Payment and Financial Incentive Options (Click here to return to Homeowners)

Residential l Commercial

The best way to finance residential PV systems is through a home mortgage loan, a second mortgage, or a home-equity loan. There are three advantages to mortgage financing. First of all, the mortgage financing provides longer terms and lower interest rates than conventional bank loans. Second, the interest paid on a mortgage loan is deductible on your federal and state income taxes. If you buy the system at the same time that you build, buy or re-finance your house, the process of adding the PV system to the loan will be simple and you may avoid fees and additional application forms. The third advantage is that the PV system becomes part of the house and that when the house is sold, the cost of the system can be added on to the cost basis of the house thus reducing the capital gains tax.

The Federal Government has a program named the "Energy Efficient Mortgage" that can be used by homeowners to finance energy efficient measures for new and existing homes. The purpose of the EEM is to give the buyer additional benefits on top of the usual mortgage deal. The benefits of the EEM are variable and depend on the energy rating of the house as determined by the HERS rating. Call LBA Renewable Energy for details or go to the web at www.natresnet.org and click on Homeowner Info.

Remember that your PV system is a long-term investment and that the terms and conditions of your financing are likely to be the most important factor in determining the effective price of your PV generated power.

You will save money because of Net Metering, the situation where your utility meter runs backwards when you are producing more electricity than you are using. The result is that your excess electricity is sold back to the utility at the same rate that you pay for it.

There is a Maryland State Residential Solar Rebate program that reimburses the homeowner $1,600. for systems under 1 KW and $3,200. for systems larger than 1 KW.

There is a Maryland State income tax credit of 15% of the installed cost up to a maximum of $2,000 for photovoltaic (PV) systems. This credit is in effect until June of 2004. A similar credit is available for installation of solar hot water heating systems but the maximum amount is $1,000.

The Community Energy Loan Program (CELP) is available for nonprofit organizations and local governments who may obtain loans for energy efficient projects in buildings owned or leased by the organization. Negotiated loans are guaranteed to be below market rate, and each loan is negotiated separately.

Commercial Systems: Payment Information Residential Info Links to Govt Info

The best way to purchase a system for a commercial installation is probably through the company's existing source of funds for capital purchases, such as a Small Business Administration SBA loan or a conventional bank loan.

Leasing the system is an alternative as long as you end up buying the system from the leasing company at the end of the lease. Please call LBA Renewable Energy, Inc. for a list of leasing companies in your area.

The company will save money because of Net Metering, the situation where your utility meter runs backwards when you are producing more electricity than you are using. The result is that your excess electricity is sold back to the utility at the same rate that you pay for it.

The Federal Business Energy Tax Credit is a 10% corporate income tax credit for the year in which the system became operational with a limit of $25,000. The credit may be carried backwards for 3 years and then carried forward for 15 years if not used up. There is no expiration date for this tax credit.

Federal tax law allows a 5 year Modified Accelerated Cost Recovery System (MACRS) depreciation schedule. The cost of the system is partially offset by a reduction in corporate income tax due to expensing 20% of the system cost each year for 5 years.

There is a Maryland Corporate Income Tax Credit of 15% of installed cost up to a maximum of $2,000 for photovoltaic systems. This credit is in effect until June of 2004. A similar credit is available for installation of solar hot water heating systems but the maximum amount is $1,000.

County Property Tax Credits may be available from Montgomery and Frederick counties to further offset the cost of the system. Call LBA Renewable Energy for the latest information on these credits.

Commercial Apartment Buildings are eligible for Maryland income tax credits of 20% for Building Integrated Photo-Voltaic systems and 25% for non-BIPV solar systems.