Glacier National Park
Ah, Big Sky Country. The Rocky Mountains and Montana’s wide open spaces make it a natural paradise. Between Yellowstone and Glacier National Parks, and parts of the Historic Lewis and Clark Trail, you could stay out under the sun for months, exploring the Treasure State. Using clean energy like solar power would really help Montana protect its treasures. Here’s what the state legislature has been doing to promote renewable power sources.
Montana’s Renewables Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar power.
Montana’s RPS will be phased in over three multi-year periods. In 2008 and 2009 all public utilities and competitive electric suppliers had to generate at least 5% of retail sales from renewable resources. Starting in 2010 that minimum was raised to 10%, where it stands now. In 2015 the minimum amount of renewable resource-based electricity rises again to 15%, where it will remain thereafter.
15% by 2015 is a strong goal, and on par with some of the best RPS’s nationwide. Those top tier Standards go further, mandating 20%, even 30% renewable energy by next decade. So while 15% by 2015 is an excellent short-term target, lawmakers in Helena have some work to do in the near future if they really want to spur incentives for solar power.
Solar Performance Payments in Montana
There are currently no performance payments available for solar power in Montana. If the RPS set higher long-term goals, we can virtually guarantee that utility companies would offer incentives to help you make the switch to solar. Why are we so certain? Only because high RPS targets have translated into big-time incentives for residential solar power almost everywhere that a strong RPS has been implemented.
Montana Solar Power Rebates
While there are currently no performance payments offered, NorthWestern Energy (the electric provider for most of folks here) does have a strong solar power rebate program to help offset the initial cost of installing a solar panels.
Way back in 1997, Montana established the state Universal System Benefits (USB) program. The USB program requires all electric utilities to establish funds for, among other things, the development of renewable energy resources. A typical NorthWestern Energy residential customer pays approximately $1 per month into the USB program. About $9 million is collected annually by NorthWestern, and about $1.2 million is used for renewable energy projects. For you, the soon to be owner of a residential solar power system, that means a solar panel rebate of $3,000/kilowatt (“kW”), up to a maximum of $6,000.
Montana Solar Tax Credits
In addition to the solar power rebate you will receive from NorthWestern Energy, when tax day rolls around you’ll also get some cash back from the state. Montana’s Residential Alternative Energy System Tax Credit offers a tax credit on 100% of the price of a solar power system, up to a maximum of $500 for individuals and $1,000 for married couples filing jointly. The credit may be carried over for up to four years.
Montana Solar Tax Exemptions
In addition to the money you’ll get back on your state income taxes, our legislators have made you’ll also save bundles of money in property taxes. Installing a solar power system adds a great deal of value to your home. Thanks to the Renewable Energy Systems Exemption up to $20,000 of assessed value from your solar power system is 100% exempt from all property taxes for 10 good long years. That’s thousands of dollars saved over the next decade!
Utility Prices in Montana
Montana pays an average of 10.16 cents per kilowatt-hour (“kwh”) of electricity. That’s really cheap! About a full cent below the regional average of 11.14 cents/kwh and even further below the national average of 11.43 cents/kwh. We know you like paying less now, but the long term costs of cheap electricity are simply astronomical. All that cheap electricity is produced by burning fossil fuels. Tons and tons of greenhouse gas spewing fossil fuels. As those environmental costs rise (and rise), monthly electricity bills are inevitably going to climb as well. Solar power is already cheap and efficient, even compared to current fossil fuel prices. Just imagine how much cheaper it will be in ten years, or even twenty, when your solar power system is still humming along. Just remember to thank us for the tip now …
Montana Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for any surplus. Montana requires all investor-owned utilities to offer net metering. All surplus energy you produce will be applied as a credit to your next monthly bill. Unfortunately, if you manage to run a surplus for an entire 12-month period (customers may elect to start yearly cycles in January, April, July or October), the accumulated surplus is granted back to the utility without compensation. We think they should cut you a check. We’d also like to see the current 50 kw size limit raised or removed for net metered systems, allowing larger commercial and industrial customers to meet on-site generation needs.
While electric companies other than investor-owned utilities are not covered by the regulation, the Montana Electric Cooperatives’ Association (“MECA”) has adopted model net metering / interconnection guidelines that mirrors state law, but with an even lower 10 kw system size limit. Net metering is available in whole or part from most MECA members.
Interconnection is a mixed bag here as well. While systems up to 10 megawatts are ensured access to the grid for all Montana utilities, including co-ops, all systems are also must be equipped with a redundant external disconnect switch that serves only to cost you extra money at installation. The state regulation does not mandate a standard agreement, but NorthWestern Energy does use a standard agreement for getting net-metered systems hooked up to the grid.
5kW Example Return on Investment in Montana
Installing a typical 5kW solar system should start at about $25,000. Don’t worry – even without state incentives, you’re still going to save a lot, just in the first year.
- Start by subtracting the maximum $6,000 state solar power rebate, immediately dropping the price to $19,000.
- Next figure in the state solar tax credit. We were conservative, figuring in just the individual maximum of $500. Remember If you’re married and filing jointly, you get twice that. Subtracting $500 gives us a new price of $18,500.
- The feds calculate your 30% federal solar tax credit from out of pocket costs, i.e. the price after the state solar power rebate. Subtract $5,700 (.30 x $19,000) for a new price of $12,800.
- Finally we subtract your first year energy savings, which we estimate to be $674, for a final cost after year 1 of $12,126 – more than half off the sticker price!
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in just 14 years. After that, your estimated profit for the estimated life of your solar power system is nearly 19 grand!
- In addition to those direct wallet-fattening savings, you also increased your home value by $13,472, tax free for the first 10 years!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 117 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much solar power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Montana Solar Consensus
Despite the reputation for cold winters, Montana actually gets a whole lot of sun. In fact, the solar resource potential for most of the state meets or exceeds that of even the sunniest parts of Florida. Unfortunately state legislators are doing only a so-so job of promoting solar power here. There are good pieces in place, particularly NorthWestern Energy’s $6,000 solar power rebate for residential systems, but what’s really needed is an RPS strong enough to kick-start a strong performance incentive program. With ongoing performance payments for solar power production, the merely adequate 14-year payback timeframe would drop dramatically. For now, however, we can’t give out more than a “C” grade here.