The Green Loans program

(N.B. the Australian government’s Green Loan program came to a close on 21 December 2010. Some information below is out of date.)

A solar PV system is a great way to green your home, reduce your energy bills and shrink your carbon footprint. The various solar feed in tariffs offered, which pay you a special premium for the energy your solar cells generate, also provide financial incentives to going solar. However, the upfront cost of a solar system can be an issue. 

You can get a loan for up to $10,000 interest free for 4 years to pay for your solar energy installation.

To address this the federal government has a special Green Loans program.

What is the Green Loans program?

The Green Loans program is a special Australian Government initiative to assist families to install solar, water saving, and energy efficient products. It provides an interest free loan of up to $10,000 for 4 years to help you pay the upfront cost of installing a solar energy system.

Who is eligible?

Almost every Australian household is eligible for the Green Loans program. These are the only conditions – the applicant must:

• Arrange for a free home sustainability assessment to be conducted
• Be aged 18 or over
• Be an Australian citizen, permanent resident and/or an Australian registered charity
• The dwelling owner, a trustee or renter listed on lease
• Have an income below $250,000

In addition, as the loan is provided through a registered financial institution (see who provides the loan? below) you must satisfy that institutions normal lending criteria.

What is the home sustainability assessment?

The home sustainability assessment is a free, independent assessment carried out on your home by a qualified expert assessor. The assessor will come to your home and physically inspect all the major energy and water systems relating to thermal comfort, water heating, lighting, refrigeration, cooking, entertainment, water efficiency and outdoor consumption, and waste management.

They will then give you advice on how you can make your home more sustainable and issue you with a tailored report that lists the most effective options for you. This may include installing solar PV or solar hot water. The assessment should take only about 1.5 hours to complete and is done free of cost. On average it will take 3 weeks or less for the home sustainability assessment report to be delivered to you.

You can book your home sustainability assessment by calling the Department of the Environment, Water, Heritage and the Arts Home Sustainability Assessment hotline on 1800 895 076 or filling out the contact form.

Once you have conducted the home sustainability assessment you have 6 months to apply for a Green Loan.

How do I apply?

1. First, sign up for your free home sustainability assessment by calling the Department of the Environment, Water, Heritage and the Arts Home Sustainability Assessment hotline on 1800 895 076 or filling out the contact form.
2. Look at your tailored home sustainability assessment report and decide what suggested options you would like to go ahead with. The report will suggest the best water and energy saving changes you can make to your property, options to purchase energy and water saving devices such as solar PV and practical information to help you get started.
3. Organise a green loan through one of the registered financial institutions

Who provides the loan?

The loan is provided to you by a registered financial institution. For a list of registered financial institutions for the Green Loans scheme click on the link. The internal working of the scheme is that the registered financial institution lends you the money and the government pays them the interest for 4 years, making the loan interest free for that time.

What happens after 4 years?

If you haven’t managed to pay back the full amount after 4 years you should arrange refinancing of the outstanding amount, most likely through a personal loan. There are no stipulated provisions in the scheme for this, so you should check with the institution you apply with to see what the terms and conditions in the case of outstanding amounts are.

Are any other rebates and government bonus’ affected?

No. Getting a green loan does not affect any other government rebate such as the solar feed in tariffs or the bonus payment and sale of your REC’s.

What if I want to install a bigger system then is recommended by the home sustainability assessment report?

There may be a situation where the home sustainability assessment report recommends that, for instance, you install a 1.5kW solar PV system, but you wish to install a 5kW system to capitalise on the solar feed in tariffs. The advice we have received from the Department of the Environment, Water, Heritage and the Arts is that in this case you will only be paid an amount consistent with the reports recommendation. If you wish to invest in addition to the loan amount on a larger system you are free to do so, but this will be at your own cost. An amount to fund the recommended capacity only will be covered by the Green Loans scheme.

How is the loan amount decided and who receives payment?

The information we have been given is that the home sustainability assessment report will outline the most effective options for your household, but not costings. Once you apply for the Green Loan with one of the registered financial institutions you then indicate the amount you wish to borrow, and the institution will check if this is within reason for the recommendations of the report. The amount is then made available to you to pay the installer. You may be required to prove that you have used the loan amount for approved purposes only in an audit, so be sure to keep all receipts.

Kobad Bhavnagri
Solar Energy Consultant
Solar Choice Pty Ltd

© 2010 Solar Choice Pty Ltd