Solar Panel Laws in Iowa

Iowa is a state that is rich in solar potential. The sun shines throughout the year. Iowa can receive up to 5 peak hours of sunlight per day. And it can have 200 sunny days in a year. There can be a peak hour of 6 hours of sunlight in June and July.

This great solar potential makes Iowa a perfect place to go solar. You are guaranteed savings from the onset of installation and over the next years.

Homeowners are encouraged to go solar as the state tries to increase energy production through renewable sources. The state government has made it easy to access solar PV systems cheaply through policies and incentives.

A 5kW solar system can support the average household. The average price of a 5kW system in Iowa is $21,000. The benefit of going solar in Iowa is that power generation starts after installation. This means you start saving from the onset.

In the first year, you can save up to $750. The payback period for a solar PV system in Iowa is around 14-15 years. The long payback period is attributed to the low cost of electricity in Iowa. Residents in Iowa pay an average of $0.12 per kWh, below the national average.

The low cost of electricity in Iowa is due to the many coal plants that have been set up. Burning fossil fuels releases carbon into the air, polluting and damaging the environment. Solar is a viable alternative that is clean and environmentally friendly.

Using a solar system to power up your household is equivalent to planting 100 trees yearly. This is a natural incentive to sway homeowners to invest in solar energy.

State policies on solar power are mainly formulated to encourage homeowners to go solar. Iowa has significant incentives to make homeowners invest in solar power and utilize the state’s natural potential. Here are the solar power laws in Iowa.

Key Takeaways

• Iowa offers significant solar potential with up to 5 peak hours of sunlight per day and around 200 sunny days per year, making it an ideal location for solar energy.
• The state encourages homeowners to go solar through various policies and incentives, including net metering, federal tax credits, state tax credits, and sales tax exemptions, which can collectively reduce the cost of solar installations by up to 48%.
• Iowa’s solar-friendly policies aim to promote clean and environmentally friendly energy sources, reduce reliance on fossil fuels, and provide financial incentives for homeowners to invest in solar power.

Net Metering In Iowa

Iowa was among the first states to introduce net metering. It was introduced in the year 1984. In the past, utilities were supposed to give you a cashback for any surpluses. Now, they give solar credits.

Net metering is a system that allows users to benefit from excess power generation from their solar PV system. Utility providers allow homeowners who have invested in solar panels to stay connected to the grid. When your solar panel produces more power than you need for your household, the grid adapts excess power to be utilized elsewhere.

The excess power adopted to the grid earns you solar that can be used to offset your bill.

Net metering also allows you to use power from the grid when your solar power isn’t producing enough energy to power your house, i.e., during winter or when you need the extra load.

At the end of your billing cycle, your credits are netted off your bill. Net metering allows you to use the grid like a big battery for your solar PV system.

If you don’t use your credits, they are rolled over to subsequent months. This means you can gather enough credits during the summer to help with your bill during winter when your solar panel doesn’t produce enough power.

However, this policy only applies to privately owned utility providers. State utilities, municipal, and cooperative electric companies are not forced to comply.

The Federal Tax Credit

Also known as the Investment Tax Credit (ITC), this policy allows you to deduct 30% of your solar PV system’s total cost. This means you can deduct 30% of your installation’s total price from the taxes you owe the government.

The total cost includes the solar panels, installation, and other auxiliary components. You can deduct 30% in the first year of filing taxes. If you do not pay enough taxes to deduct the whole amount, you can split it through the subsequent years.

This incentive only applies to homeowners who buy the system in cash or using a loan.

Iowa Tax Credit

Like the federal tax credit, the state of Iowa has a tax credit applicable to people who buy solar PV systems. The Iowa tax credit allows you to deduct 18% of the solar PV’s total cost from taxes you owe the state government.

However, there’s a maximum limit of $5,000. Do not worry if you are buying a regular-size PV, as the cap applies to solar systems unusually large for a home.

The two tax incentives are great as they will cut 48% off the cost of your solar PV system. This means more savings.

Iowa Tax Exemptions

Iowa has exempted sales tax for electricity-generating equipment. This means that solar PV systems are exempted from sales tax. Hence, they are cheaper to acquire. This includes all the components and will save you 6% of the purchase price.

Iowa has also exempted solar PV systems from being included in property taxes for the first five years. This means the value added to a home by a solar PV system won’t be counted in property taxes, only for the first five years after installation.

Solar Easements

Iowa has solar easements that allow you to own the sunshine on your property. This helps ensure that your solar panels aren’t covered by shade.

Case Study: Residential Solar Installation in Iowa

Background

In Cedar Rapids, Iowa, a family was motivated to transition to solar energy to minimize their carbon footprint and leverage the state’s favorable solar policies. This case study details the steps taken and the results achieved through this residential solar installation.

Project Overview

The family approached Solar Panels Network USA with the objective of installing a solar system capable of meeting their entire household energy needs. They aimed to take full advantage of Iowa’s net metering policies, federal tax credits, state tax credits, and sales tax exemptions.

Implementation

Our team performed a thorough site assessment, evaluating the roof’s orientation, potential shading, and structural integrity. Based on this evaluation, we designed a 5 kW solar system incorporating high-efficiency photovoltaic panels and a modern inverter to convert the generated power into usable electricity.

We engaged in detailed discussions with the local utility provider to ensure compliance with Iowa’s net metering policy. The system was optimized to maximize energy production during peak sunlight hours and store excess energy to be fed back into the grid.

Results

The installation was executed smoothly, and the solar system was successfully connected to the grid. The family began reaping the benefits of the net metering policy, receiving 1:1 retail rate credits for the excess electricity generated, which significantly reduced their monthly utility bills.

Additionally, the family utilized the federal solar tax credit, lowering their overall installation costs by 30%. They also benefited from the Iowa state tax credit, which covered an additional 18% of the system’s cost, capped at $5,000. These financial incentives, combined with the property tax exemption for the first five years, made the investment highly attractive. The family’s home value increased without the burden of additional property taxes.

Summary

This case study showcases the successful implementation of a residential solar system in Cedar Rapids, Iowa. By effectively navigating and utilizing local solar laws and incentives, the family achieved energy independence and maximized their financial returns. Solar Panels Network USA’s expertise in managing utility negotiations and understanding solar policies was crucial in overcoming potential challenges, underscoring the importance of professional guidance in residential solar projects.

Expert Insights From Our Solar Panel Installers About Solar Panel Laws in Iowa

Iowa’s extensive solar potential, coupled with robust net metering policies, allows homeowners to significantly cut down their electricity bills. By sending excess energy to the grid, residents earn credits that offset future power costs, making solar installations highly advantageous.

Senior Solar Installer

The combination of federal and state tax credits in Iowa provides substantial financial relief for homeowners investing in solar systems. These incentives effectively lower the initial costs, encouraging more residents to switch to renewable energy sources.

Lead Solar Technician

Iowa’s property tax exemptions for solar PV systems ensure that homeowners do not face increased property taxes after installation, making solar a financially sound decision while also boosting home value.

Chief Solar Installation Engineer

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Conclusion

Iowa’s abundant solar potential, with its generous sunlight hours and sunny days, makes it an ideal location for harnessing solar energy. Homeowners in the state are encouraged to go solar thanks to various policies and incentives, including net metering, federal tax credits, state tax credits, and sales tax exemptions. These incentives collectively reduce the cost of solar installations by up to 48%, ensuring substantial savings for residents. Moreover, Iowa’s commitment to clean and environmentally friendly energy sources aligns with the state’s efforts to reduce reliance on fossil fuels, making solar power an attractive and sustainable choice for homeowners.

Map image by Wikimedia Commons User: TUBS / CC-BY-SA-3.0