Different Ways of Financing Your Project

There are many ways to design and finance renewable energy projects. Each project needs to be evaluated according to your particular situation. The following examples illustrate the basic economics of various renewable energy investments.

We realize, however, that the initial cost of a renewable energy system may still be substantial. Fortunately, there are a variety of financing options available that take advantage of tax incentives, further improving the economics of your system, to the point where it will pay for itself in a relatively short time.

The following are brief descriptions of financing methods that will reduce the cost of your renewable energy system, through income tax benefits.

Homeowners

Home Equity Loan

As a homeowner, you can use the equity in your property to finance the purchase of your renewable energy project. The interest paid on the home equity loan is deductible on your income taxes.

Leasing

Leasing a system provides other tax benefits, including depreciation and the 10 percent Renewable Energy Tax Credit. Leasing companies can transfer all or part of these benefits to the homeowner.

Business Owners

As a business owner, you can deduct the interest, depreciate the system using MACRS over 5 years, and use the 10 percent Renewable Energy Tax Credit. You may also elect to expense the system as Section 179 property.