Alternative Energy Loan Program
What is it?
The Alternative Energy Revolving Loan Program (AERLP) was established by the 57th Montana Legislature in 2001 with amendments dating from 2005. Its purpose is to provide a financing option to Montana homeowners, small businesses, non-profits and government entities to install alternative energy systems. The program has traditionally been funded by air quality penalties collected by the Department of Environmental Quality (DEQ).
Energy from these renewable systems is intended for use by the owner, although net-metering is allowed for systems that generate electricity. Energy conservation measures installed in conjunction with an alternative energy project may be funded through the program, limited to 20 percent of the loan amount.
Federal stimulus funding under the American Recovery and Reinvestment Act (ARRA) was introduced into the loan program. That funding came with additional requirements, including reporting and project verification, high transparency and visibility as well as other provisions. Most new loans will carry the same requirements as the ARRA funds revolve back into the program.
Loan Application Information
What are Alternative Energy Systems?
Alternative energy systems are defined by law as "the generation system or equipment used to convert energy sources into usable sources." The code goes on to list "geothermal systems, low emission wood or biomass, wind, photovoltaic and small hydropower plants (under 1 megawatt) and other recognized non-fossil forms of energy generation." DEQ will provide technical review and approval of systems proposed for the loan program.
What energy conservation measures may be included in a project?
Additional insulation, efficient windows, doors, and fixtures are examples of measures that may be proposed for funding. Energy conservation measures must be installed as part of the alternative energy project to be funded through the program and are limited to 20 percent of the total loan amount.
How much can I borrow?
Loans can be made up to a maximum of $40,000 (subject to available funds), and may be repaid in up to 10 years, depending on the loan amount. Interest rates are set annually and are fixed for the term of the loan. The interest rate for 2012 is 3.75 percent.
How does the process work?
DEQ accepts and processes loan applications throughout the year.
Applications are reviewed for technical and financial merit. Approved applicants are notified and, if funds are available, loan documents are signed and funds released to the applicant. It generally takes about four weeks to get funds to complete the process.
When the program receives more applications than funds are available, a ranking process will prioritize applications based on criteria published in ARM, Title 17, Chapter 85. Criteria includes items such as system reliability, return on investment and avoided fossil fuel consumption. Applicants are notified when the loan is approved and given an estimate of when funds may be available. The program receives revolved funds each quarter from loan payments. Applications held for more than six months may require updated information but may remain active for up to a year.
What is net-metering?
Net-metering is a special installation that allows any surplus energy generated by the customer's system to go back on the utility electric system. Net-metering allows the customer to receive "credit" for the electricity put back onto the system at retail rates. The customer's meter measures the electricity the customer used from the utility system less the electricity the customer's system puts back.
Net-metering is available on the NorthWestern Energy and Montana-Dakota Utilities systems for renewable installations of less than 50 kW capacity. Most electric co-ops also offer net-metering. Contact your local electric utility for their net metering policies.
How can I get more information?
Kathi Montgomery
Phone: (406) 841-5243
Updated 1/5/2012
