How Much Can You Save on Solar in Montana?
Montana is the fifth least sunny state in the US. The state receives 3,847 kilojoules per square meter (kJ/m2) of average annual sunlight.
As of 2023, the Treasure State has three installations totaling 133 megawatts (MW). The state’s projected solar energy installation growth over the next five years is 718 MW, which would raise the state’s ranking to 40th in the US by 2029.
State and Federal Solar Incentives in Montana
|Montana Solar Incentives||Federal, State, or Local||Program Overview|
|Residential Clean Energy Credit||Federal||This is a 30% federal tax credit for homeowners who buy and install solar panels from 2022 to 2032.|
|Energy-Efficient Mortgage Program||Federal||This federal solar incentive program allows borrowers to obtain a higher mortgage to cover the cost of a new solar system and its installation. The US Department of Housing and Urban Development (HUD) is in charge of managing this program.|
|Renewable Energy Systems Exemption||State||Montana provides households that have qualifying renewable energy systems with a property tax exemption of up to $20,000 for 10 years.|
|Residential Alternative Energy System Tax Credit||State||Montana offers a personal tax credit of up to $500 for individuals and $1,000 for married couples when a sustainable energy source, like solar, is installed in their residences.|
|Alternative Energy Revolving Loan Program||State||This state program provides loans for installing alternative energy, including solar systems. They are low-cost loans for customers installing residential solar in the state.|
|Net Metering||State||Montana residents who are served by investor-owned utilities can receive bill credits when their solar array produces more energy than the household uses in a month.|
|Local Incentives and Rebates||Local||There are various rebates and incentives offered by municipal governments, utility providers, and other solar-related entities that reduce the cost of purchasing a solar system. These incentives vary based on the terms of the provider and your system size.|
How Cheap or Affordable is Solar Energy in Montana?
The US Energy Information Administration (EIA) reported in 2021 that the average retail price for grid energy in Montana was 9.50 cents per kilowatt hour (kWh). The average price per watt for solar panels is $2.42 in the state.
|State||Number of solar Installations||MW Installed||Average cost for grid power (2021)||Average cost per watts|
The average cost of installing a 6 kilowatt (kW) solar system in Montana is $14,520. If you apply the Federal solar tax credit of 30%, the average cost reduces to $10,164, which helps you save $4,356.
|State||Cost of installing a 6kw system||Federal tax credit value 2022 (30%)||Cost of installing a 6kw system after Federal tax credit|
According to the EIA, Montana’s total energy per capita was 115,850 kWh in 2020. The state’s residential energy usage was 27,109 kWh, commercial energy consumption was 22,244 kWh, and industrial energy consumption was 35,139 kWh.
The Federal Solar Tax Credit, (also called the Residential Clean Energy Credit), is a program available to all taxpayers who own a solar energy system. It provides property owners in Montana with a 30% tax credit on their income tax liability for that assessment year. There is no limit to the amount. The tax credit covers the cost of the panels, solar batteries, inverters, and labor.
|State||Cost of installing a 6kw system||Federal tax credit value 2023 (30%)|
The federal solar tax credit for businesses comes in two types:
ITC and the PTC cannot be claimed for the same property. However, project owners can claim ITC and PTC for co-located systems. The table below shows the value of the federal solar tax credit by installation year:
|Solar Installation Year||Federal Solar Tax Credit For Home||Federal Solar Tax Credit For Business|
|Between 2020 and 2021||26%||26% for ITC|
|Between 2022 and 2032||30%||30% for ITC; 2.6¢ for PTC|
|2033||26%||30% for ITC; 2.6¢ for PTC|
|2034||22%||22.5% for ITC; 2.0¢ for PTC|
|2035||0%||15% for ITC; 1.3¢ for PTC|
The credit was first offered in 2005 at a 30% rate and was initially scheduled to drop to 26% in 2022 and then to 22% in 2023. The scheduled conclusion date of the program was 2024. Fortunately, the Inflation Reduction Act (IRA) was passed in August 2022 to extend the applicability of the program. Now, the solar tax credit is 30%. Here is a breakdown of the applicable tax credit:
To qualify for the Federal Solar Tax Credit in Montana, you must:
Only project owners whose solar systems meet the following criteria can claim federal solar tax credit for businesses:
Note that not all solar system expenses are eligible for federal solar tax credits. For instance, ITC and PTC do not cover roof installation costs. Below are common expenses eligible for federal solar tax credits:
The State Department of Revenue can allow a property owner to apply for Montana tax credit for solar panels while applying for federal solar tax credits. This is because Montana solar panel tax credit does not affect federal tax credits. However, a property owner's taxable income on federal taxes may be higher when receiving Montana renewable energy tax credit.
Residents can claim the Federal Solar Tax Credit in Montana by following several quick steps:
Montana offers net metering to its residents. Net metering is a system where consumers connect their solar systems to a public-utility power grid, and excess electricity is transferred to the grid, allowing them to offset their electricity costs.
Generating electricity from your solar system allows you to decrease the amount of electricity you buy from your utility provider. It also reduces your recurring high electricity costs. If your system generates more electricity than you need, you can sell the excess electricity to the grid. This will either reduce your monthly bill or give you credit for your future bill.
Net metering is mandated by the Montana Public Service Commission (PSC), but restricted to systems 50 kW or below. All investor-owned utilities must apply credits for any excess energy transmitted to the grid. These credits continue over from month to month, but they run out at the end of the annual billing circle.
Customers have a choice of four different months to terminate the billing year: January, April, July, or October. You can use up more credits by choosing a year end that comes after the months with the highest use.
Montana-Dakota Utilities Co. provides net metering to its customers according to the above. NorthWestern Energy provides a one-time annual billing date change.
Rural electric cooperatives are not regulated by the PSC. As a result, these utility providers are able to and do define their own net metering policies, providing for greater flexibility and generosity.
According to state legislation, the Montana Electric Cooperatives Association (MECA) provides its members with net metering/interconnection standards. The cap is simply 10 kW for each individual system. Many MECA members provide net metering in some way, including:
You can take the following steps to enroll for net metering in Montana:
Step 1. Get in touch with your utility provider to find out if you have a bidirectional meter installed in your home. A bidirectional meter is needed for interconnection with the grid and monitoring the flow of electricity between your solar system and the grid. If you do not have a bidirectional meter installed, you should apply for one.
Step 2. Select a reputable solar installer in your municipality or the state to install your solar system. Ensure that they file an application for net metering on your behalf.
Step 3. Install your solar system.
Step 4. Monitor the credits that accrue to your monthly utility bills after installation is complete to confirm that your connection is net-metered.
Montana has a local property tax exemption for residential owners with solar installations. The state’s law offers residents a property tax exemption on qualifying renewable energy systems for up to $20,000 (single-family residential dwelling) or $100,000 (multi-family residential dwelling or non-residential structure) over 10 years after installation.
To get the property tax exemption, you must complete the Property Tax Exemption Application For Installation Of An Alternative Energy System (Form AB-14). The completed application should be mailed to the local Department of Revenue field office servicing the county where your property is located.
Homeowners can use property tax exemptions to deduct their solar system’s added value from the valuation of their property for tax purposes. A solar system can increase the value of your home by a multiple of 20 times, which increases your property tax liability.
Property tax exemption makes it economically feasible for a taxpayer to install a solar system on a residential property.
Montana offers Commercial Property-Assessed Clean Energy (C-PACE) financing. This financing program provides property owners with low-interest loans to cover up to 100% of the total upfront cost of their renewable energy or energy efficiency projects.
Residents can repay the loan through bi-annual assessments of their property taxes. Since the energy savings from the projects often exceed the assessments, this financing option can improve property owners’ bottom lines and make their projects cash positive from the start.
This funding strategy ensures that the project investment and its benefits transfer ownership by allowing the assessments to move onto a new owner if the property is sold, like other property taxes.
Montana enacted the enabling legislation for C-PACE in 2021, making the program accessible through municipal governments. The program covers projects from solar systems to high-efficiency HVAC systems and is available to any property for general commercial purposes like retail, industrial, office, non-profit, agricultural, and hospitality uses and certain multi-tenant buildings with four or more units.
C-PACE projects are eligible for rebates and incentives offered at federal, state, and local levels. Property owners are advised to take advantage of all available government, utility providers, manufacturer incentives and rebates, or other upfront cost reductions to reduce the total C-PACE project cost to determine the cost of the financing.
To qualify for C-PACE, the property owner must submit an Energy Assessment or Renewable Energy Feasibility Study that assesses the changes the owner proposes to finance and complies with the Program Guidelines. The C-PACE project must be cost-effective, meaning the estimated monetary savings of the projects outweigh their cost throughout the evaluation.
The clearwater credit union provides unsecured loans for homeowners to help finance their solar projects or energy-efficiency improvements. The union offers two types of home energy loans:
Eligible borrowers can apply for home energy loans online, by phone at (406)-523-3300, or in person at any clearwater credit union branch.
The Helena City Commission offers loans to homeowners for alternative/sustainable energy improvement purchases. Solar projects eligible for Helena's solar loan program include but are not limited to:
The maximum amount of Helana solar loan is $12,000 per residential property. The term for this loan is ten years. The Helena residential loan is placed as an assessment on annual property tax bills with 0% interest.
The loans are made on August 31 of each year. The annual assessment payments will be certified to the Department of Revenue to be included in the property tax records for eligible properties annually.
**Community Development Department **
316 N. Park Avenue
Helena, MT 59623
Phone: (406) 447-8490
Other supporting documentation to be submitted alongside the application form includes plans from the contractor, contract dollar amount, and an approval form from the current mortgage holder. After submitting the necessary forms, the application will be reviewed and approved. The homeowner must sign the loan agreement and pay the filing fee.
The applicant’s contractor will have to submit plans for approval and will be given a building permit upon approval. The homeowner must submit a payment request for half cost to the City (based on the contract bid amount). When the work is completed, the Helena city Building Division will inspect it for approval. T
Homeowners are expected to submit all invoices from the contractor to the Community Development Department, and final payment will be made. The loan agreement should be filed with the Lewis and Clark County Clerk & Recorder.
As of 2023, Montana has no sales tax at the state or local levels. Sales tax exemption exempts solar system owners from paying sales tax at the point of purchasing the system.
Based on the U.S. Energy Information Administration data, Montana had about 395.3 Million Btu total energy consumption per capita in 2020. About 92.5 Million Btu was consumed by residential properties, while commercial properties consumed approximately 75.9 Million Btu.
As of 2021, Montana had a population of over 1.1 million residents living in nearly 530,000 housing units. About 69.1% of these housing units were owner-occupied, and 30.9% were available for rent. 436,481 households were in Montana, with 2.41 persons per household. Montana local town or city Building Departments issued about 7,272 building permits for new buildings and alterations, additions, and repairs.
Renewable Energy in Montana
As of 2021, Montana ranks 10th in the largest share of electricity generated from renewable energy resources like hydropower, wind power, biomass, and solar.
Hydropower accounted for about 52% of Montana's in-state electricity. Montana was the seventh-largest hydroelectric power producer in the U.S. in 2021. The state has 24 utility-scale hydroelectric plants, mostly located in the western part of Montana. Six of the ten largest power plants in Montanna are hydroelectric facilities.
The first utility-scale wind farm in Montana came online in 2005. Two of Montana’s 10 largest generating plants are powered by wind energy. The 184-megawatt Rim Rock wind farm is the largest wind facility in Montana, located close to the Canadian border.
The 135-megawatt Judith Gap wind farm is the second-largest wind facility in Montana, located close to Lewistown.
As of late 2021, nearly 900 megawatts of wind power generating capacity were active in the state. About 1,000 megawatts are still in the planning and construction stages.
In 2022, solar accounted for about 1% of Montana's in-state electricity. Before 2017, solar power was mainly obtained from small-scale (less than 1 megawatt) solar panel installations. In 2017, Montana's first utility-scale (1 megawatt or larger) power facilities began generating electricity.
In 2021, Montana had six utility-scale solar power facilities with 17 megawatts of capacity combined. The state projected that an 80-megawatt solar farm would come online in late 2022. Also, two solar projects totalling 24 megawatts were planned to come online in late 2023.
Montana has very little electricity coming from biomass resources. Only about 7 in 100 households in the state use wood to heat their homes. Montana has only one utility-scale wood biomass-fueled generating facility with 3 megawatts of capacity.
A lumber company owns this utility-scale biomass-fueled generating facility. There is a 1.6-megawatt generating unit fueled by landfill gas owned by an electric cooperative.
Montana has no utility-scale geothermal-fueled generating facilities. However, the state has geothermal resources in the mountainous southwest. Nearly all areas in Montana have low- and moderate-temperature geothermal resources.
Montana enacted a renewable portfolio standard (RPS) in 2005. The RPS achieved its goal of ensuring that 15% of the electricity sold by retail suppliers came from renewable energy sources by 2015. Eligible renewable resources include geothermal, solar, landfill gas, wind, anaerobic digesters, small hydroelectric facilities, biomass, and renewable fuel cells. The RPS requirements also include electricity suppliers buying a certain amount of electricity from smaller, community-based renewable energy projects. Montana provides homeowners and businesses with low-interest loans for energy-saving measures and alternative energy systems expenses.
Renewable Energy in Montana
As of 2023, Montana has about two dozen utility-scale hydroelectric plants, and seven of 10 of the state’s largest power plants are hydroelectric. According to the EIA, in 2021, hydropower generated 40% of Montana’s in-state electricity. The state was the nation’s seventh-largest producer of hydroelectric power.
Wind energy was the third highest contributor to Montana’s electricity generation at 12%. Wind energy powers two of the state’s 10 largest generating plants by both capacity and actual yearly generation.
The largest wind facility is the 184-megawatt Rim Rock wind farm, and the second-largest wind facility is the 135-megawatt Judith Gap wind farm. Montana currently has nearly 900 megawatts of wind power generating capacity in operation. Another 1,000 megawatts are in various stages of planning and construction.
Solar energy generated less than 1% of Montana’s in-state electricity. Solar power in the state was provided only by small-scale (less than 1 MW) residential and business solar panel installations until 2017 when the state’s first utility-scale (1 MW or larger) power facilities began generating electricity.
In 2021, Montana had six utility-scale solar power farms with a combined generating capacity of 17 MW. An 80-MW solar farm and two solar projects totaling 24 MW are scheduled to begin operations in the near future.
Biomass and geothermal resources contributed very little to the state’s electricity. They were mostly used at small-scale levels.