Low-Interest Loans for Solar Hot Water Heaters
Other Financial Incentives for Renewable Energy Systems
Federal Tax Credits Available
Low-Interest Loans for Solar Hot Water Heaters
The Kentucky Solar Partnership (KSP) and the Mountain Association for Community Economic Development (MACED) are partnering to offer low interest loans for the installation of solar water heaters. Loans cover the full equipment and installation cost. Interest rates are fixed at 6.0%. All loans are to be repaid in monthly installments, with a fixed term of six years.Who can apply?
Residents and businesses in Eastern Kentucky are
eligible to apply. A credit check is required before
final loan approval. Click here to see a map and list
of the 51 counties in MACED’s service area.
What does a solar water heater cost?
Installing a residential solar water heater in Kentucky will typically
cost $3,000 to $6,500 and will save a family about $150 to $400 or more
per year on their utility bills. The price range for installing a
system depends on the amount of hot water used each day, whether a new
water storage tank is required, the size of the home, whether the
system is installed by the homeowner or a professional contractor, and
other factors.
Click here for an illustration of how much money a typical family spends just to heat water, and how much can be saved by using a solar water heater. Actual financial savings will depend upon the type of fuel used by the conventional water heater, the cost of fuel or electricity, the amount of hot water used in the home, and other factors. As energy costs rise, financial savings will increase as well.
Higher loans for
larger solar water heating systems (such as those used for radiant home
heating or commercial uses), will be evaluated on a case by case basis."
How can I apply?
Download a copy of the loan application and follow
the instructions. The process begins with a solar site
assessment to determine if your home is suitable
for a solar water heater—most homes are, but it’s
important to make sure before you buy a system.
Contact a solar water heater installer and ask them
to conduct a site assessment (to find a qualified
installer in your area, refer to our list of SWH
installers). If your loan application is accepted, the
cost of the assessment can be included in the loan.
If the loan is declined, KSP will reimburse you for
the cost of the assessment (up to $50).
Solar Water Heater Loan Program Documents
Loan Application (PDF)
Site Assessment Form (PDF)
Installation Checklist (PDF)
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Other Financial Incentives for Renewable Energy Systems
MACED Loans for Commercial Renewable Energy Investments and
MACED also offers loans to businesses for the installation of renewable energy systems,
(859-986-2373), www.maced.org).
Commercial Tax Credits for Solar Energy
A Federal business energy tax credit of 30% is available to businesses that purchase
Other Incentives Available in Kentucky
Read Chapter Thirteen of The
The Database of State Incentives for Renewable Energy (DSIRE)
DSIRE's website provides a comprehensive source of information on state, local, utility,Back to top
Federal Tax Credits Available
The Energy Policy Act of 2005 (EPAct 2005) provides new
tax incentives for a number of solar & energy efficiency measures,
including:
§
Tax
credits for residential and commercial solar photovoltaic and hot water
heating systems
§
Tax
deductions for highly efficient commercial buildings
§
Tax
credits for highly-efficient new homes
§
Tax
credits for improvements to existing homes including high-efficiency air
conditioners and equipment
§
Tax
credits for residential fuel cell systems
§
Tax
credits for fuel cell and microturbines used in a business
§
Tax credits for fuel-efficient vehicles
What are
Tax Credits and Tax Deductions?
There is an important
difference between a tax deduction and a tax credit. A tax deduction is
subtracted from income before total tax liability is computed. On the other
hand, a tax credit is subtracted directly from the total tax liability.
This means that a deduction and a credit have very different values, with a
credit being 3 or more times more advantageous to the taxpayer than a
deduction. For example, a tax credit of $1,000 for someone in the 28% tax
bracket is equivalent to a tax deduction of $3,571.
Tax Credits for Solar Photovoltaics and Water Heating
Systems
Federal tax credits are available for residential and commercial solar
energy systems placed in service between January 1, 2006 and December 31, 2008.
Residential Tax Credits – For solar water heaters and solar
electric (PV) systems, the tax credit is 30% of the equipment and installation
cost, with a maximum tax credit of $2,000.
Commercial Tax Credits – For solar water heaters, solar electric
(PV) systems, and solar hybrid lighting, the tax credit is 30% of the equipment
and installation cost, with no maximum limit.
To be eligible for the solar hot water system tax credit, the system
must be certified by the Solar Rating and Certification Corporation (SRCC) and
produce 50% or more of the hot water needed by the residence. There is no qualification
provided for PV systems. Individuals may claim tax credits for either or both
types of solar systems.
Energy
Efficient New Homes
This provision offers
homebuilders a tax credit of $2,000 for homes that reduce energy use for
heating and cooling only (not hot water) by 50% compared to the national model
code — the 2004 IECC Supplement (assuming an SEER-13 air conditioner).
Producers of manufactured homes can also choose to qualify for a tax credit of
$1,000 for homes that save 30%. This $1,000 credit for reaching 30% savings is
not available for site built homes, which must reach the 50% savings tier to
qualify for the $2,000 credit.
Eligible
homes must demonstrate savings using software that has been approved by DOE and
builders must demonstrate compliance by the use of third-party inspectors
certified according to DOE rules. While no interim rules have yet been
promulgated to meet these requirements, similar standards exist in
Energy
Efficiency Improvements for Existing Homes
These provisions
offer cost-based incentives of 10% of the amount expended by the taxpayer for
"Qualified Energy Efficiency Improvements," up to $300 for
"Qualified Energy Property." The maximum credit limit per home is $500
for 2006-2007.
"Qualified
Energy Efficiency Improvements" are specifically defined as:
- Any insulation material or
system specifically designed to reduce heat loss or gain
- Exterior windows (including
skylights)
- Exterior doors
- Any metal roof having
pigmented coatings specifically designed to reduce heat gain which meet
Energy Star program requirements.
"Qualified Energy Property" is defined as:
- Electric heat pump water
heater with EF of 2.0 or greater
- Electric air source heat
pumps with HSPF of 9.0 or greater
- Geothermal heat pumps:
- Closed loop products with
EER of 16.2 and COP of 3.3 or greater
- Open loop products with EER
of 14.1 and COP of 3.3 or greater
- Direct expansion (DX)
products with EER of 15 and COP of 3.5 or greater
- Central air conditioner that
receives the highest efficiency tier established by the Consortium of
Energy Efficiency as of
- Natural gas, propane or oil
water heater with EF or 0.80 or greater
- Natural gas, propane or oil
furnace or hot water boiler with AFUE of 95% or greater
- Advanced main air circulating
fan used in natural gas, propane or oil furnace that uses no more than 2%
of the total annual energy use of the furnace.
Credit
limitations on qualified energy property are as follows:
- $50 for any advanced main air
circulating fan
- $150 for any qualified
natural gas, propane, or oil furnace or hot water boiler
- $300 for any item of
qualified energy property.
The
incentives apply to improvements and equipment placed in service during
2006-2007.
Fuel-Efficient Passenger and Commercial Vehicles
Tax
credits are available for a range of vehicles, mainly those with
hybrid-electric or diesel engines. Tax credit amounts are based on a complex
formula and will be available for vehicles placed in service after January 1,
2006. The credits are available for both passenger and commercial vehicles and
will be phased out over time for each auto manufacturer after they sell 60,000
qualifying vehicles. The vehicle tax credits will end for vehicles placed in
service after December 31, 2010.
Source: This
fact sheet adapted from the
www.fsec.ucf.edu/epact-05.htm and the Tax Incentives Assistance Project.
For more information
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