Alternative Energy Revolving Loan Program

May 09, 2023


The Alternative Energy Revolving Loan Program (AERLP) provides loans to individuals, small businesses, local government agencies, units of the university system, and nonprofit organizations to install alternative energy systems that generate energy for their own use. The program is funded by air quality penalties collected by the Department of Environmental Quality (DEQ), and also used funding from The American Recovery and Reinvestment Act of 2009 (ARRA). The program is administered by DEQ, which is responsible for developing the rules.

Alternative energy systems are defined by the Montana Code as "the generation system or equipment used to convert energy sources into usable sources." Technologies included in this definition are fuel cells using non-fossil fuels, geothermal, low emissions wood or biomass, wind, photovoltaics, solar water heating, small hydropower (under 1 megawatt), and other recognized non-fossil forms of generation. DEQ provides a technical review and approval of systems proposed for the loan program.

In 2005, SB 50 added local government agencies, units of the university system, and nonprofit organizations to the list of eligible sectors, and allowed energy conservation measures to be financed when installed with an eligible alternative energy system. Interest rates are set annually and are fixed for the term of the loan. The rate for 2023 is 3.5% with a maximum loan amount of $40,000 and a loan term of up to 10 years with no early payment penalty.

DEQ will accept and process loan applications throughout the year. Approved projects will be ranked according to criteria published in the Administrative Rules of Montana (ARM) Title 17, Chapter 85. This criteria includes items such as system reliability, return on investment and avoided fossil fuel consumption. Once a loan is approved, the applicant will be informed as to whether funds are currently available and when new funds are anticipated if funds are not currently available.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Montana
Incentive Type: Loan Program
Web Site:
Administrator: Montana Department of Environmental Quality
Start Date:
Eligible Renewable/Other Technologies:
  • Solar Water Heat
  • Solar Photovoltaics
  • Wind (All)
  • Biomass
  • Geothermal Heat Pumps
  • Building Insulation
  • Windows
  • Doors
  • Other EE
  • Wind (Small)
  • Hydroelectric (Small)
  • Geothermal Direct-Use
  • Fuel Cells using Renewable Fuels
Maximum Loan: $40,000
Loan Term: Up to 10 years
Interest Rate: Set annually and are fixed for the term of the loan; 3.5% for 2023


Name: MCA § 75-25-101 et seq.
Date Enacted: 5/5/2001, amended 2005
Effective Date: 7/1/2001


Name: Meranda Bass
Organization: Montana Department of Environmental Quality
Address: 1520 E. 6th Avenue
Helena MT 59620
Phone: (406) 444-6586

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.