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Financing Green Building and Remodeling

Financial incentives such as rebates, tax credits and deductions are available to help those wishing to add water or energy saving green building features to their building or remodeling projects. Normally building owners must provide the upfront capital, seeking partial reimbursement at a later time via rebate applications, requests for tax credits and deductions, and the like.

For this reason, financing is often a preferred option, with savings from lowered utility bills used to repay or help repay the loan. Too, low interest loans are sometimes available through cities or local utility companies wishing to reduce energy and/or water usage in an area. Owners can also recoup some upfront costs while financing through a home equity loan or a business line of credit by deducting loan interest payments on their federal and state tax returns.

A comprehensive listing of financial incentives for green building projects that save energy and or water--available through the federal government, individual states and cities, as well as private and public utility companies—can be found at DSIRE.  DSIRE is a comprehensive source of information on incentives that promote renewal energy and energy efficiency.

Finally, recognizing that clients with reduced utility bills are at an advantage in paying back loans and that resell can be better for energy efficient buildings and homes (also occupancy rates for rental property), some lenders offer a financial incentive for green building. These incentives, usually in the form of a modest reduction in the percentage rate, can, unlike rebates and deductions, help to defray some of the upfront cost.

Calculating Energy Savings and Return On Investment (ROI)

If you are considering seeking financing for a green building project, and you’d like to know how much money you can save with a particular appliance or furnace, you can compare different models at City Utilities’ web page. But comparing many other green options--including geothermal, solar and wind applications—with conventional systems remains challenging to both homeowners and professionals.

Some green building professionals, however, do have access to advanced software that can help significantly in accurately estimating cost savings and the years to return on the initial investment. For this reason, consulting with a green building professional can be particularly helpful when considering the more expensive options for a green building project.