If you’re interested in installing a solar system in your home, you’re likely already familiar with the potentially high initial cost of purchasing the necessary equipment and having it set up. With bills that are sometimes in the tens of thousands, it can be a challenge to work out the solar energy financing details for your new project.

Thankfully, there are now many programs that can help you get to producing clean, renewable energy without breaking the bank. Although many require that you fill out paperwork and submit expense forms, the benefits to you will definitely outweigh the time it takes to put through the applications. Here’s a breakdown of the major options available to the average homeowner:

• Incentives and rebates: Increasingly, local jurisdictions, states, and utilities are making it easier for consumers to purchase and install solar systems by offering incentives and tax breaks for solar photovoltaic (PV) and solar thermal systems. To find out more about what’s available in the way of incentives and rebates in your local community, look into the Database of State Incentives for Renewables and Efficiency (http://www.dsireusa.org/) which is a comprehensive database of all state and utility rebates throughout the country. We also have a list of government rebates by state here.
• Investment Tax Credit (ITC): Beginning in 2009, the ITC, a new bill signed by the President on October 3, 2008, will make your investment even more affordable. The ITC now allows homeowners to receive between $4,000 and $7,000 in refunds from the federal government (more than the $2,000 maximum once allowed by the federal government) for solar system purchases and installation. That’s on top of any state and utility incentives you may receive.
• ENERGY STAR Financing Program: Administered by the US Environmental Protection Agency (EPA), this allows homebuyers to purchase new ENERGY STAR qualified homes with mortgages that are valued 10 to 24 percent higher than they would otherwise have qualified for. These are offered through one of three national lenders and several regional lenders. Additionally, some of the lenders in the program offer cash discounts on closing costs that reduce those fees by almost 50 percent. Check out http://www.energystar.gov/index.cfm?c=new_homes.hm_index for more information.
• Energy Efficient Mortgages (EEMs): Obtain an increase on your mortgage amount through a variety of programs to receive a loan for making energy efficiency improvements on your home. Some of these programs are insured by the federal government, making them available to borrowers who wouldn’t otherwise qualify for such loans. Conventional EEMs are also available for homeowners who do not need the added security of federal insurance in order to take out a loan for a solar system purchase and installation. Get the details in our guide to EEMs.
• US Small Business Administration (SBA): The SBA has several loan programs which can be used to purchase energy efficient equipment. The Loan Guaranty Program allows small businesses to use the loan funds for construction, renovation, or leasehold improvements, or the acquisition of machinery and equipment—including solar thermal equipment, PV cells, and related equipment. For more information, check out their website (http://www.sba.gov/).
• Power Purchase Agreement (PPAs): Gaining popularity with businesses in California and Hawaii especially, PPAs are another way for companies to power their operations with green energy. A Solar Power Partner (SPP) is an organization that uses its own funds to build a solar array on the buildings of its clients. The client then signs a long-term agreement (often around 15 years) that allows them to purchase clean energy from the SPP. The cost of electricity is generally slightly less expensive than that they would take from the local utility, but since it’s green, they can claim all the environmental kudos without making the high initial investment in solar.

To get more information on these and other programs, take a look at the US Department of Energy’s “The Borrower’s Guide to Financing Solar Energy Systems” PDF document (http://www.nrel.gov/docs/fy99osti/26242.pdf).