Federal tax credits and state rebates provide plenty of incentive for making energy efficiency improvements to homes in Maine.

The problem for many middle-class homeowners is finding the upfront money to pay for them.

A new state loan program aims to bridge that gap. But Maine cities and towns must endorse the program before their residents can take advantage of it, and a popular $1,500 federal tax credit and a $1,000 state rebate bonus may be close to expiring before the loans would be available in many communities.

The $1,500 federal credit covers up to 30 percent of the cost of biomass furnaces; new windows, doors and roofs; heating systems; insulation; and water heaters — other federal credits applying to solar-energy panels and other improvements are not set to expire this year.

The state is providing rebates of up to $4,000 for a variety of energy efficiency projects — the $1,000 bonus expires at the end of the year, but up to $3,000 of rebates will still be available until the federal money funding them runs out.

The revolving loan program is being established with a portion of a $30 million federal grant awarded earlier this year as part of the economic stimulus package. It will be managed by the Efficiency Maine Trust, an independent agency created by the state to oversee weatherization and other energy efficiency programs.

Details of the Property Assessed Clean Energy loan program are still being worked out — for instance, officials have yet to determine the interest rate, said Michael Stoddard, the executive director of Efficiency Maine.

But unlike many loans, these will be designed to reflect the actual amount of money saved through energy efficiency improvements — if an energy audit determines that a more efficient furnace will save a homeowner $100 a month, in most cases, that’s about what the payment will be, Stoddard said.

Homeowners will be required to get an energy efficiency audit to qualify for the loans. They can be repaid over as long as 20 years or transferred to a new owner if there’s a balance remaining when a house is sold.

That last feature, and another that will give borrowers the option of making payments twice a year with the amount added to local property taxes, spurred state lawmakers to require towns and cities to endorse the PACE program before residents could take part, because it might add a small amount of administrative work to municipal tax offices.

In municipalities governed by them, town or city councils can vote to adopt the program. In communities run by town meeting or selectmen, the plan must be put to voters — in many cases, this would not happen until November.

So far, no Maine towns and cities have adopted the program, which was approved by the Legislature this spring, but several are working toward endorsing it.

One such town is Kennebunk which — because it is run by a board of selectmen — is expected to put local adoption of the PACE program on the November ballot. For most towns and cities, it should be “a no-brainer,” said Steve Thomas, a solar contractor and member of the Kennebunk Energy Advisory Committee.

Thomas noted that the loans don’t carry an income requirement, so middle- or even upper-income homeowners can apply, a potentially big factor for those who might be cash-strapped due to the recession.

“A lot of people don’t have that up-front money,” Thomas said. “This will tap an enormous market, especially in this economy.”

Thomas said he sees a lot of interest in energy efficiency improvements provided by his company, Renewable Energy of Maine, because of the federal tax credits and state rebates. For instance, one homeowner he’s working with is installing a new furnace and solar panels. The cost is about $15,000, but the net bill to the homeowner after credits and rebates will be less than half that.

Other states have adopted versions of the PACE program, Thomas said, but it’s especially appropriate for Maine.

“Maine has the oldest housing stock in the country and we also use the most fuel oil in the country,” he said, “so there’s a huge need for PACE.”

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]