2012 Idaho Solar Power Update
From Lake Pend Oreille to the Sawtooth Mountains and Hell’s Canyon, Idaho has some truly unique natural beauty. Since there’s so much to see and do outdoors in Idaho, keeping the environment clean by using renewable power sources should be a top priority. Don’t forget about all those potatoes either; clean energy helps farmers too. How has the state legislature taken up the issue of renewable energy? Read on!
Idaho’s (Lack of A) Renewables Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar.
Unfortunately Idaho does not have any RPS at all, not even the voluntary targets we’ve seen in some nearby states that also lack true RPS mandates. No RPS generally translates to little to no solar incentives offered by the utilities, and unfortunately that’s the case here. No utility incentives means a whole lot of missed opportunity, and wasted solar resources. The southern half of Idaho, in particular, gets a great deal of sun — as much as Florida– and could produce a great deal of clean solar power with the right programs to encourage homeowners like you to make the switch. A strong RPS would force the utilities to pick up a lot of the cost of providing those incentives here.
Solar Performance Payments and Rebates in Idaho
Idaho lacks any performance payments or utility rebates for solar power. This is a direct result of the lack of an RPS. With an RPS in place, and the accompanying penalties for utilities that fall short of RPS goals, you can bet the utilities would start offering incentives to switch to solar power. How do we know? Because it’s worked everywhere else. RPS’s inevitably spur the creation of incentives that are cheaper for the utility companies than the penalties of the RPS.
Idaho Solar Tax Credits
With no utility incentives to speak of, we have to commend the legislature for stepping up with a pretty strong solar tax credit. The lack of utility incentives is the legislature’s fault for not passing an RPS, of course, but never the less, the personal deduction that you can claim in April is a big step back in the right direction. When you install a new solar power system in your home, you are entitled to a state income tax deduction for 40% of the cost of the project in the first year, and 20% each year for the next three years. The deduction comes off of your income that you pay taxes on, not your actual tax burden. With a maximum deduction from income of $5,000 per year and a state tax rate of 7.8%, you can expect to get back about $1,560 over the four years the tax credit can be stretched over.
Idaho Solar Tax Exemptions
With that incredible solar tax credit in place, we can’t imagine how the other solar friendly tax policies slipped through the cracks. Both a property tax exemption and a sales tax exemption would save you money, without ever actually removing a single dollar from the state’s bank account.
Utility Prices in Idaho
Idaho pays an average of 8.24 cents per kilowatt-hour (“kwh”) of electricity. That’s the lowest price in the region (by far). In fact, it’s one of the lowest average rates in the nation, and well below the national average of 11.43 cents/kwh. We know you like paying less now, but the long term costs of cheap electricity are through the roof. All that cheap electricity is produced by burning tons of fossil fuels. Millions and millions of tons of earth-killing fossil fuels. When the astronomical environmental costs start to mount, monthly electricity bills are inevitably going to rise as well. And when that happens you’re going to feel pretty darn smart for making the early switch to producing your own clean, efficient solar power. Just remember to thank us!
Idaho Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for any surplus. It’s an essential part of strong solar policy, because it’s a big money saver for you. Idaho currently has no law requiring utilities to offer net metering, or governing interconnection (getting on the grid to get net-metered).
Despite not being required, all three of the state’s three investor-owned utilities — Avista Utilities, Idaho Power and Rocky Mountain Power — have independently decided to offer net metering programs. The framework of all three programs is similar. All of the programs limit individual system size to 100 kilowatts (kW); limits aggregate net-metered capacity to 0.1% of the utility’s peak demand in a baseline year (1996 for Avista); and restrict any single customer from generating more than 20% of the aggregate capacity of all net-metered systems.
All three programs also handle residential net metering the same way: all surplus energy produced is applied as a credit to your next month’s bill at the full retail rate. So for every kw extra you produce one month, you pay for one less kw the next. Avista specifies (sadly) that surplus credit reverts back to the utility without compensation after 12 months. Idaho Power and Rocky Mountain Power do not specifically address “rollover” limits or other annual surplus accounting policies.
5kW Example Return on Investment in Idaho
Installing a typical 5kW solar system should start at about $25,000. Don’t worry – that’s going to drop a whole lot just in the first year.
- Start with that gigantic state tax credit. You can take 40% of the costs off of your taxable in year 1, but only up to the max of $5,000 per year. You’ll hit that cap, so subtract that $390 ($5,000 less income taxed at the state tax rate of 7.8%) for a new starting price of $24,610. Don’t forget that you can take another $5,000 off your taxable income, and save another $390 each year for the next 3 years, bringing your total tax credit savings to $1,560.
- The federal solar tax credit covers 30% of out of pocket costs, so subtract $7,500 (30% of the full $25,000 sticker price) for a new price of $17,110.
- Finally we subtract your first year’s energy savings, which we estimate to be $631, giving you a final cost after year 1 of $16,479.
- With a conservative estimate of the future rise in electricity prices, you can expect your solar power system to pay for itself in just four short years. After that you’re turning a profit! We estimate those profits to be more than 15 grand through 2036.
- In addition to those direct wallet-fattening savings, you also increased your home value by nearly $12,624.
- In addition to all that cash (and home value), you’ve helped create a bunch green for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 117 trees a year, every year your solar power system is pumping out all that clean and cheap energy
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Idaho Solar Consensus
We’ve reviewed solar policy in a whole lot of states –all of them in fact– but we’ve never seen a state quite like Idaho before. No RPS, no utility backed solar incentives, heck, no mandatory net metering or interconnection standards! Virtually nothing, except for that amazing Idaho solar tax credit. And at the end of the day, it’s really the money that talks. All that money you’ll be taking off your taxes, that is. With a 4 year payback time frame, we can’t give Idaho anything but an “A” for residential solar policy, even without any of the typical foundational policies in place.