Welcome to the 2017 Montana solar power information page
Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
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.
While there have been some good solar conversations going on in Montana as of late, there hasn’t been much actual movement in renewable energy policy coming from Helena. With the coming deadline for its RPS, Montana has an opportunity to enact new, forward-thinking renewable energy policy with long-term goals that reflect a commitment to getting us off traditional fuel sources and moving us toward a cleaner future.
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Montana solar incentives you see below.
Your guide to going solar in Montana
We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in Montana. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
The Solar Strategy section is all about the various financial options you have in Montana. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.
The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Montana. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.
Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Montana is doing to make solar more affordable for its citizens, you'll find it here.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Montana Solar Strategy|
|Comparing Solar Investment Options|
|Buying Solar in Montana|
|Montana Solar Loans|
|Smaller Solar Systems in Montana|
|Solar Purchase Payback Time in Montana|
|Montana Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Montana
Figuring out the best way to go solar in Montana can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in Montana
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan. That might look a little complicated to you, so let's break it down:
The green bars show the return if you pay up front. As you can see, there's a big payment in year 1, which gets slowly reduced over time. The green bars cross the "$0" line at year 16, which is when the system will have paid back your initial investment with electricity savings. Then, our example goes to year 25 (which is when most solar panel warranties end), where you'll end up with just about $9,400 in total profits. Not bad! That's because even though Montana has pretty cheap electricity, Big Sky country gets some good doses of sun.
The orange bars, on the other had, show what happens if you take a loan or Home-Equity Line of Credit (HELOC) to pay for the system. You don't put any money down, but you do get the 30% Federal tax credit, meaning you actually come out ahead in year 1. The bars dip below the $0 line after 6 years, because your loan payments (over a 15-year term) will exceed your energy savings by a little each year. Still, once you pay off the loan, the savings start stacking up quickly. In the end, you'll come out a few thousand dollars ahead over the 25-year estimate.
Finally, the blue bars represent a smaller (2-kW) system purchased with a loan. Just in case you don't have a ton of equity.
Read on to find out more about each option!
Buying Solar in Montana
Paying up front used to be the only way to get panels on your roof, and it's still the option that allows you the most control. But it isn't the best option from a percentage return on investment standpoint—that award goes to the solar loan.
Still, an outright purchase returns the most money over time, because you own the system from day one and reap all the benefits—including the Federal solar tax credit of 30%, the state solar tax credit of $1,000, and some decent energy bill savings.
In our example, you put down $20,000, but by the end of year 1, those tax credits and energy savings will erase a bunch of it. Over 25 years, your system will have produced nearly $9,400 in income.
Net Present Value: -$1,618
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Montana's-$1,618 NPV on a 5-kW solar system means you'd be that much better off investing your money in stocks over 25 years than in Montana solar. But check out what happens to NPV if you buy the same system with a loan that you can pay back over time.
Here’s an example of how the numbers work for a purchase of a 5-kW rooftop solar system, for a married couple in Montana:
- Installing a typical 5-kW solar system should start at about $20,000. That's cheaper than solar has ever been, but it probably still seems expensive. Stay with us.
- At tax time next year, the Feds will give you a 30% tax credit, which means you'll get $6,000 back next April. Note: you can take the credit over several years if you don't owe $6,000 in Federal taxes this year.
- Next, subtract Montana's $1,000 state tax credit. With the two credits, you'll have spent just $13,000 on that solar system after year 1!
- Then there's your first-year energy savings. That's another $665, and it brings the cost after 1 year to just $12,335. The rebate, tax credits, and energy savings have taken about 40% off the cost of your system!
- With those energy bill savings rolling in, your system will pay itself back after 16 years. Once that happens, you’ll be seeing over $950 per year in savings until the end of your system’s life.
- When all is said and done, our 25-year estimate shows a total net profit of $9,394 with an internal rate of return of 4.6%. That's better than most financial investments you can make!
- On top of those returns, your home's value just increased by $17,000 too (your expected electricity savings over 20 years)!
- And speaking of doing good for the environment... your system will create some green for the earth by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 101 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Montana. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Solar Loans in Montana
This is where we tell you that taking a loan for solar panels is a no-brainer, because it means investing in an income-generating asset. And it's true! That's because the state has nice a tax credit and rebate, and gets enough sun to make solar worthwhile, generating a good deal of income for you after you pay your loan off. A loan is the only solar investment in Montana that compares favorably with an investment in the stock market.
Here's the important stuff:
As you can see from the chart above, you'll start out with a big windfall, because with a loan, you're not putting any money down, and you get those tax credits just like if you paid $20,000 up front for your system. You'll come out ahead nearly $6,000 after the first year! In the 14 years that follow, your loan payments will actually cost a little more than the money you'll be saving in electricity, but just think of it like a monthly deposit into a savings account.
And that solar "savings account" will pay dividends after the loan is paid off in year 15. You'll be saving tons of money every year because you'll own the system outright. At the end of our 25-year example, you'll be $2,765 to the good, which is great for an investment where you put nothing down!
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can qualify for a solar loan or home-equity line of credit (HELOC) for $20,000 with a fixed rate of 4% or lower and a 15-year repayment period.
- You have an appetite for making a little money with a long-term investment, while also producing benefits for the environment.
Net Present Value: $9
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Montana's $9 NPV on a solar loan means you're bascially breaking even with an investment in the stock market. That's pretty great news!
Here’s how the numbers pencil out for a married couple making a Montana solar purchase with a loan:
- Installing a typical 5-kW solar system should start at about $20,000. That's how big your loan will need to be to cover it.
- The electricity bill savings in the first year of operation will total $665, but your loan payments will be $1,775, for a difference of $1,110, or about $93 per month.
- But here come the tax credits! Because you've technically "paid" for the system with your loan, you'll get a state tax credit of $1,000 and a Federal tax credit of 30% of system costs, or $6,000! After you make those loan payments, you'll end up with an extra $5,889 at the end of the first year.
- When your loan’s paid off in year 15, you’ll see over $940 per year in savings until the end of your system’s life.
- For our 25-year estimate, you'll see pretty nice returns, to the tune of $2,765 after all the payments. That's a huge amount of money for a zero-down investment!
- Finally, the environmental benefits cannot be overstated. Operating your system will take as much carbon out of the air as planting 101 trees every year!
Keep in mind, the numbers above are based on an average home in Montana. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Small Rooftop Systems in Montana
Let's say you don't have a ton of extra cash laying around, but you do have a bit of equity in your home. Can you get solar panels? YES! Is it a good idea in Montana? That depends on what you're in it for...
See, solar saves you money on your electric bill, but in Montana, we only pay $.11 per kilowatt-hour (kWh) of electricity, which means solar saves you less money than in states with high electricity costs. You'll still save a little over the long-term with solar, but it won't be better than an alternative investment.
Here are the factors we'll look at for this example:
- A 2-kW rooftop system that will cost around $9,600 installed.
- A solar loan or HELOC for that amount with a 10-year payback at 4% interest.
Just like with a big system, you don’t have to put any money down, but you still get the big federal tax credit for buying solar. You'll get the 30% of your solar costs back as a tax credit and the energy bill savings will start right away. Your loan payments will be about $97 per month while your energy bill savings will be about $22—a difference of $75. Basically, for the cost of cable TV service, you do your part to save the planet from carbon pollution, and make a little money later in your life, too.
Net Present Value: -$1,052
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Montana's -1,052 NPV on a small solar system means you'd be that much better off investing your money in stocks over 25 years than in solar here. So only go solar in Montana if the environmental benefits are worth at least that much to you.
Here’s how the numbers pencil out for a Montana solar purchase of a small rooftop solar system:
- Installing a typical 2-kW solar system should cost about $9,600. Your loan should be for this amount.
- The electricity you'll save in the first year of operation would have cost $266, while your loan payments will cost $1,166; a difference of $900.
- At the end of the year, the Federal government will give you a tax credit of 30% of the cost of your system. That's $2,880 that you won't owe this year. You can take that credit over several years if you don't owe that much in federal taxes this year.
- Finally, the state will give you a tax credit, too, of $400! All those incentives bring the year 1 gains from your system to $2,380.
- When your loan’s paid off after year 10, you’ll see over $350 per year in savings until the end of your system’s life.
- At the end of your system's 25-year warranty, you'll end up with a small profit; $1,033 according to our estimate.
- Your system will remove as much carbon from the air as planting 40 trees per year, which is a pretty great thing, we'd say.
Keep in mind, the numbers above are based on an average home in Montana. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Montana Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Montana:
15% by 2015
A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
Montana’s RPS was 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%. In 2015 the minimum amount of renewable resource-based electricity again rose to 15%, where it will remain.
Montana’s RPS has been critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
15% by 2015 looked like a strong goal in the beginning, but 2015 has come and gone, and without further action, Montana will be stuck with no clear direction on future renewable development. The Renewable Portfolio Standards in other states go further, mandating from between 20% and 40% renewable energy by next decade. So while 15% by 2015 was 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. The program could be even better if it had specific targets for Montana’s solar panels.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
The one thing Montana doesn’t include in its RPS is a specific requirement for solar. If the RPS contained specific carve-outs for clean and efficient solar panels, or mandates for environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Montana Electricity Prices
Montana homeowners pay an average of 11 cents per kilowatt-hour (“kWh”) of electricity. That’s really cheap! Nearly two cents below the national average. 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.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Montana Net Metering
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 the 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 mirror state law, but with an even lower 10 kW system size limit. Net metering is available in whole or part from most MECA members.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Montana Interconnection Rules
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.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in Montana
Montana Solar Power Rebates
Way back in 1997, Montana had some of the first rebates programs. Sadly, here it is 20 years later and the state is lagging behind in helping its citizens go solar. We'd like to see a return to even the modest rebates that were here just a couple years ago, but we're not going to hold our breath.
The good news is the rebates of the past helped bring the costs of solar down so far, you can expect it to still make financial sense here in good ol' Big Sky country.
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Montana Solar Power Tax Credits
In addition to the solar power rebate 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 households with more than one taxpayer. The credit may be carried over for up to four years.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
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.
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
Property Tax Exemption
100% for 10 years
In addition to the money you’ll get back on your state income taxes, our legislators have made sure 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!
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.
Sales Tax Exemption
No State Sales Tax
Without a state sales tax in Montana, you pay zero extra dollars on the installation of that beautiful new solar panel system! Thanks, Montana!
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
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The consensus on Montana solar power rebates and incentives
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 11-year payback timeframe would drop dramatically. For now, we give out a tentative “B” grade here, but if that rebate goes away, Montana is going straight to “D” territory, with a bullet.
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!