Iowa Solar Incentives (Rebates, Tax Credits & More in 2023)
By Kristina Zagame /
Here’s a quick overview of solar viability in Iowa:
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Iowa ranks in the bottom half of states in the country for solar conversions, and the price of solar equipment on a per-watt basis is quite a bit above the national average. Thankfully, the abundance of sunny days and the favorable solar incentives available in the Hawkeye make solar a sound investment for many homeowners. Below, you’ll find an expense analysis guide that will help you determine if your home is a good candidate for solar panel installation. You’ll also find some information on the benefits of solar conversion in Iowa and some things you should know before you install solar panels on your home.
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Watch Below: What Should You Know About Recent Changes to the Solar Tax Credit?
Solar panels prove to be a worthwhile investment for many Iowans, but they won’t save every homeowner money. Below, we’ll discuss some crucial factors to consider that can help you determine if solar is right for you.
Checking your monthly energy consumption is one of the easiest ways to see if solar would benefit you. Generally, homes that consume at least 500 kilowatt-hours per month will profit over time from going solar. You can check your average monthly energy needs by looking at your recent electric bills. Most Iowa residents consume about 865 kWh monthly, which is well above the minimum where solar is considered worth it. If you use far less than the typical home, you might find that the return on investment isn’t as good, especially since electricity rates in Iowa are a bit below the national average.
Iowans pay an average of $2.77 per watt for solar equipment, which is above the average of $2.66 throughout the rest of the country. However, the average total to go solar in Iowa is lower than the national average, as most homeowners in Iowa need a smaller solar panel system.
For the typical 9-kW system needed in the area, the total price hovers around $24,930 or $17,451 after you consider the federal solar investment tax credit. Despite being below average, this total will be prohibitively expensive for some residents. Additionally, the return on investment is lower in Iowa than in many areas because the electricity prices are below average.
If you buy or finance your solar panels, the system will very likely pay for itself well within the equipment’s lifespan of 25+ years. The time it takes for your energy savings from going solar to offset the system expense is called the payback period, and it’s a great metric to use to determine the value your solar PV equipment will provide you. The average homeowner in Iowa has an estimated payback period of 13 years, which is a bit above the national average of 12 years. Most local payback periods fall between 10 and 16 years. You can use a solar calculator to estimate your payback time frame, but having a solar installer assess your home and calculate it for you is more accurate. If yours is more than 16 years but under 25 years, you’ll still benefit from going solar, but your return on investment after your panels are paid off will be much smaller than the average of $17,572.
Most states now mandate that utility companies offer their customers net metering services, or energy buy-back programs. These incentives help solar customers reduce future energy bills by letting them sell back excess power generated by their panels. Net metering is required in Iowa, but the rate at which the utility companies buy the excess power isn’t mandated. As such, the benefit provided to you by your net metering policy can vary. If you find that you have a less favorable net metering policy, installing a battery system is a good way to maximize the value you get from your panels. Battery storage solutions will also provide you power through blackouts and through the night in most cases, when your panels won’t produce any power.
Solar panels need sunlight to generate electricity, so the amount of sun your roof receives will naturally have an impact on how much energy you produce, how much electricity prices you offset with your system and the value of the panels as a whole. Iowa receives 200 days of sun each year, on average, which is right in line with the national average of 205 sunny days. In general, Iowa is a good place for solar installations based on sunlight availability. However, individual sunlight can vary from house to house, so you’ll have to consider how much sun your roof, in particular, receives. First, you can consider the direction your roof faces, as south-facing and west-facing roofs will receive the most sunlight in North America, with a strong preference for south-facing roofs. Shading on your property from trees, buildings or other obstructions can also decrease the value of solar and should be considered carefully.
Renewable energy, in general, is a valuable resource in Iowa, and, in fact, Iowa was the first state in the country to establish a Renewable Portfolio Standard (RPS) goal of generating 105 megawatts annually via clean energy sources. However, solar is less of a focus throughout the state than wind energy, which has more widespread application. Despite the slow adoption of sun energy, the solar market has increased in popularity — particularly in residential solar installations — over the past decade. As solar continues to grow in popularity, the expectation is that equipment will only get more affordable and solar energy as a whole will increase in accessibility.
There are several benefits of going solar in Iowa, both from a financial perspective and in terms of reducing your carbon footprint and your negative impact on the environment. We’ll discuss the most significant benefits you’ll enjoy when you install solar panels in Iowa.
The most appealing benefit of going solar in Iowa is the savings you’ll enjoy on your electric bills. The average homeowner in Iowa pays around $107.78 per month for electricity, so the annual savings your solar panels can provide can be as high as $1,293. After the energy savings pay off your solar panels, they will save you an average of $17,572 over the lifespan of your equipment.
Additionally, going solar means reducing your dependence on your utility provider. Since electricity rates have historically risen and are expected to continue to rise in the future, your overall savings could be even higher, since you’ll be locking in a much lower energy rate for 25+ years.
Although Iowa doesn’t need to promote solar power conversion, given the reliance on wind power as a renewable energy source, there are some solar incentives provided by the state and federal governments that can make going solar more enticing and affordable.
One of the most significant incentives is the federal tax credit, also called the ITC. The ITC is a credit applied to your federal income tax for 30% of your entire solar system installation expense. In Iowa, the ITC averages around $7,479.
Some additional Iowa solar incentives are listed below:
One of the most noteworthy benefits of going solar is the property value increase the solar panels will provide. Based on data from Zillow, the average home jumps about 4.1% in value after solar conversion.3 In Iowa, where the average home value is $183,155, most homeowners will see a value bump of around $7,509.4
This value increase could be even more beneficial in more expensive areas, like Des Moines, Iowa City and Cedar Rapids. The increase in home value is only applicable if you buy or finance your solar panels. Leasing options and power purchase agreements (PPAs) will not cause your property value to go up.
Finally, your solar power system will provide some environmental benefits, including a reduction of your carbon footprint, your contribution to air and water pollution and your reliance on fossil fuels as a whole. You’ll also make your home more energy independent, which means you can avoid the electricity rate spikes that are expected in the future.
Even once you’ve determined that solar panels are a sound investment for your home, there are still quite a few things you’ll want to consider to ensure you have the best possible experience when installing your solar energy system. We’ll include some additional things to think about below.
Of course, the upfront fees of your solar panels will be an important consideration, as you’ll have to make sure your total system expense — in the case of a cash purchase — or your down payment — in the case of a loan — fits into your budget. You can keep your upfront fees down by choosing a no-money-down loan, opting for just solar panels rather than add-on products like batteries or electric vehicle chargers and choosing a cheaper solar panel brand.
The time it takes for your panels to pay themselves off — called the solar panel payback period — is one of the best metrics for determining how fit your home is for solar panels. The average payback period in Iowa is 13 years, with a normal range of 10 to 16 years. If your payback timeline is longer than 16 years, you can be sure that your return on investment will be lower than the average in the state.
Net metering is a wonderful solar incentive that is mandated in Iowa. However, the rate at which you’re credited or paid for your excess energy production and how long your energy credits are good for is not dictated by the state’s net metering policy. You should check your electric company’s policy terms before signing anything. If your utility provider has a buy-back rate that’s below retail value, you might want to consider installing a solar battery to help offset your electric rates when your panels underproduce.
The solar industry is relatively young compared to others, so it’s still expanding, improving and changing. The policies, incentives and rebates available to you could change, get better or disappear in the future, so it’s best to check for updates before you decide to go solar. It’s usually not wise to wait for better incentives to pop up, but knowing the benefits available to you is a good first step in maximizing your solar system’s value.
Iowa receives around 200 days of sunshine every year, which is just under the national average of 205 sunny days. This is typically plenty of sun exposure to make solar panels well worth the investment. However, some homeowners worry about the frequent thunderstorms that occur in the spring and summer and the occasional tornado that residents experience.
Thunderstorms and cloudy days will reduce solar energy production, but there’s typically enough sunshine in Iowa to make the cloudy days more or less inconsequential. Rainfall will naturally keep your panels free of dirt and debris, ultimately improving energy production during the clear weather. Tornadoes can cause damage to your system, but opting for a solar installer that provides a physical protection warranty is typically enough to offset the risk.
Finally, you should be careful which solar installer you choose to handle your home solar project. Some companies in Iowa advertise “free solar” or more blatantly push solar leases and power purchase agreements (PPAs). These options are typically far less beneficial than solar loans and cash purchases and should be avoided. Solar leases don’t give you access to the federal tax credit, don’t bump up your home value and leave you with fewer savings on your electric bills.
Iowa residents receive abundant sunlight and require more affordable solar system sizes than most residents throughout the country, meaning a solar panel installation is a great option and a sound financial investment for most homeowners in the area. However, it’s not ideal for everyone, so you’ll need to assess your home to determine if solar will benefit you.
Among the things you need to consider is the direction your roof faces, shading on your roof, your monthly energy consumption, the size of the solar system you need, and more. You can use a solar calculator to help determine if solar will save you enough money to justify the price, but contacting a reputable, vetted solar panel installation company in your area is your best bet.
Read More About Going Solar
The EcoWatch team gets questions from homeowners in Iowa on a daily basis about the value of solar energy systems in the area and how to determine if solar is a good investment. Below are some of the questions we see most often, along with our responses. If you have specific questions that aren’t answered here, reach out to our team of solar experts at email@example.com.
On average, it takes around 13 years for the energy savings provided by solar panels to pay off the equipment price. Most Iowans experience a payback period between 10 and 16 years. Your payback timeline could vary quite a bit depending on several factors. Most importantly, the direction your roof faces, the amount of shading on your roof, your monthly energy bills, and the size and price of the system you need to have installed will determine your payback period.
In most cases, yes. Going solar in Iowa means you can offset a large portion of your electric bills or even eliminate them entirely. With the average monthly energy bill in Iowa sitting around $107.78, Iowans could save up to around $1,293 per year on electricity prices. After the panels pay for themselves, the typical additional savings enjoyed by Iowa residents is around $17,572.
Yes, solar panels will make your Iowa home more valuable. According to data from Zillow, homes in the US jump up in value by approximately 4.1% from solar panel installation. Given the average home value in Iowa, most homeowners will experience a bump of around $7,509. Iowa also has a property tax exemption for solar equipment, so your property taxes won’t go up even though your home value will.
Yes, you do need permits for solar panel installation in Iowa. The permitting process is typically handled by your solar installer, and the permit prices will often add a few hundred dollars to your total expense of solar panels.
You can install your own solar panels in Iowa, but it’s not a particularly good idea. Installing rooftop solar panels is dangerous and puts your home and equipment at risk of severe and expensive damage. In most cases, it’s better to defer to experienced solar panel installation experts rather than attempt the work yourself.
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