Financing Alternative Energy

New Hampshire's forests provide plenty of renewable fuels

State and federal incentives, in the form of grants and tax credits, have been making it easier for individual households and small business owners to pay for alternative energy systems. In New Hampshire, for example, rebates from the state's renewable energy fund have totaled more than $1.5 million since 2008, and have helped fund the purchase of solar hot water systems, small wind and solar electrical generation systems, and even central heating systems fired by wood pellets.

Nevertheless, the market is still growing slowly.

Part of the reason is that the cost of a new alternative energy system is relatively high: as much as $10,000 for a new hot water system, and as much as $40,000 for a full-scale solar electric generating system that can power a home or business.

Jack Bingham, president of Seacoast Energy Alternatives Solar Store, in Dover, NH, and James Gamble, who operates GreenSource Energy Solutions, in Concord, NH, talked things over and came to believe that the shortage of viable financing options was a significant damper on the market. They decided to do what they could to provide financing, as a traditional way to make it easier for their customers to buy single-site alternative energy sources.

"It's critical to our business, and it was a real missing link in the bigger picture," says Gamble. "What I was finding right out of the gate was that our ability to sell systems was limited to those folks with sufficient means readily available."

Bingham claims that banks "sort of looked at me like I was crazy," when he approached them about financing the sale of alternative energy systems. "I don't think they took the time out to research the alternative energy market or the products we sold. They offer financing for a $35,000 car that won't be worth anything in five years," he pointed out, with amazement.

In comparison, says Bingham, "... we're offering ... an energy system that's going to last 25 years or more, cut down on operating expenses, and save lots of money. It's a unique situation and it was hard trying to get to see it from this perspective of an improved financial condition because of the loan."

Eventually, the pair found Holy Rosary Credit Union, based in Rochester, NH, which agreed to offer financing to customers of all USA Solar Stores throughout New Hampshire.

"We already offered home equity loans for certain efficiency measures, so it was really a natural fit," says Julie Coakley, lending director at the credit union. "When we saw their Web site and what they were doing, we were impressed ...."

The credit union now makes loans available to purchasers of alternative energy systems at rates from 3.99 percent for up to five years and from 6.49 percent for up to 15 years.

Coakley says "When you look at it from a risk standpoint, yes we finance up to 100 percent, but we feel that what they're putting into their home is increasing the home's value, which is good for everyone."

Holy Rosary has already approved some loans and has received additional applications for more loans that are now pending. Although the financing option is too new to yield significant data on how well it is being accepted among homeowners and small business people, Bingham and Gamble claim that the level of interest is very encouraging.

More later ...

Photo credit: Werner Kunz