Indiana Solar Incentives Lower Cost of Solar Panels In Indiana: Tax Credits

Georgette Kilgore headshot, wearing 8 Billion Trees shirt with forest in the background.Written by Georgette Kilgore

Solar Panels | March 15, 2024

Person showing a solar panel to the state of IN, giving money from Indiana solar incentives after he learned how to reduce the cost of solar panels in Indiana with solar tax credit, solar home installation rebates, net metering options and more.

Indiana solar incentives are an excellent assistance for anyone looking for options to help lower the cost of solar panels in Indiana.

From South Bend all the way to Indianapolis, going solar will be a total game changer for your household and, in fact, for the entire country.

Have you been struggling with the ever-rising cost of electricity and want to alternate to a cheaper power source? Are you worried about climate change and want to go for cleaner power alternatives to reduce your eco footprint?

Here is where solar power Indiana comes in, but for many people, the high cost of solar home installation can be a serious drawback and prevent implementation.

But before you give up on achieving the goal above, you will be glad to know that solar power has never been this cheap.

You can use Indiana solar incentives to lower the cost of solar panels in Indiana with tax credits, net metering, and solar rebates.

This article takes a closer look at all things solar power in Indiana, and how you can take advantage of the options before it’s too late.

Solar Power Indiana (Solar Plants)

One thing that you probably know about Indiana is the fact that it is the birthplace of a famous basketball player, but it is not exactly a high-rated solar state.

Solar power may not be the first thing that comes to your mind when you picture Indiana, but thankfully, legislation and residents’ curiosity about the alternative power source are gradually beginning to change this narrative.

Map showing locations of solar plants in Indiana using yellow markers and Indiana solar panels with a US cut out showing the location of the state of Indiana.

Going by the findings of the Solar Energy Industries Association (SEIA), Indiana currently comes in at number 18 when it comes to the production of solar power. At the moment, only about 1.53% of its power comes from solar, while the rest is produced by fossil fuels and other renewable sources.4

Therefore, you can say that there is still quite a long way before it can at least catch up with other best states for solar.

Seemingly, another hurdle in the way of the state going solar is the lower power rates, given that it is at number 26 in matters of electricity rates.17 One problem is the worry that the low rates may make it somehow hard to get a huge payback from the solar investment you make.

If the rates were any higher, more and more people would find solar way cheaper and go for it.

But still, if the statewide trends are anything to go by, you should know that the rates keep going up for the entire country, and you would be safer going for an alternative source before it gets there. It is also welcome news to learn that the cost of solar panels Indiana has actually dropped by 54% over the past decade.4

How Much Are Solar Panels in Indiana? Cost of Solar Panels Indiana

Going solar in Indiana is an excellent idea and it doesn’t really matter that the state generally sees fewer sunny days than the rest of the country.

It has an average of about 186 sunny days (202 in Evansville, 187 in Indianapolis, 173 in South Bend, and 180 in Fort Wayne).

Map of the state of Indiana with each county colored to show the daily peak sun hours in each Indiana county ranging from 4.01 to 4.37 daily hours of sunlight.

But still, the residents have kind of high energy requirements,8 and it goes without saying that the panels will be of great help to offset their electricity bills.

So, how much does installing solar set you back? For a solar power system that ranges between 7kW to 9 kW, which is what most residents have installed, you will part with anything from $18,760 to $24,120.

This rate is just a little higher than the national average because, in most parts of the country, the rate per watt tends to stand at $2.66, but it is at $2.68 in Indiana, which is a slight difference.

If you go for the 7 kW system, you will be glad to know that you will be able to save about $14,900 once the system has paid itself off, which is a lot of money saved.

Also, note that the larger the system, the more savings you are going to make because a 10 kW system capacity can easily save you over $20,000.

What Is the Average Cost of Solar Panels Indiana?

The most important question that you will likely ask before choosing to go solar in Indiana is how much it is going to cost you.

If you want to invest in a 7 kW system, you will most probably part with about $18,760, but if you need a slightly larger system of about 9 kW, you may have to pay at least $24,120.

In general, going solar in Indiana should set you back about $2.68 for each watt that you install.

Factors Affecting Cost of Solar Panels Indiana

It is without a doubt that one of the main challenges of entry into the solar market is the cost of solar panels Indiana. Hoosiers are always asking, why are solar panels so expensive?

It is one of the reasons why many of them are holding back, but did you know that that is not always the case?

That there are factors that will actually drive down the cost of your solar system?

Energy Requirements

One aspect that determines how much your solar panels are going to cost is your energy needs. If you are a particularly small household and have very low energy requirements, you don’t have to worry because a small system will serve your needs and will obviously be cheaper to acquire.

The reason why most homeowners pay more is the fact that they have higher energy requirements and, as a result, have to go for massive systems to satisfy these needs.

The SEIA states that many residents in the stat use about 946 kWh every single month, which is a little higher than the nation’s average.

That goes to explain why the average cost tends to be $1,000 to $1,500 higher.

System Efficiency

It is obvious that high-quality equipment will cost you more because they are higher performing and long-lasting. This is what many people go for in Indiana, especially because of the fewer sunny days than average.

But still, you can save some money depending on the brand that you go for because some are still efficient but cheaper.

Batteries or No Batteries

In Indiana, you basically have two options, to connect your solar systems to the grid or go completely off-grid.

Batteries are pretty common in Indiana, given the frequency of power outages,5 and many would rather go off-grid, using batteries to serve as backups during such instances.

Batteries on a rack, connected to a solar inverter, stores energy from solar panel systems.

(Image: PowerAfricaSolar18)

However, buying a battery will, of course, increase the cost of the entire system and you want to consider that too.

The Solar Company

Like any other product in the market, solar panels are priced differently depending on the brand, the materials used to make them, efficiency rating, durability, and many other factors.

Therefore if you are looking for a great bargain, you want to window shop and compare company quotations and find which one is cheaper and better for your home,9 but make sure that it is still high-quality.

Solar Panel Cost Calculator Indiana: How Does It Work?

While you are doing your research online to help you decide whether going solar in Indiana is the right move, you may bump into the solar panel cost calculator.

Before you ignore it, you should know that it is the closest you can get to finding out how many panels you need and how much they will cost even before going shopping.

Instead of going in blind, it would help to know what you should expect, and that gives you bargaining power when you actually get down to the real purchase. Such software is pretty straightforward and works almost the same way, only that they come in different designs and use specific algorithms to help give you an estimate.

Basically, what they will require from you is that you enter certain details about your home and the energy requirements and will later use this to make calculations.

You can expect questions about your average utility bills, your location, the size of your roof space, and many more, depending on the calculator.

In the end, you should know how much the system is going to cost, among other valuable pieces of information.

Indiana Solar Incentives To Know

States around the country are coming up with ways to increase conversion rates to solar power, and Indiana is no different.

Although there is still a pretty long way to go before it gets to the level of the top solar states, it doesn’t take away from the fact that there are Indiana solar incentives available to help reduce the cost of panel installation.

Federal Solar Investment Tax Credit (ITC)

You can check anywhere, and you will find out that the single most highly sought-after solar rebate from the government is the ITC. The Federal Energy Credits started way back in the year 2005 and was a total game changer when it came to solar power for all the people across all the states.

Many will attest that the only reason they converted was because the government came up with this clever way to help reduce the cost of going solar.

But how does it work anyway? You may ask.

So what happens is that the government gives every new solar panel installation a 30% credit off the cost of the entire project.

A solar panel array is installed horizontally beside a house.

(Image: Steven Lilley19)

This money is credited to your tax liability, by the way, and is not a cashback. Instead, the money comes out of the taxes that you owe, reducing the amount payable, which is kind of the same as returning the money to you but indirectly.

This is all thanks to the Inflation Reduction Act that came to be in August 2022, which extended the law by 10 years and increased the rate of credit to 30%.7 Therefore, if you install the solar panels any time between August 2022 to the end of the year 2032, you are eligible for a 30% tax credit.

However the rates will keep changing annually from 2033 until it reduces to 0 in 2035, making this the perfect time to go solar.

Net Metering Indiana (NEM)

Another Indiana solar incentive making waves through the country is the net energy metering that serves so many solar power homes in Indiana.10 Through this elaborate system, you get to earn credits for each kW of power that you send to the grid.

This power is part of the surplus that you don’t really use, and you can send it to the grid and, in exchange, reduce or offset your energy bills later on.

There are plenty of benefits that you receive by opting for net metering in Indiana. For one, you are able to save a lot of money when you have to pull in power from the conventional grid system.

Secondly, there is the advantage of allowing your panels to pay for themselves much faster, increasing the long-term savings that you get from the system. Therefore, you will find the solar system more valuable.

When it comes to how much savings you are going to make by net metering, the value will differ based on every consumer. It will depend on how much your monthly utility usually is, how large your system is, and many more factors.

Renewable Energy Property Tax Exemption

Installing a solar system is kind of like any other home renovation project, and what do you know about it? It is supposed to drive up the value of your home, right?

In addition to that, you also know that an increase in your home value means an increase in your property taxes.

But, not in this case, all thanks to the Renewable Energy Property Tax Exemption. This rule prevents your taxes from increasing because you have installed a renewable energy system.

The amount of savings that you will be able to make based on this solar incentive usually varies based on several factors, from your home’s value to its location. Basically, if you live in a high-cost area, you should be able to save more money down the line.

Sales and Use Tax Exemption Indiana

Instead of imposing taxes on the sales of PV systems, Indiana lets you buy them at a lower cost.

This is all in a bid to encourage more and more Hoosiers to adopt renewable energy.

Monocrystalline and polycrystalline solar panel systems installed on a pole mounted racking system on a gravelly surface.

(Image: Kiran Jonnalagadda20)

The best part about this is the fact that it is an upfront saving method. If there is supposed to be a 7% sales tax on your system that costs about $25,000, you can expect to save about $1,750, which is still a great deal.

Local Indiana Solar Incentives

While you can still apply for federal and state Indiana solar incentives, you may also want to try your luck with others that are being offered by local utility companies.

  • Feed-In Tariff by Northern Indiana Public Service Company (NIPSCO): This is pretty similar to SREC, which is offered in various states, although this is specific to Indiana and the company’s customers.
    Basically, if you have a system with a capacity of 5 kW to 10 kW, you are able to receive credits worth $0.15 to $0.17 for each and every kWh that you generate.
    On the other hand, if you have a larger system of more than 10 kW, you can receive $0.13- $0.15 worth of credits.
  • Rebates from NineStar Connect: If you are looking for a cashback program for installing the panels, NineStar offers you up to $1,500 not only for your PV system but also for renewable energy heat pumps and many more.

Apart from the ones above, there are more companies in Indiana offering rebates for their customers. To know more about the ones that are available, you can head on to the Database of State Incentives for Renewables & Efficiency (DSIRE) for any new updates.11

Is There a Statewide Indiana Solar Tax Credit?

The solar tax credit offered by the federal government has proven to be a success, and you can easily tell based on the increased number of people going solar and applying for the incentive. There are certain states that have realized that and opted to create their own statewide tax credits giving their residents up to 25% off of their solar power installation in the form of tax reliefs.

You can imagine how much that means, especially if used in combination with the 30% ITC. It means more than 50% off of the project, and who wouldn’t want that?

Given the cost of solar panels Indiana, you can’t help but be concerned whether you are also lucky enough to have a statewide solar tax credit.

Unfortunately, there is currently no state-specific tax credit meant for Hoosiers, and in all honesty, there is not much talk about it being on the table in the near future. Maybe that explains why Indiana is not ranked among the top states for solar.

So, for now, you will have to make use of the available incentives, which also go a pretty long way to help reduce the total costs.

Federal Solar Tax Credit Is One of the Best Indiana Solar Incentives

Homeowners going solar will tell you that they couldn’t wait to apply for the federal tax credit. Where else will you get an incentive that is willing and able to offset 30% of the total amount that you spent on PV system installation?

It should be the very first on your list if you want the biggest relief ever, and it is quite easy to apply for too.

Basically, all you have to do is to apply for it while filing your taxes, fill out the IRS Form 5695,12 and disclose all the necessary information. You will then submit the details along with your accomplished Form 1040, and that’s about it.

It is lucrative and easy to apply for, with all the great features of a solar incentive, but before you get started, you want to first understand how it works.

A common question from first-timers is, how does the solar tax credit work if I don’t owe taxes?

If you don’t pay taxes or don’t have a tax liability, then there is absolutely no way that you can benefit from the solar tax credit.

Just from the name, you can tell that it was implemented exclusively for taxpayers, deducting the money from the total amount that they owe; therefore, that will not work in your case.

Apart from having a tax liability, another criterion to meet to qualify for the incentive is that you should have paid outright for your PV system and actually completed the installation,3 either using cash or a solar loan.

Another obvious rule, in this case, is that you must be the rightful owner of the system, and it should be brand new, only signed to your name.

Net Metering Indiana

Indiana net metering has been on a dramatic ride over the past few years. The Indiana solar power bill, SEA 309, led to the reduction of the amount that you, as a customer, would be able to make in terms of compensation for the amount of power that you send over to the grid.

All five utility companies in the region that are owned by investors got the go-ahead from the IURC (Indiana Utility Regulatory Commission) to change the calculation of the credits and ultimately slash the amount that homeowners were entitled to.13 The IURC is just like the Public Utilities Commission that is present in other states.

The commission doesn’t really have a fixed rate for the credit; therefore, the utility companies have their own prices, sometimes lower than the expected retail rate. It is still worth something if you are looking for ways to reduce the payback period of your panels, and the best part is that you get to put your excess electricity to good use and can go without a battery as a backup because the power will come from the grid.

Indiana Solar Rebates vs Renewable Portfolio Standards

All the top states for solar energy have solid Renewable Portfolio Standards (RPS).

First time hearing about RPS goals?

These are basically regulations that are set by the states requiring utility companies to focus more on producing power from renewable sources like sun, wind, and water and reducing the reliance on fossil fuels.

Pie chart showing Indiana renewable energy consumption breakdown including Indiana wind energy, biomass energy, geothermal energy, hydroelectric energy, and solar energy in the state of Indiana for 2022.

If the RPS is strong, net metering rules follow suit because the companies have to find a way to meet the laid-out quotas by the states. If they don’t, they will be at the receiving end and will be hit by high fines and penalties.

To avoid this, companies strive to obtain solar power from their own customers and generate the rest on their own.

Indiana does have RPS goals, but before that excites you, it is unfortunate that it is not as strong as those in other states. It currently stands at only 10%.2

This explains why utilities are kind of relaxed, not as pressured as those in other states. But how does this affect the Indiana solar incentives and rebates?

You will realize that companies in states with extra strict RPS have to come up with more rebate programs to entice more of their customers to go solar. This way, at least, they will have more people to obtain solar power from in the case of net metering.

Unfortunately, that is not what is happening in Indiana and that is why net metering and solar rebates from the government are not very popular.

Which Indiana Solar Incentives Are the Best?

Knowing all the Indiana solar incentives that are available, you are itching to know which ones are the best and which are the most highly sought after so that you can focus your attention on those first.

It is a little unfortunate that there is not so much to work with when it comes to the solar market in Indiana, but still, there are a few options that you cannot afford to miss out on.

For starters, and obviously, you are going to look into the Federal Solar Tax credit. It is the single most lucrative incentive ever, not just in Indiana but also in the entire country.

So, no matter where you are in the US, you are going to start by thinking about the ITC. Considering the cost of solar panels Indiana, applying for the ITC gives you a shot at reducing as much as $7,000 of your investment,14 and you know you cannot pass that up.

Next on the list of the favorite solar incentives has got to be net metering. It doesn’t matter that the compensation rate is lower than that in other states; it still makes a lot of sense if you are looking to find ways to reduce the payback period of your panels.

Besides, it is available for all, and the solar company you contract basically handles everything for you, which is pretty easy if you ask.

Why Go Solar in Indiana?

Since you know the cost of solar panels Indiana and the available incentives to help you save money, you may still be wondering, why should I go solar in the first place?

Photovoltaic solar panels installed on a flat surface using pole mounted racking system, directly harnessing sunlight.

(Image: PDS.201621)

Will you be missing out on anything in the first place, actually yes, here is what it means to go solar in Indiana, or in any other place in the country for that matter.

Increase in Home Value

Does solar increase home value? It may come as a shock to you, but it is very true.

Reports indicate that installing solar panels can potentially increase your home’s value by as much as 4% or even higher if you live in Indianapolis, Fort Wayne, or Evansville.

Prospective home buyers don’t mind adjusting their budgets if that means acquiring a clean energy home, which means that the project is actually an investment.

No More Costly Energy Bills

This will come as a relief for you if you have been struggling with extremely high energy bills in the past. This is the chance to completely go off-grid and find a cheaper energy source that will even end up saving you a lot of money in the long run.6

It Is Friendlier to the Environment

Looking at the adverse effects of global warming and how much households and mining contribute to it, it doesn’t take much to know that something needs to be done. The low carbon footprint solar panels produce is better for the environment in comparison to fossil fuels and is the best alternative if you are looking for clean energy.

Factors To Consider Before Buying Solar Panels for Home in Indiana

Solar panels are a great investment. They cut the ties to conventional grid power and save you a lot of money in the long run.

But, as much as there are so many upsides to going solar, you should know that there are many factors to consider, as well. It is not automatic that panel installation will work for your home unless you take into account the factors below.

First, what is the condition of your roof? There are so many angles to this because the panels are supposed to go on your roof, right?

That is the perfect place for them because it is raised, and there are no obstructions to shade out the rays. Therefore, it is important that your roof is in great shape, spacious, and strong enough to accommodate the panel that can get heavy.

If not, there are two angles to take, you can either replace your roof or opt for ground mounting of the panels.15 The first is costly, of course, and so is the second option, but the problem with ground mounting is that it doesn’t always work for everyone unless you have enough space, and it is also more expensive to install.

Another factor to consider is whether your region receives enough sunlight or not because if not, you will have to go for highly efficient panels that will work regardless of the few sunlight hours.

Another factor that many seem to ignore is the energy needs of their homes and how much they affect the cost of their panels.

If you usually receive high utility bills, then you will have to brace yourself because you will pay more for your panels, but all in all, the great thing about this is that the system will be very rewarding and will pay for itself much faster.

How To Save on Solar Panel Installation Cost Indiana

The upfront cost of going solar may seem high at first, but not until you realize that there are some tips that can actually help you reduce the cost. For one, pay in cash.

It doesn’t seem right but look at it this way, compare cash payment and paying using a solar loan. For the latter, you will have to factor in the expensive interest rates in the long run.

A closeup view of solar panel system installed on the roof of a house, directly harnessing sunlight and convert it to clean energy.

(Image: Marta Victoria22)

In this case, cash upfront will be way cheaper.

Using the Indiana solar incentives also goes a long way to save you a lot of money, whether you are talking about rebates, tax exemptions, or the tax credit. You will be better off if you can apply to as many of them as possible to increase your chances in case you fail to qualify for some.

You can always ask your installer if there are any rebates available because there may be some offered at the local level that you may not know about.

One more trick that will definitely help you save a lot of money is reconsidering batteries and other add-on equipment. If you weigh your options and realize that net metering will be way cheaper than spending an extra $10,000 or so on a battery system, you would rather go for it instead.

While still on the purchases you make, you also want to go for very efficient solar panels. They are more durable and require less maintenance, unlike low-quality ones that you will only end up replacing in the long run.

How To Pick a Company for Solar Panel Installation

Not every solar company in your area will do a great job of installing the panels for you. Remember that this is a costly investment, and considering how long do solar panels last, they can serve you for as long as 25 years.

Therefore, you want everything to be perfect and avoid any mishaps along the way.

For starters, you will have to look for the golden standard of quality of all solar companies, the North American Board Certified Energy Practitioners (NABCEP) certification.1,16 With this, it means that the contractor has what it takes to do a great job for you.

You also want to go for companies that have a wealth of experience and, of course, those that have been around for a very long time.

One more invaluable piece of advice that you can get when shopping for the perfect solar company is to get more than just a single quote. You need to do a thorough search online, read reviews, get the companies’ quotations and compare before you can make the final decision.

How To Get Free Solar Panels Indiana

What if you have read through all this just to realize that getting solar panels is a little out of your budget right now? You may be thinking about how to get solar panels for free in Indiana, imagining how much it will reduce the cost of virtually the entire project.

Unfortunately, there are currently no free solar panels being offered to Hoosiers.

Perhaps the closest that you can get to actually receiving solar panels for “free” is if you go for solar leasing or Power Purchase Agreements. In this case, you let the solar company install its systems and basically do everything pertaining to the installation for you, but in return, you are expected to pay a certain amount at the end of the month.

Depending on the terms of the contract that you sign, it could be a fixed payment each time or flexible based on just how much power you have used in that month.

So, you can see that that is not exactly a free service. You would also know that the entire system will belong to the solar company, it will never be in your ownership, and that means that you cannot qualify for the federal solar tax credit.

Is the Cost of Solar Panels Indiana Worth It?

It is without a doubt that going solar in Indiana is a huge step for you and your family. It can be quite pricey depending on your energy needs, and so many other factors.

This is why you can’t help but wonder, is solar worth it in Indiana? Is it worth the investment, really?

An eye-level view captures a house with a large solar panel system installed on its roof, directly harnessing sunlight to create clean and renewable energy.

(Image: Montgomery County Planning Commission23)

This answer applies to almost every other part of the country, investing in solar is probably the best thing you could ever do for your household. There are so many benefits attached to it, and you definitely don’t want to miss out on all the amazing things that come with it.

You will be free of the grid system and avoid blackouts since you will be fully relying on the power from the sun.

Probably the most important reason why going solar is all the more worth it is due to the fact that you will avoid hefty energy bills, especially if you have high energy requirements. It will be cheaper for you, and it will actually help you save a pretty sum by the end of their service life.

Therefore, you don’t need to question whether the investment is worth it or not.

Are you contemplating whether you want to go solar or not in Indiana due to the cost? You don’t have to worry because the rate is only slightly higher than the national average and still very affordable in comparison to that of other states.

Solar power remains the cleanest and cheapest power alternative to the grid system, and it is best to invest in it as soon as possible.

And, thanks to the incredible Indiana solar incentives at your disposal, they all work together to go a long way in reducing the cost of solar panels in Indiana.

Frequently Asked Questions About Indiana Solar Incentives

How Do Indiana Solar Incentives Work?

There are a number of Indiana solar incentives that you can take advantage of, and each has a unique design and works in an incredible way, all in a bid to help you reduce the cost of the system. For instance, the nationwide federal solar tax credit reduces 30% of the total installation cost from your taxes, net metering lowers your grid power bills and reduces the payback period of the panels, and the local rebate programs can give you credits for using solar or offer you cashback.

Read More About Indiana Solar Incentives


References

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11Schroeder, D. (2015, March 3). Find Energy Incentives Quicker and Easier with DSIRE Open Data and Website. Department of Energy. Retrieved July 25, 2023, from <https://www.energy.gov/energysaver/articles/find-energy-incentives-quicker-and-easier-dsire-open-data-and-website>

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14Office of ENERGY EFFICIENCY & RENEWABLE ENERGY. (2023, March). Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics. Department of Energy. Retrieved July 25, 2023, from <https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics>

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18Solar Installation in Kenya Photo by PowerAfricaSolar / Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). Resized and Changed Format. From Wikimedia Commons <https://commons.wikimedia.org/wiki/File:Solar_Installation_in_Kenya.jpg>

19Solar Photo by Steven Lilley / Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0). Resized and Changed Format. From Flickr <https://flic.kr/p/8d4Jnc>

20Solar panels Photo by Kiran Jonnalagadda / Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0). Resized and Changed Format. From Flickr <https://flic.kr/p/7BdiTH>

21The Solar Panels Photo by PDS.2016 / Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). Resized and Changed Format. From Wikimedia Commons <https://commons.wikimedia.org/wiki/File:The_Solar_Panels.jpg>

22Rooftop solar photovoltaic installation Photo by Marta Victoria / Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). Resized and Changed Format. From Wikimedia Commons <https://commons.wikimedia.org/wiki/File:Rooftop_solar_photovoltaic_installation.jpg>

23Solar Photo by Montgomery County Planning Commission / Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0). Resized and Changed Format. From Flickr <https://flic.kr/p/GeL1HQ>