By Johnathan Hladik, former policy director
The Iowa legislature created the Iowa Solar Energy System Tax Credit in 2012. Designed to encourage local investment, the credit offsets up to 15 percent of the cost of a new installation. Legislators included limits of $5,000 per home or $20,000 per business to ensure accessibility.
This incentive led to 2,524 new solar projects between 2012 and 2016. The new installments are spread across the state, with at least one in 97 of Iowa’s 99 counties. In total, the $16.4 million provided by the solar tax incentive has generated $123,248,595 of private investment.
One project is located on the Joe and Dianne Rotta farm near Merrill, Iowa. The Rottas farm 1,000 acres of corn and soybeans and have a 24,000 hog operation. In cooperation with a local solar developer, they recently built a combined 121 kilowatt (kW) installment to meet their energy needs. They used net metering, and any excess is banked for use during the harvest season, when grain drying and augering systems increase energy demand.
The farm has been in Dianne’s family since 1884. During that time, it has seen a lot of changes. At the end of July, I had an opportunity to visit. I was joined by several members of the Iowa legislature, along with a representative for Sen. Grassley. Solar installers, project developers, and members of the local electric cooperative were on hand to provide perspective.
During the tour, Joe and Dianne listed the reasons why solar worked for them. They first pointed to independence and the ability to act as their own electric provider. They acknowledged the flexibility and autonomy. But in the end, it came down to cost.
“Once it’s paid off, it’s yours,” Dianne explained. “We would not have went forward unless it made sense financially. We see this primarily as a way to control inputs and lower costs.”
Because of the Iowa Solar Energy System Tax Credit, the pay-off period is shorter than ever. Combining a state or local incentive with the federal investment tax credit can offset costs by up to 45 percent. This reduces the payback period by two years.
The price of installed solar has fallen by more than 200 percent since 2009. Farm, home, and business owners have taken notice. Due to growing demand, the industry now employs almost 375,000 individuals across the country. Nearly 1,000 of those live in Iowa, many of them rural.
This is what opportunity looks like in rural communities across the Midwest and Great Plains. Joe and Dianne found a way to lower costs and improve their bottom line. They identified a local business that could help them do it. It’s a win-win for Merrill and northwest Iowa.
The Iowa Solar Energy System Tax Credit is a small investment that creates a big return. The result is a new industry in the state’s rural towns. Smart policy like this is what helps keep our communities strong.
Feature photo: Lawmakers, solar installers, project developers, and electric cooperative members recently took a tour of solar installments in northwest Iowa – a tour co-organized by the Center for Rural Affairs. | Photo by Patrick Snell of the Nature Conservancy
