Alternative Energy Revolving Loan Program
Administered by Montana Department of Environmental Quality
You can borrow up to $40,000 at a fixed 3.5% interest rate (4.023% APR) for up to 10 years to install solar, wind, geothermal, biomass, small hydropower, or fuel cell systems, plus energy conservation measures like insulation or windows when paired with the system. Apply quarterly (July, October, January, April) with your completed application and supporting documents; DEQ reviews projects and ranks them by energy generation, return on investment, and geographic diversity, then notifies you of funding status.
Help customers access low-cost financing for alternative energy installations and efficiency upgrades; Montana's revolving loan program finances projects across residential, commercial, nonprofit, and government sectors with no application fee and no early payment penalties. Your customer's project will be ranked on energy output and payback period, so systems should be properly sized and economically justified; DEQ requires technical approval and verification that installations meet local codes and utility interconnection standards.
AERLP is a revolving loan program funded by air quality penalties, administered by Montana DEQ's Energy Office, offering quarterly application cycles with scoring based on energy generation, ROI, technology diversity, and geographic spread. The program finances over $19 million in projects since 2001 across individuals, small businesses (≤100 employees), nonprofits, local government, and university units; current terms are 3.5% fixed rate, $40,000 maximum, 10-year maximum term, with approximately $250–$450 in closing costs. Demand has exceeded quarterly funding since April 2023, requiring ranked prioritization per ARM 17.85.111(5).
Program details
- Program ID
- 604
- Effective
- 7/1/2001
- Last updated
- 7/29/2025
Eligibility
- Sectors
- commercial local government nonprofit residential schools
- Technologies
- solar water heat solar photovoltaics wind (all) biomass geothermal heat pumps wind (small) hydroelectric (small) geothermal direct-use fuel cells using renewable fuels building insulation windows doors other ee
Program summary
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. Funding may be used to provide loans for construction of alternative energy systems and capital investments for energy conservation purposes when done in conjunction with an alternative energy system. The program is funded by air quality penalties collected by the Department of Environmental Quality (DEQ). 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 that do no require hydrocarbon fuel, geothermal, low emissions wood or biomass, wind, photovoltaics, 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 2025 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 on a quarterly cycle (July, October, January, and April). Approved projects will be ranked according to criteria published in the Administrative Rules of Montana (ARM) Title 17, Chapter 85. This criteria includes items including, but not limited to, amount of energy produced, diversity of technology in the portfolio, return on investment, and geographical diversity of the project portfolio. 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.
Contact & resources
- Contact email
- kmontgomery@mt.gov
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
