(1) The department shall fund projects that the department determines will best enable the state to meet the legislative mandate to reduce reliance on nonrenewable energy sources.

(2) To be eligible for funding, a project or portion of a project must be:

(a) conducted within Montana;

(b) technically appropriate for Montana's climate and available generation resources; and

(c) the construction or installation of an alternative energy system that generates energy through a proven methodology for the sole use of the customer-generator or for net metering, or for capital investments for energy conservation purposes when done in conjunction with an alternative energy system in a structure owned by an entity listed in Title 75, chapter 25, part 1, MCA, as an eligible recipient of a loan.

(3) Projects designed to produce electricity for sale to third persons are not eligible for funding.