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 renewable energy project. Energy conservation measures financed by the loan are limited to 20% of the total loan amount. Interest rates are set annually and are fixed for the term of the loan - the rate for 2017 is 3.25%. Some funding from ARRA temporarily boosted the loan amount in April 2010, but loan amounts have returned to previous levels; the maximum loan amount is $40,000, with a maximum loan term of 10 years. Approximately $1 million in funding is available for the period starting July 2013.
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.