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Clear info on home solar power rebates, tax credits, and other benefits

2017 Policy

C+

Avg. Yearly Savings

$748

Congratulations! You've found the ultimate guide to going solar in Iowa

2016 Policy

C+

Avg. Savings/yr

$748

At Solar Power Rocks, our dream is to turn your thoughts of solar power for your home into reality

Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.

Anyone who’s ever spent time here in the Hawkeye State knows how beautiful it is. More than just windswept plains and farmer’s fields, Iowa is home to some of the most beautiful prairies and savannas anywhere in the world, and is also home to several varieties of grapes that are turned into delicious Iowa wine. Those of you that live here know what we’re talking about. That means you also know how important it is to protect that environment by getting off of dirty energy, and onto clean sources like solar.

Fortunately, the solar incentive landscape is almost as pretty as the Iowa prairies. There are no big utility company rebates here, but a nice state tax credit helps with some cash back in the first year, and payback timeframe and return on investment are a little better than average.

Sadly, despite the moderately good news above, Iowa has suffered from court battles and utility reluctance when it comes to allowing third-party ownership. So no $0-down leases or Power Purchase Agreements for you, unfortunately.

Thankfully, there are other options. Read on to find out the best way to go solar in Iowa!

Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Iowa solar incentives you see below.

Your guide to going solar in Iowa

We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in Iowa. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

The Solar Strategy section is all about the various financial options you have in Iowa. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.

The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Iowa. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.

Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Iowa is doing to make solar more affordable for its citizens, you'll find it here.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Your Solar Strategy in Iowa

Figuring out the best way to go solar in Iowa can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

Compare the Return of Different Solar Investments in Iowa

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan. Since utility companies in Iowa are actively fighting against allowing homeowners to get solar through a third-party agreement like a lease or Power Purchase Agreement, we included two different sizes of solar loans—one for people with a lot of equity (or credit), and one for people with just a little.

As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. A better option is to take a solar loan or home equity line of credit (HELOC). You'll put $0 down and end up with a big, big tax break at the end of the year.

Your loan payments over 15 years will be more than your electric bill savings, but you'll still come out thousands of dollars ahead by the end of your panels' 25-year warranty, with the potential to continue the savings long into the future.

Read on to find out more about each option.

 Buying Solar in Iowa

Paying up front used to be the only way to get panels on your roof, and it's still the option that allows you the most control, but it isn't the best option from a percentage return on investment standpoint—that award goes to the solar loan option.

Still, an outright purchase returns the most money over time, because you own the system from day one and reap all the benefits. The 30% Federal solar tax credit, combined with Iowa's own tax deduction and electricity savings, bring your first-year costs way down.

In our example, you put down $21,250, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced nearly $14,000 in income.

Net Present Value: $1,369

Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Iowa's $1,369 NPV on a 5-kW solar system means you'd be that much better off investing your money in solar in here over 25 years than in, say, stocks. With investment return like that, you'll be padding your wallet while you save the planet. Good job! But check out what happens to NPV if you buy the same system with a loan that you can pay back over time.

Here’s how the numbers work for an Iowa solar purchase with a 5-kW rooftop solar system:

  • Installing a typical 5kW solar system should start at about $21,250. Don’t worry–with tax credits and energy savings, it'll be a lot cheaper after year 1.
  • Since the Feds calculate their incentive based on actual out of pocket costs, no state rebate means a bigger federal solar tax credit. Subtract $6,375 (30% of $21,250) for a new price of $14,875. Note: you can take the credit over as many years as necessary to get the full amount.
  • Iowa gets in on the game with its own 18% tax credit, netting you another $3,825 total. We estimate about $1,000 in each of the first 3 years, and you can take over a total of 4 years if necessary. If you know your annual Iowa income tax, this credit will wipe it out, up to $3,825.

  • Don't forget your first year’s energy savings, which we estimate to be about $749. That brings your cost after the first year to $13,126.
  • By the time your system pays itself back in year 13, you’ll be seeing over $1,000 per year in savings until the end of your system’s 25-year warranty, and the panels will probably keep working for longer!
  • When all is said and done, our 25-year estimate shows a total net profit of $13,826, with an internal rate of return of 6.8%. That's better than a 25-year investment in the stock market!
  • On top of those returns, your home's value just increased by just about $19,000, too (your expected annual electricity savings over 20 years)!
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 104 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Iowa. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

 Solar Loans in Iowa

It's simple: taking a loan to pay for solar is a great idea. Someone else (your bank) puts down all the cash, while you get the big first-year tax credits—then your system produces electricity that helps offset the cost of loan payments. It's like investing in a business that's already successful.

As you can see from the chart above, you'll start out with a big windfall, because even though you're not putting any money down, you get the Federal 30% tax credit for the whole installed cost of your system. Then, over the 15-year repayment term of your loan, you'll be spending more than you're saving in electricity costs, essentially investing a total of about $5,500 until you pay the loan off.

But from there, it's up-up-up! After your loan is paid off, you'll be saving more than $1,000 per year in electricity costs from your fully-owned solar panels. You'll end up over $6,783 to the good after 25 years, after which your panels will likely still work; they'll just be out of warranty.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can qualify for a solar loan or home-equity line of credit (HELOC) for $21,250, with a fixed rate of 4.5% or lower and a 15-year repayment period.
  • You have an appetite for making money with a long-term investment, while also producing benefits for the environment.

Net Present Value: $3,097

Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Iowa's $3,097 NPV on a solar loan means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. That's a huge number, and it shows how getting a loan for solar is so much better than the alternatives. You can rest easy with an Iowa solar loan knowing you're doing right for your pocketbook at the same time as you're doing right by the planet!

Here’s how the numbers pencil out for an Iowa solar purchase with a solar loan:

  • Installing a typical 5-kW solar system should start at about $21,250. That's how big your loan will need to be to cover it.
  • The electricity you'll save in the first year of operation would have cost $749, but your loan payments will total $1,886, for a difference of $1,137, or about $95 per month.
  • That's not so bad when you consider your tax savings for the year will be $7,375! You'll come out more than $6,200 ahead in year 1, and you'll get a $1,000 tax credit in years 2 and 3 as well!. That should help ease the burden of loan payments for a few years.
  • When your loan’s paid off after year 15, you’ll start to see over $1,000 per year in savings until the end of your system’s life.
  • For our 25-year estimate, you'll see some great returns, to the tune of $6,783, even after all the payments.
  • And the future is going to look a little brighter, since your system will mean green for the environment. It'll be like planting 104 trees every year!
Keep in mind, the numbers above are based on an average home in Iowa. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

 Small Rooftop Systems in Iowa

Let's say you don't have a ton of extra cash laying around, but you do have a bit of equity in your home. Can you get solar panels? YES! Is it a good idea in Iowa? Well...

Here's the thing: electricity in Iowa is priced close to the cheapest in the nation. The way solar saves you money is by producing energy that you would have paid for. Trouble is, paying for solar with a loan costs just a little less than paying for electricity.

That means solar isn't the brilliant investment it can be in other states with high energy prices and cash-back incentives, but it might still be a good idea for you if you really, really want solar for environmental reasons. And it can mean a big windfall in year 1, because of tax savings.

Here are the factors we'll look at for this example:

  • A 2-kW rooftop system that will cost around $10,200 installed.
  • A HELOC for that amount with a 10-year payback at 4.5% interest.

Just like with a big system, you don’t have to put any money down, but you still get the big state and federal tax credits for buying solar, and the energy bill savings will start right away. Your loan payments will be about $103 per month while your energy bill savings will be about $25—a difference of $78. Basically, for the cost of cable TV service, you do your part to save the planet from carbon pollution, and make a little money later in your life, too.

Net Present Value: $94

Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Iowa's $94 NPV on a small solar system means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. $94 is a really small number, and changes to any of our assumptions can make it bigger or smaller. Basically, the $94 is what you're gaining alongside the other benefits of solar.

Here’s how the numbers pencil out for an Iowa solar purchase with a small rooftop solar system:

  • Installing a typical 2-kW solar system should cost about $10,200. Your loan should be for this amount.
  • The electricity you'll save in the first year of operation would have cost $300, while your loan payments will cost $1,239.
  • At the end of the year, the Federal and State governments will give you tax credits based on the cost of your system. That's $3,460 that you won't owe this year. You can take the Federal $3,060 credit over as many years as necessary to get what you're entitled to, and the state tax credit ($1,275) can be stretched to as many as 4 years. With Iowa's low income tax, we estimate $400 per year for the first three years, and $75 in year 4.
  • When your loan’s paid off after year 10, you’ll see over $400 per year in savings until the end of your system’s life.
  • For our 25-year estimate, you'll end up with some nice profits! We're talking $2,547 after 25 years, which will help your old, wiser self appreciate your young, forward-thinking self.
  • Finally, your system will remove as much carbon from the air as planting 42 trees per year, which is a pretty great thing, we'd say.
Keep in mind, the numbers above are based on an average home in Iowa. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Iowa Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Iowa:

RPS

105 MW

Grade: D

A Renewables Portfolio Standard (“RPS”) basically requires a certain percentage of a state’s energy production come from renewable sources by a specific date in the future. A great many states have passed such standards, sometimes with goals as high as 30%, even 50% renewable energy production in the near future.

So, where is Iowa in this awesome environmentally-friend policy trend? Sadly it’s still mostly in the solar dark ages (pun intended). Iowa technically has an RPS, but that RPS is perhaps the smallest and least effective we’ve seen of any state that has any RPS targets at all. How bad are the Iowa RPS targets? Pretty bad; they mandate only 105 MW of renewable energy from the state’s two investor-owned utilities – MidAmerican Energy (“MAE”) and Alliant Energy Interstate Power and Light (“AEIPL”). While that target has been declared met for years, based on the state’s remarkable 5,177 MW of wind-energy generation there is not a peep coming out of Iowa about increasing those pretty low standards, or including any requirements specifically for solar.

Iowa really needs to get with the program on this one. Colorado, California, New York, New Jersey, Connecticut, Rhode Island, Oregon, Washington, Arizona, and a whole bunch other states have legislated strong renewable energy goals to ensure a bright future for solar power. In fact, the absence of an RPS is probably the biggest reason that Iowa lacks (as we’re about to see) the financial incentives for solar that we see in those other states.

What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.

An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.

RPS solar carve out

None

Grade: F

A solar carve out is basically a mandate that goes along with the RPS, and states that a certain amount of the renewable energy produced in a state must come from solar. Iowa hasn’t included a solar carve out in its RPS, perhaps too satisfied by the performance of the wind energy sector. But in a state that gets as much sun as Iowa does, we think the legislature is missing a great opportunity to bring Iowa into the future and bring costs down for interested homeowners.

What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.

Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.

For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!

Iowa Electricity Prices

$0.12/kwh

Grade: C

Iowa pays an average price of 12 cents/kWh for electricity; a little more than half a penny cheaper than the U.S. average. While Iowans at least don't pay those high electric prices that the coastal cities pay, we wonder how many homeowners here have thought about why electricity is relatively cheap.

It might have something to do with all of all the dirty coal we’re burning here to produce it in massive, inefficient, earth-killing ways. When all that fossil-fuel burning starts to catch up with us (and with the fossil-fuel supply), energy isn't going to be so affordable anymore.

You know what your neighbors will think you are with that shiny solar system humming along, producing clean, efficient, (still) cheap power? A genius! The best thing about a solar installation is that it keeps producing for you, long after it’s paid for itself; even when everyone else is complaining about paying too much for electricity!

Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.

The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.

Iowa Net Metering

B

Grade: B

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 the surplus.

Iowa was one of the first states in the country to get on board with net metering, passing its first standard way back in 1984. The state's current net metering policy is solid, but not spectacular. First off, the net metering policy applies only to MAE and AEIPL – municipal and cooperative electric utilities are not covered. Second, MAE and AEIPL used to have to cut you a check for any surplus you generated, but more recent changes now allow the utilities to carry your surplus forward toward future bills, rather than actually giving you cash back. Don’t get us wrong –savings are savings– but we sure do like it more when the cash goes straight to you every month.

What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.

The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.

Iowa Interconnection Rules

B

Interconnection reflects how easy it is to connect your Iowa solar panels to the grid. Since Iowa calls for reviews of solar installations, external disconnect switches, and extra insurance, that adds unnecessary cost home solar systems. We recommend that the legislature pass updated rules that help reduce costs for homeowners looking to go solar.

Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.

Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.

Solar Incentives in Iowa

Iowa Solar Power Rebates

None

Grade: F

Iowa lacks a statewide rebate program to encourage renewable power, solar or otherwise. In some other states missing statewide programs we’ve seen utilities come to the rescue with strong solar power rebates of their own. Not so much in Iowa, where utility-backed rebate programs have been exhausted or phased-out. Of course, a more robust RPS with a solar carve-out might convince the utilities to start offering rebates to homeowners to help them meet the new standards...

How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.

The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.

Iowa Solar Power Tax Credits

18% of Costs, up to $5,000

Grade: B

Even without great statewide rebates, there are ways to reduce the cost of going solar. Iowa offers a personal tax credit equal to 60% of the federal solar tax credit of 30%. Both can be claimed on your yearly tax returns for after a solar installation was completed on your home. Individuals and businesses are eligible for a state tax credit up to a maximum of $5,000. Any excess credit (i.e., if your credit reduces your tax burden below $0) may be carried over for up to ten years, which is great news for Iowa homeowners interested in solar power.

About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.

(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)

The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.

Solar Power Performance Payments

12.5 cents/kWh, FEC customers only

Grade: D

Back in 2007, the Iowa legislature provided for a renewable energy credit (REC) payment program to help MAE AND AEIPL purchase renewable energy from homeowners to meet the state's small 105 MW renewables target. Since the RPS goals were met long ago, the REC program has gone the way of the dinosaur.

There is one bright spot (pun intended) in the state, though: In Kalona, Farmers Electric Cooperative (“FEC”) has introduced a performance payment plan that will buy the electricity your panels produce at $0.125/kilowatt-hour (“kWh”) up to your usage amount. FEC buys electricity from you above your usage at $0.06/kWh.

$0.125/kWh is a pretty solid price—a little above Iowa’s retail electricity rate (covered above). To enroll, you must enter a 10-year contract. FEC also allows its customer-owners to buy solar panels in its community solar garden, and has been recognized by the National Renewable Energy Laboratories as a leader in green power programs. Nice job, FEC!

Now, let's be clear, here: if the entire state offered a plan like FEC's, with a fixed contract payment that paid above current retail rates for solar based on your usage, and paid a fixed wholesale price for any overage, we'd award it a B+. The only better performance payments scheme is an SREC market coupled with high RPS goals and strong Alternative Compliance Payments.

In this case, FEC is bumping the whole state up a little with its excellent program.

Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!

Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.

Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.

If you don’t know what an SREC is, or how they work, check out this great SREC video

Property Tax Exemption

100% for 5 years

Grade: B

Your solar power system adds value to your home. A bunch of value – like, thousands, even tens of thousands of dollars of value. Normally all that added value comes with added taxes. In Iowa, however, the increase in property value resulting from the installation of a solar power system is exempt from all associated property taxes for five full assessment years. That’s not the full (i.e. doesn't expire) exemption we’ve seen in a lot of other states, but it IS a nice chunk of change you won’t be responsible for paying.

About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).

For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!

The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.

Sales Tax Exemption

100%

Grade: A

Another chunk of change you won’t be responsible for paying is the 5-7 % sales tax (depending on where you live) attached to most other items. Yep, Iowa exempts your solar power system from this one too. Good show, Iowa! You just made up for a bit of that incomplete property tax exemption with a simple and smart law that we’ve seen too many other states miss.

What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).

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The consensus on Iowa solar power rebates and incentives

Iowa is far from the worst state we’ve seen regarding solar policy, but it’s also far from the best. What’s the bottom line here? The background policies are OK, with adequate grades in net metering, interconnection, and tax exemptions. What’s missing is solar power rebates and performance payment incentives. Money. Dinero. Moolah, people! Cold hard cash. The cost after year 1 is adequate, but not outstanding for a state with friendly foundational policies. Because starting costs remain somewhat high and there are no ongoing performance incentives, the payback timeframe on a solar power system here remains a fairly slow 12 years. Again, not the worst we’ve seen, but a long way from good. While we were tempted to give out a “B-” because of some friendly solar policies, without a strong RPS we’re still in “C+” territory here. Time to get on it, Des Moines!

25 thoughts on “Iowa Solar Power for your house – rebates, tax credits, savings

  1. Julie says:

    Has this been updated since the recent 2017 changes? If not, what do they score right now?

  2. Iowa Reader says:

    Please update this page to reflect the current solar situation in Iowa. An Iowa Supreme Court case several years ago decided that PPAs are allowed; the Iowa tax credit is 15%, not 18%; and at least the city of Ames offers credits to homeowners purchasing solar panels. I’m sure there are more changes since this site was last updated, and would find it a helpful resource if it is made current.

  3. Warren McKenna says:

    I’m the GM at FEC, the Cooperative that you have given a D for its performance payments. This feed-in-tariff has resulted in 2,000 watts of solar per customer. More connected watts per utility customer than anywhere in the world. A hybrid feed-in-tariff like ours is the only long term business model that can grow a long term win-win-win (utility, customer, installer) solar market.

    1. Ben Zientara says:

      Hi, Warren

      Thank for writing in. I guess it’s not clear enough in the section, but the state of Iowa earns the “D” grade, not FEC! We really admire what you’re doing, and I’m going to update the text to reflect that. Thanks again for your comments.

      -Ben Zientara
      Lead Researcher and Policy Analyst

  4. Anonymous says:

    The reason it’s a 15 year paypack period is because solar costs us the same as the rest of the nation, but our electricity rates are much lower than the rest of the nation. Even then, 15 years may be your ROI, but it’s also 15 years of CLEAN energy

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  6. Keith Hicks says:

    Last time I checked, Iowa’s tax credit was only for systems greater than 2MW. Which seems outrageous. Can you please state your source for the 15% tax credit?

  7. Dan Hahn says:

    Rich, that 15% tax credit is accurate. We’ll update this page in the next week to reflect it!

    – Dan

  8. Rich Clewell says:

    Attended a solar training workshop last night and the guy said Iowa provides a 15% tax credit based on the cost of installation. Is he incorrect?

  9. Bo says:

    Dear Dan,

    On your website, you said:

    “In addition to those direct savings on your monthly electric bill, you also just increased your home’s value by more than 12 grand – tax free for the first five years!”

    How did you get the number of $12,000?

    Thanks

    Bo

  10. Thomas Bahls says:

    I operate a not-for-profit in Davenport and have had a couple of energy consultants review our building and both haev suggested an (approximate) $175,000 PV system will reduce electrical costs by @ $12,000/year. We are very motivated to move forward, but tax credits do us no good. Resources for grants and funding are needed!

    Thanks,

    Tom Bahls
    CASI
    563-386-7477, 263

  11. Eric says:

    Hi,
    I am looking for a qualified solar panel installer to do work in Oskaloosa, IA. I am a home builder and have a customer that wants me to get pricing on that. Can anyone help.

    Thanks!

  12. Stef says:

    We are purchasing a home in Iowa with a 11′ X 17′ outbuilding that we want to turn into usable space. We’d like heating, cooling and hot water in there. Presently it has only electricity. Any helpful, affordable suggestions would be appreciated.

  13. Scott says:

    This is madening and a joke. Politicians wonder why the youth of Iowa leave this state. Maybe because the leadership of this state has no clue about establishing meaningful forward looking legislation.

  14. Peter says:

    Iowa is not a homeowner friendly state for funding alternate energy. The best return is on Solar – and even with that, if you purchase a 6KW gridtie solar system on sale the best timeframe you can hope to break even on it is about 15 years. That’s just about the time you have to start fixing everything – not to mention the 25k dollars tied up in equipment that is not earning anything for 15 years. Read the Iowa laws – if you take the property tax exemption you are not eleigible for the state tax credits. Ha!!!! Go solar – yeah right!! I have 2500 sq ft of southern facing barn roof, when Iowa gets serious about solar -I will too!!!

  15. Angie says:

    I am very disappointed in the lack of rebate funds, in comparison to other states for solar and wind power. It is sad for Iowans who want a better environment for our children. YOU CAN COUNT ON MY VOTE TO REFLECT MY FEELINGS ON THIS MATTER,

  16. Dan Hahn says:

    Jeff,

    Not sure about the wind power credits in Iowa, though I’m sure there’s a fair amount of wind blowing across the state. Unfortunately it seems most of that wind is coming out of Des Moines in your case. We encourage you to look at what the utilities are starting to offer Iowa homeowners for going solar.

    Cheers,

    – Dan

  17. Jeff says:

    From what I see, Iowa looks like a poor state for wind power credits. No surprise, Chet Culver is more interested in taking our money than providing tax breaks for people trying to help the environment.

  18. Dan Hahn says:

    Solarium,

    We have friends in Iowa who would love to talk to you, fill out our form and we’ll get the ball rolling. Incentives are out there in Iowa, they’ll break out the numbers for you.

    Cheers,

    – Dan

  19. solarium says:

    unless I find out different Iowa is all talk and no go for assistance in solar or wind installation at residential level. Im ready,own my home have lots of land and some money. If you can point me in a direction please do.

  20. Shane says:

    I own an electric company here in Des Moines and we are geared up for installing a lot of large solar systems in the near future. We have been trained by some of the largest solar producing compaines and are now working with some very well known companies in Des Moines. We really need the state to jump on board and realize how much ability the state has for solar production.

  21. Dan Hahn says:

    Warren,

    Iowa provides a 1.5 cent per kilowatt tax credit for solar over a period of 10 years. Granted, that isn’t a whole lot of cash but many utilities are now required to derive at least a certain percentage of their energy from renewable sources by next year. Therefore, more generous incentives are popping onto the horizon from them, not the state government.

  22. Warren McKenna says:

    Are you kidding! Iowa sucks when it comes to funding site based renewable energy. They don’t offer a single tax credit for residential or business for PV or Wind. Look at the surrounding States like MN, WI, MO for better deals. Come on Iowa give us a bone, like $ 2 per watt for PV if you would.

  23. Dan Hahn says:

    Don,

    Hopefully the visibility issue has been resolved. We do know our page is best viewed using Mozilla Firefox. We encourage you to download that browser instead. You’ll also be safer on the web.

    Cheers,

    – Dan

  24. Don Davison says:

    I am attempting to read / view this web page using Microsoft Internet Explorer and see there is a problem with the HTML code, because I can see the code between some of the lines of text on the web page. Although the colors are appropriate for Iowa (black & gold, the gold border around the black background behind the gray text is extremely difficult to read. I know a different color combination will be greatly appreciated by most viewers and hope you have the opportunity to view and agree, and modify.
    Thank you for your consideration.
    Don Davison

    davison@isp.com

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How to Claim the 30% Solar Tax Credit and FAQ