Montana Solar Power: Check Your Savings, Costs, Tax Breaks, Incentives and Rebates
Montana offers a great opportunity to save money by going solar: despite its location to the north of the US, the state gets average rates of sunshine above five peak sun-hours per day, and on top of that there are generous rebates, state tax credits and exemptions available.
Add the 30% ITC to the state incentives, and solar PV systems in Montana end up being quite affordable.
Return on Investment for Residential Solar Power in Montana
The ideal installed capacity of a residential PV system depends on factors that are specific to each home.
For example, a household with high energy consumption will need more PV panels to get all of its energy from solar power.
Also, available rooftop area places a limit on how large a PV system can be. However, solar PV systems for the residential sector tend to average at around 5 kilowatts.
- Before deducting incentives, a 5-kW PV system costs around $20,000 in Montana. - However, there is a fixed $2000 rebate for all PV systems above 2-kW, so the price is reduced to $18,000. - Deducting the 30% federal tax credit, equivalent to $5400, the price is reduced to $12,600. - There is also an extra tax credit of $500 per taxpayer, capped at $1000. Most households will get the full $1000, bringing down PV system cost to $11,600. - Considering the PV system will save over $650 in the first year of operation, the net outlay is $10,950. - The expected payback period is around 13 years. Considering solar panels have 25-year warranties, you are assured 12 years of free power after recovering your investment. The net profit over your PV system’s lifetime will be around $14,000. - Does solar increase home value? Your home will rise in value by more than $13,000, but you will not be taxed higher! - The environmental benefit of the 5-kW PV systems is comparable to planting more than 100 trees per year.
- Before deducting incentives, a 5-kW PV system costs around $20,000 in Montana.
- However, there is a fixed $2000 rebate for all PV systems above 2-kW, so the price is reduced to $18,000.
- Deducting the 30% federal tax credit, equivalent to $5400, the price is reduced to $12,600.
- There is also an extra tax credit of $500 per taxpayer, capped at $1000. Most households will get the full $1000, bringing down PV system cost to $11,600.
- Considering the PV system will save over $650 in the first year of operation, the net outlay is $10,950.
- The expected payback period is around 13 years. Considering solar panels have 25-year warranties, you are assured 12 years of free power after recovering your investment. The net profit over your PV system’s lifetime will be around $14,000.
- Does solar increase home value? Your home will rise in value by more than $13,000, but you will not be taxed higher!
- The environmental benefit of the 5-kW PV systems is comparable to planting more than 100 trees per year.
The payback period would be even shorter if it wasn’t for the low electricity prices in Montana, which average at $0.11/kWh. However, this low-cost energy is available thanks to power plants driven by fossil fuels.
Governments are committing to reducing their emissions, so tougher regulations for power plants of this type could come into play in the near future, driving up energy prices.
However, this only means more savings for homeowners who go solar!
The financial breakdown presented above is based on a 5-kilowatt system and the average conditions for Montana.
In reality, no two systems have the exact same performance because all project sites are different, to get a financial breakdown that fits your home check out our UV panel instillation calculator here
- The solar array is installed on a south-facing rooftop. - The place is free from obstacles that are capable of blocking sunlight. - The home is located to the south of Montana, where there is more sunlight throughout the year.
- The solar array is installed on a south-facing rooftop.
- The place is free from obstacles that are capable of blocking sunlight.
- The home is located to the south of Montana, where there is more sunlight throughout the year.
The NASA Atmospheric Science Data Center website is a great resource if you want to know the sunlight availability at your exact location.
Just input your coordinates, and you can check a wide variety of meteorological data tables, including solar radiation rates broken down by month and by solar panel tilt angle.
Montana Solar Power Incentives, Tax Breaks and Rebates
One of the strongest points in favor of solar power in Montana is the wide variety of state incentives in the form of rebates, tax exemptions and tax credits.
It is not that common to find all three types of benefits together in the same state! On top of that, the net metering policy is favorable for residential solar power, and don’t forget the 30% federal tax credit.
The Renewable Portfolio Standard required all utilities in Montana to source 15% of their power from renewable technologies by 2015, which was a great short-term goal.
However, the outlook for solar power can be even better if the RPS is reviewed and updated with a higher goal and new deadline.
This could result in performance payments from local utilities, which are currently not available.
Montana Tax Credit
Solar PV systems in Montana are eligible for a tax credit of $500 per taxpayer, up to $1,000 per household, on top of the 30% federal tax credit. In a 5-kilowatt solar PV system, this amounts to a total of $6,400 less in upfront expenses.
The tax credit is an even stronger incentive if you decide to go solar with a low-interest loan: the cash that would have otherwise been paiג in taxes becomes available for you to start paying the loan instead!
A word of advice: If you are planning to go solar, we recommend you do it before the 30% ITC expires in 2020.
Montana Tax Exemption
Solar PV systems in Montana are exempt from both the sales tax and the property tax. The sales tax exemption provides immediate cash solar energy savings on your purchase, while the property tax exemption provides an ongoing benefit year by year.
It is great to think that you can go solar without paying any taxes, but are still allowed to claim a huge tax deduction equivalent to more than 30% of your investment.
Are There Any Rebates for Solar Power in Montana?
Montana is a unique case when it comes to solar rebates.
There is a fixed $2000 rebate on any PV system that has a capacity of 2-kW or more, which means that the impact is higher for smaller photovoltaic systems: $2000 is only 10% of a $20,000 investment... but represents more than 22% of the upfront cost for a 2-kilowatt system worth $9000. In the case of a 5-kW PV system, the sum of the rebate and the total tax credit is $8400, or 42% of the system’s cost.
This entire benefit is available to you within the first year of PV system operation.
Montana Electricity Rates
Electricity is cheap in Montana: $0.11/kWh is two cents under the national average. However, solar power is even cheaper in the long term, saving you around $14,000 over 25 years compared to purchasing all of that energy from the grid.
Besides, with solar power you are avoiding the use of high-carbon energy from power plants fired by fossil fuels.
Is There Net Metering in Montana?
Montana has a solid net metering policy, where any surplus energy production is given back to you as a credit at the full retail price. The only disadvantage is that accumulated credits expire after 12 months without compensation.
Another limitation is that the system cap for net metering is 50 kW, but only commercial and industrial customers are affected by it: a home doesn’t need 50 kW of solar power, unless it’s a huge mansion.
The Montana Electric Cooperatives’ Association (MECA) has a lower system cap of 10 kW, but it is still large enough so that most residential PV systems will not be limited by it.
There is also a state-wide interconnection policy, which requires a redundant external disconnect switch for all net-metered PV system.
This increases your upfront expenses, but don’t worry because you have plenty of rebates and tax benefits to compensate!
Are There $0 Down Payment Financing Options in Montana?
Montana doesn’t have a legal framework for PV systems to be owned by third parties, which means there are no solar leases and Power Purchase Agreements available.
However, you can still go solar for $0 down if you take a low-interest HELOC (home equity line of credit).
In terms of dollars returned per each dollar spent from your pocket, low-interest loans typically beat a cash purchase.
The main strategy behind purchasing a solar PV system through a loan is having 10 to 15 years to pay for the system, but claiming all available tax credits right away. Then, the combination of tax credits and yearly savings pays off a huge portion of the loan for you.
In the specific case of Montana, where all PV systems above 2 kW get the same rebate and state tax credit, the highest return per dollar spent is achieved with a small PV system.
- However, a 2-kW system saves around $3500. If you don’t have the equity to purchase a 5-kW system through a loan, you can still get nearly 60% of the savings with system that is only 40% as large!
Cash Purchase VS Loan: What’s Best for Montana Homeowners?
This question has no straightforward answer, since there are many factors that determine which option is the best for you.
However, the following general guidelines can help you decide:
Purchasing a PV system in Montana
Purchasing a PV system in Montana in cash is recommended if you have the cash availability and want to maximize total savings from solar power. You can expect to save nearly $14,000 over 25 years with this option, but have a to assume a 13-year payback period.
Purchasing a PV system in Montana through a loan
Purchasing a PV system in Montana through a loan is recommended if you have equity in your home and wish to minimize your upfront expenses. On a 5-kW system, you can expect to save around $6,000 over 25 years.
What is the Solar Power Installation Process in Montana?
The PV system installation process in Montana is standardized thanks to the interconnection policy. However, we still recommend you hire solar panel installation companies who are familiarized with the process in order to avoid delays and extra costs.
If you have already decided to install a solar PV system for your home in Montana, the procedure to follow is very simple and you can start today:
2.Talk with trusted solar contractors near you to get detailed quotes.
3.Compare quotes and choose the best option for you. We recommend you get at least three.
4.Have your contractor install the PV system, and enjoy clean power while helping the planet.
The installation process is quick and free from major disruption, lasting only from 3 to 4 days after you sign the agreement with your contractor of choice.
Remember all the information presented in this article assumes a system size of 5 kilowatts, subject to the average sunlight conditions of Montana. You will know the exact price and projected system performance once you get a proposal from a trusted solar installer near you.
Montana may have cheap electricity, but the wide range of incentives available make solar power a sound investment nevertheless: you have access to a $2,000 rebate, a $1,000 tax credit and a full exemption of both the sales and the property tax.
Now subtract the 30% ITC from the federal government, and you end up purchasing a PV system for almost half the normal price!
The conditions for solar power in Montana can be further improved by refreshing the Renewable Portfolio Standard and setting a new renewable energy goal.
This could result in even more rebates from local utilities, as well as performance payments.