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Solar installation costs do not include the 30% federal investment tax credit or local incentives.
The Hawkeye State is home to a number of incentives and policies–from tax incentives to easement laws–that make it easier to go solar in Iowa. Prospective solar buyers in the state will be excited to learn that Iowa’s net metering rates as one of the best in the country. These incentives make going solar in Iowa a great option.
Iowa's average cost of a solar panel installation ranges from $15,512 to $20,988. On a cost per watt ($/W) basis, a solar panel installation in Iowa ranges in price from $3.10 to $4.20. See how Iowa compares to solar panel costs across the U.S.
Another calculation that potential solar buyers have to consider is the solar payback period. This term tells us as at what time you will recover your initial investment through electricity savings from your solar system. For Iowa, the average solar payback period is 15.34 years.
Another choice that solar shoppers have to face is how to pay for a solar panel system. Fortunately, there are many financial options available to ensure the customer can afford installations. Cash purchases are one common method to pay for solar and often lead to the most long-term value for your money. If an upfront purchase isn’t right for you, solar loans and solar lease/PPAs are available to help finance a solar energy system.
For property owners, you now can customize your solar panels, inverters, racking systems, and batteries, as well as the general aesthetic of the installation. This customizability has made it important for solar consumers to understand these various factors. For example, the best solar panels available may have premium efficiencies and warranties, but will typically be more costly. However, depending on the size of the installation, you’ll need to determine whether high-efficiency solar panels that can produce more electricity are worthwhile. Also, your appetite for risk can help determine which solar warranties best fit your needs. These are just a few of the many factors to consider when selecting solar panel equipment.
Aside from the power output of the solar equipment you choose to install, the amount of energy you generate with solar panels in Iowa is directly related to the amount of sunlight that hits your panels. The amount of sunlight Iowa receives each year is about average across all states in the country, but solar policies and incentives combine to make going solar in Iowa a worthwhile investment.
There are additional factors that determine how much solar electricity you can produce. These include shading and panel angle, which are used to calculate your total production estimate. a prediction of how much energy your solar installation will produce over time. This evaluation offers a clear estimate of how much energy your solar installation will produce. You can see how much solar panels can save you based on factors like geographic location and shading by using the EnergySage Solar Calculator – the calculator will take into account site-specific conditions like shade and geography.
Solar incentives in Iowa can help you reduce the overall price of going solar. Learn more about why solar panels are such a great investment in Iowa.
Learn about solar incentives in IAThe federal investment tax credit, now referred to as the Residential Clean Energy Credit for residential systems, has been one of the most reliable and impactful incentives for solar across the U.S. This solar incentive allows you to deduct 30 percent of the total system cost from your federal taxes. For example, a solar energy system installation that costs $15,000 out of pocket will qualify for a tax deduction of $4,500. For residential systems, this advantageous incentive lasts until the end of 2032 at which point it steps down to 26 percent. The federal ITC drops to 22 percent in 2034 and is eliminated for residential solar installations in 2035. Commercial systems are eligible at least through 2024, but may not be eligible for the full 30 percent depending on certain labor and domestic manufacturing requirements; they also may be eligible for specific ITC adders.
Besides the federal ITC, Iowa has additional incentives for going solar that are dependent on your area and utility company. Iowa has one of the best net metering rates in the country and has some great tax incentives for renewable energy projects. These incentives help make going solar in Iowa a great option for property owners. To learn more about Iowa’s best financial incentives for solar, check out our complete overview of the state’s best solar incentives.
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Learn more about EnergySageThe Hawkeye state has a long history of relying upon renewable energy. In fact, although coal is the most heavily used electric generation resource, wind energy is the second largest source of electricity in Iowa: 37 percent of Iowa’s total electricity generation came from wind energy in 2018, more than in any other state. With such great wind resources to develop, the state has spent less time and money focusing on solar: SEIA’s national ranking lists Iowa as 37th in installed solar capacity in 2019, with around 75 megawatts (MW) of solar as of the end of 2018.
The origins of Iowa’s commitment to renewable energy can be traced back to 1978 when the state passed the Property Tax Exemption for Renewable Energy Systems. This financial incentive, which remains available today, ensures that the market value added to a property from a renewable energy system is exempt from additional state property taxes for five full assessment years. Iowa continued as a leader in renewable energy policy by passing the first Renewable Portfolio Standard (RPS) in the nation in 1983. Known as the Alternative Energy Production law, the policy mandates that Iowa’s two investor-owned utilities own or contract for a combined total of 105 MW of renewable generating capacity and associated energy production. The following year, Iowa enacted the country’s first net metering program to help renewable energy users save on their electricity bills through a surplus energy credit system with utilities.
Iowa continued to support renewable energy through policy into the 1990s: the state passed the Renewable Energy Equipment Tax Exemption in 1993, which saves solar purchasers 6 percent on the price of the system. In 1996, Iowa added the Alternate Energy Revolving Loan Program (AERLP) to the state registry. Administered by the Iowa Energy Center, the loan program covers 50 percent of the total loan at a 0 percent interest rate up to a maximum of $1 million with the rest provided by a lender at the market rate. Overall, the AERLP has provided more than $28.4 million in support of 195 renewable energy projects.
In 2008, the Kalona Farmers Electric Cooperative (FEC) introduced the first performance payment plan for solar in the state: the utility buys electricity back from customer’s solar panels at $0.125/kilowatt hour (kWH). While the FEC is much smaller than the two state-owned utilities (MAE & AEIPL), this provides a strong deal for customers in the utility’s territory and should be recognized for its effort to promote solar energy.
Iowa’s most impactful incentive for promoting solar system installations takes the form of tax credits. Passed in 2012, the Solar Energy Systems Tax Credit offers residents a 15 percent tax credit when purchasing a new solar energy system, with a $5,000 maximum credit amount. Coupled with the Federal Residential Tax Credit, Iowa’s own tax credit has helped to lift Iowa’s solar industry.
Nevertheless, there is room for more growth of the solar industry in Iowa. As the Iowa Environmental Council notes, the state ranks 16th in technical potential for solar photovoltaic (PV) energy production and has the potential to build over 4,000 gigawatts (GW) of solar- enough to meet Iowa’s current electricity needs 150 times over.
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