The complete list of Montana solar incentives and tax credits for 2023, plus how to take advantage.
Table of Contents
Montana gets above average amounts of sun in the U.S., making this a great state for installing solar. There’s also no state sales tax, saving homeowners a good chunk of money upfront. Factor in a 10-year property tax exemption and net metering, plus the federal solar tax credit, and the sky’s the limit in the Big Sky State.
Montana State Solar Incentives
| Incentive | Description |
|---|---|
| State sales tax exemption | Montana has no state sales tax! |
| State property tax exemption | Homeowners can claim a property tax exemption of up to $20,000 for home solar for 10 years in Montana |
| Net metering | Net metering is mandated by law for investor-owned utilities in Montana with credits carried forward each month and expiring annually. Some rural electric cooperatives also offer net metering |
| Solar loans in Montana | The Montana government offers low-cost loans for customers installing residential solar, and the City of Helena offers 0% loans with repayments added to property tax bills |
SRECs in Montana
There is currently no viable market for solar renewable energy certificates (SRECs) in Montana, despite the state enacting the Renewable Power Production and Rural Economic Development Act (69‐3‐20, MCA) on April 2005. This law established a Renewable Portfolio Standard (RPS) for the state, meaning that utilities are required to produce or procure a certain amount of electricity from renewable energy sources such as wind and solar.
The RPS isn’t especially ambitious though, asking for just 15% of retail electricity sales to come from renewables each year since 2015. There’s also no solar carve-out for the RPS in Montana, meaning little incentive for utilities to buy SRECs from residential solar customers. In fact, most utilities satisfy the RPS requirements through wind farms alone, with these mostly built before the RPS was enacted.
Given these factors, the RPS seems to have had minimal impact on renewable energy infrastructure in Montana, according to a state government report. Rather than increasing the RPS requirements, the Montana government decided to repeal renewable energy credit reporting requirements through House Bill 20, enacted in 2017.
Unless pro-solar and pro-renewables legislators are elected to office in Montana, there’s unlikely to be a market for homeowners to sell SRECs anytime soon.
Solar loans in Montana
The Montana government offers an Alternative Energy Revolving Loan Program (AERLP) to provide low-interest loans. The 2022 program offers loans with a 3.0% interest rate (3.409% APR), 10-year terms, and a $40,000 max loan amount, with $515 in closing costs.
Clearwater Credit Union offers low-interest loans with a 3.9% interest rate over a 15-year term up to $75,000. The credit union allows homeowners to re-amortize after receiving any state and federal rebates or tax incentives, helping to reduce loan amounts and monthly repayments. With these loans, there’s no application fee, no origination fee, and no pre-payment penalty.
The City of Helena, Montana, provides a Residential Energy Efficiency and Renewable Energy Loan Program. This program offers homeowners loans for installing solar energy systems within the city limits of Helena. These are 0% interest loans of up to $12,000 and with terms up to 10 years. Repayments are added as an assessment on annual property tax bills. For more info, see the FAQs for the loan program.
State sales tax exemptions in Montana
Montana doesn’t have a sales tax, so all solar installations are, in a sense, exempt from sales tax in Montana.
State property tax exemptions in Montana
Montana offers a property tax exemption for homeowners who install residential solar. The exemption allows for homeowners to avoid paying additional taxes on up to $20,000 for a single-family residential dwelling or $100,000 for all other structures of the assessed value of alternative energy generation equipment for 10 years following installation.
Homeowners have to file a property tax exemption form with the Department of Revenue by March 1st for the claim to be considered for the current tax year. The DoR will assess the application and schedule a visit for a site inspection to confirm the details of your home solar installation.
Net metering in Montana
Net metering is mandated by law in Montana but doesn’t allow for aggregate net metering or virtual net metering. This makes it hard for farmers, ranchers, and community solar projects to benefit from net metering in Montana. The law also restricts net metering to arrays of 50 kW, which makes it hard for schools, businesses, and non-profits to use the program as many would need to undersize their systems.
While this doesn’t seem like good news for Montanans, things could be worse. In 2019, a major utility, NorthWestern Energy tried to kill net metering in Montana by proposing reduced compensation and new fees for solar customers. The Public Service Commission said no and determined that net metering must be offered by utilities until distributed solar generation reaches at least 5% of the utility’s peak load. With so few solar installations in Montana, this means net metering should be available for many more years.
Under the current rules, all investor-owned utilities must apply credits for any surplus energy a homeowner’s solar energy system exports to the grid. These credits carry over month to month but expire at the end of the annual billing period. Fortunately, you can choose to end your billing year in January, April, July, or October. Selecting a year-end after your highest usage months allows you to use up surplus credits.
Montana-Dakota Utilities Co. offers net metering to its customers per the rules outlined above. So too, does NorthWestern Energy, which also offers a one-time annual billing date change.
The other good news is that the net metering rules are set by the Montana Public Service Commission and legislature, but the PSC doesn’t regulate rural electric cooperatives. As such, these utility providers can and do set their own policies allowing for more flexible and generous net metering rules.
The Montana Electric Cooperatives Association (MECA) offers its members guidelines for net metering/interconnection similar to state law. However, the cap is even lower, at just 10 kW for each individual system. Many MECA members offer some form of net metering, including:
- Beartooth Electric
- Fall River
- Fergus Electric (though this coop charges you $8 a month extra as a solar customer)
- Flathead Electric
- Marias River
- Missoula Electric
- Park Electric
- Sun River Electric
- Tongue River
- Yellowstone Valley (which also offers up to $1,000 in rebates for ‘solar stock watering systems’).
Final thoughts on state solar incentives in Montana
Montana used to have an Alternative Energy System Tax Credit, but this was repealed in 2021 through Senate Bill 399. If you’re a Montanan now kicking yourself for missing out, don’t. The state tax credit was only worth $500, while the increase in the federal tax credit from 2021 to 2022 is worth far more for most homeowners installing solar.
In 2022, then, Montana homeowners looking to go solar can enjoy some of the lowest installation costs in the country, plus a 10-year property tax exemption, net metering, and no sales tax! Add in the federal tax credit and a possible 0% interest loan and it’s a great time to go solar in the Treasure State.