoltaic tile evolves over the next decade.

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