In 2008, Iowa was the United States’ fourth largest producer of wind power, behind only Minnesota, California and national leader Texas. Yet there's little incentive in the state for other renewable energy sources. Since 1983 (although repeatedly amended since), Iowa has had a renewable energy standard on the books requiring its two investor-owned utilities to carry at least 105 megawatts of renewable power. Unfortunately for further renewable energy distribution in Iowa, both utilities are already meeting their requirements through wind and/or biogas energy.
That hasn't left a whole lot of room for solar power in the Hawkeye State. But there are a few state-funded options available for solar-minded homeowners, as well as a few small utilities leading the way. Here are the residential solar incentives available so far in Iowa:
Property Tax Exemption for Renewable Energy Systems
Along with wind systems, solar thermal and solar electric systems, including passive solar heating, are exempt from property taxes. 100 percent of the added property value incurred by a solar energy system cannot be taxed for 5 years. This law has been in effect since the start of 1978. Originally, the law did not include net-metered systems, but has since been amended to do so.
Wind and Solar Energy Equipment Exemption
In Iowa, equipment and components of solar water heaters, solar space heating systems, solar thermal electric, solar thermal process heat and photovoltaic (PV) systems as well as solar pool heaters are exempt from state sales tax. For more information, see the Iowa Dept. of Revenue.
State Loan Program
In 2009, Iowa established an Alternative Energy Revolving Loan Program (AERLP) to finance renewable energy projects from the small to the large scale. The state will loan, at zero-percent interest, up to 50 percent of the cost of a solar project. Eligible projects include solar water heat, solar space heat, solar thermal electric and PV, among other renewable resources. Maximum loan term is 20 years. The state-funded half of the loan is combined with a loan from a lender delivered at the market rate. Loans less than $50,000, which would include most home solar power projects, are reviewed on a continual basis. As of March 2009, AERLP had doled out $11.4 million worth of loans, financing some 88 renewable energy projects.
Personal Production Tax Credit
For the record, the state of Iowa does offer a personal tax credit based on the energy production of a given solar electric system. The going rate is 1.5 cents per kilowatt-hour produced in a tax year. However, while the tax credit is available to residential projects, eligible systems must have 2-30 MW capacity, thus eliminating every feasible home solar power project from eligibility.
Utility Options
As mentioned above, certain utilities in Iowa are offering rebates for solar power systems, including a production incentive offered by the Farmers Electric Cooperative of Kalona and Independence Light & Power's renewable energy rebates. For more information on these and other available utility incentives that may be available to you, check out the summaries provided by the Database of State Incentives for Renewables and Efficiency (DSIRE).
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