Lower Cost of Solar Panels in Iowa: Solar Incentives, Tax Credits, Rebates

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

Solar Panels | March 18, 2024

Man standing on a solar panel looking at Iowa solar incentives cash for how to reduce cost of solar panels in Iowa for home solar installation including state solar tax credit, solar net metering, and Iowa solar rebates.

If you are a proud Iowan thinking of finally going solar, discovering how to lower cost of solar panels in Iowa using Iowa solar incentives, tax credits, rebates, and other programs can save you big bucks.

There is quite a lot to think about, especially if you are a first-timer but by the end of it all, you will realize why switching to solar power is probably the best thing you can ever do for your home.

Iowa is in the bottom half when it comes to the ranking of solar states, but not to worry, the high number of sunny days and Iowa solar incentives make it worth the investment.

You don’t have to worry about the cost of solar panels in Iowa, not only because it is cheaper than in other states but because renewable energy has a pretty high ROI.

Besides, Iowa solar incentives give you a huge leg up, and there is no better encouragement than acquiring panels at a lower cost than the market price. This guide explains everything you need to know.

Solar Renewable Energy in Iowa

Iowa goes down in history as one of the very first states to adopt an RPS (Renewable Portfolio Standard) way back in the year 1983.

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

This law practically forced its two largest utilities, Alliant Energy Interstate and MidAmerican Energy to either own or outsource renewable energy by as much as 105 MW.

What is the RPS, you ask?

Well, it is one of the most effective ways that help states achieve their renewable energy goals. The regulation calls for utility companies to increase the amount of energy that they generate from renewable sources.

The companies can only get this done by one, generating the power on their own or otherwise buying it from their customers. If they fail to meet the standards by any chance, they have to pay hefty fines.1

Luckily, Iowa has met these regulations time and again, which is expected given that it is one of the pioneers of RPS.

By 2022, Iowa had boasted of having 658 MW capacity solar power stations all through the state, and according to the SEIA, this means that more than 80,000 homes can access this clean energy.

It is also expected that the capacity will rise in half within the decade, by at least 1.5 MW, and the wind power sector is not doing badly either, projected to reach about 14 MW in the next few years or so.

But in all honesty, Iowa still has a lot of room for improvement because it is still at number 35 when it comes to solar power usage.8

Thankfully, major strides have been made so far, as you can tell by the increase in the number of Iowa solar incentives and several other perks.

It should be on its way up the rungs sooner than you expect, and the best time to get on it is now.

Why Go for Solar Panels for Home in Iowa? Peak Sunlight Hours in Iowa

Iowa may rank in the bottom 20 in matters of solar power, but it doesn’t mean that it is not a great idea for Iowans.

It is a sound investment plan, and it is great that there are plenty of sunny days that make it all worth it.

Map of the state of Iowa with each county colored to show the daily peak sun hours in each Iowa county ranging from 3.98 to 4.35 daily hours of sunlight.

With an average of 200 sunny days all year round, you want to tap into that potential and see how much power your panels will generate.

Take Sioux City for instance, with 208 average sunny days, even higher than the national numbers that stand at 205.

Other cities are also doing quite well since Des Moines boasts 202, while Waterloo and Dubuque share the same number at 191 sunny days. Apart from the availability of sunshine, below are more reasons why you should go solar in Iowa.

You Save a Fortune on Energy Bills

It is probably the number one reason why more and more Iowans are going solar. A typical home in the state pays at least $107 in utility every month, and if you do the number, it means that you could potentially save more than $1,200 annually if you go off the grid.

Imagine how much money this is if your panels have been of service for more than 20 years.

You can also tell from history that the utility rate only goes up, and there are several reasons to blame.2 And what better way to be rid of this than by taking the alternative route?

It Increases Your Home’s Resale Value

If you are wondering, does solar increase home value, the answer is an absolute yes, no matter what. A typical home with installed panels costs at least 4% more than when it didn’t have the panels.

To put it more in perspective, consider a standard home in Iowa valued at $183,000. The resale value can go high by as much as $7,000. What’s more, the value could be even higher in high-cost areas like Iowa City, Cedar Rapids, and Des Moines.

It Is the Best Way for Your Home To Go Green

As you know by now, the carbon footprint solar panels emits is lower than that of other nonrenewable sources and by a lot, even when you factor in the mining, manufacturing and disposal emissions.

If you are eco-conscious and are looking for the most impactful way to help reduce your carbon footprint, you can start by changing your lifestyle and using solar power instead.

If you are also concerned with how to get rid of solar panels when their service life is over, know that the state regulates various solar panel recycling centers distributed all across cities.

There may not be any particular rules about disposal,9 but be sure that your old panels will not be a danger to the environment.

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

Solar panels are no doubt a huge investment as any other keen investor, you want to know what exactly it will take for you to own a fully functioning system.

The cost of solar panels in Iowa is slightly higher than the national average, at $2.77 for every watt in comparison to $2.66. At least it doesn’t go extremely overboard, and you will likely even pay less if you put some factors into consideration.

Graphics of cost of solar panel installation in Iowa showing technicians installing a solar panel system on a house atop a cutout map of the state of Iowa and the average cost at the bottom.

To put it more simply, buying the setup and having it fixed in your home will set you back $16,620- $22,160.

Of course, it can cost anything in between based on several factors, but the range mostly accounts for a typical system of 6 kW- 8 kW, which is what most homeowners in Iowa have installed.

This is a considerable number considering that the rate is way higher in some states. As a matter of fact, you are in luck because the costs have trended favorably over the past decade and SEIA states that there has been a 52% decrease so far.

It only goes to show that the price is on a downward trend, which is great news because it gets even lower if you factor in Iowa solar incentives.

How Does Solar Panel Cost Calculator Iowa Work?

Buying solar panels in Iowa for the first time doesn’t have to be a daunting experience. Just in the comfort of your own home, you can easily research online and find a rough estimate of what the installation should cost you.

A number of rows of solar panel installations showing the top surface of the solar panels and a dense forest in the background.

(Image: Photo by Courtney Celley/USFWS19)

The last thing you want is to get an overpriced setup because panels are already generally costly as it is. So here is what you do.

You find a cost calculator for Iowa online and follow the prompts, and you should be done in a few minutes. What the software needs is basically general information about your home and its energy needs, simple.

After disclosing that information, the system does the calculation for you and tells you how many panels you need and how much you should expect the installation to cost you.

This saves you a lot of time and gives you a rough estimate to work with, making shopping and cost comparisons a walk in the park.

What Factors Affect the Cost of Solar Panels in Iowa?

It may come as a shock to you that the cost of solar panels in Iowa can go as high as $30,000, way past the average right?

It is quite a massive range if you think about it because it can be as cheap as $16,000, so what gives? No two solar panel customers are the same, and here are the factors that ultimately determine how much you will end up paying for your installation.

For starters, the number of panels you use really matters.10 This, in other words, means how much energy do you need?

Take a look at it this way, the more power you need, the more panels you will have to buy because you will need a bigger system. If your last utility bill was way too high, sorry, but you will have to go all out for the installation.

You can have a 6 kW capacity setup, which needs fewer panels, but if you are a large household with more needs, you can even go for a 9 kW system, which means more costs.

Secondly, consider the brand or company that you settle for. Brands only set bases in states with a lot of potentials.

Judging by the number of brands available in the market, you can tell that the solar market is not doing badly.

The decision is entirely upon you because there are cheaper and more expensive brands based on their performance. And this is a huge factor that decides how much you will ultimately spend.

However, remember that you may also fall prey to overpriced brands, and this is why thorough research is crucial. Getting multiple quotes from various reputable brands is one of the best ways to go because honestly, why pay more for panels that work the same?

Iowa Solar Incentives

Any expert will tell you that there is no better deal in Iowa or any other state that helps make the conversion to solar more worthwhile than incentives.

Whether they are solar rebates from the government or local incentives in the state, such programs save you a lot of money and eventually help shorten the payback period of your panels.

The following are the Iowa solar incentives that you should take full advantage of as soon as now.

The Federal Solar Tax Credit (Solar Investment Tax Credit)

There is no doubt at all that the federal energy credits are the incentive that most new solar panel installers scramble for. It is not specific to Iowa but is available throughout the country, which makes it all the more fascinating and in high demand.

This is all thanks to the inflation reduction act that passed in the year 2022, making the ITC available to all Iowans and virtually all taxpayers.

The tax credit is currently valued at 30%, which is a pretty great figure all things considered. The rate is however in effect only for the systems installed in 2022 all the way to the year 2032.

Unfortunately, this will not last long because the rate is set to reduce to 26% for panels you install in 2033 and even lower to 22% for systems set up in 2034.7

If you are planning to make the switch, maybe do it as early as possible because the credit will be discontinued in 2035, that is unless Congress decides to pass a new law.

To better explain why it is the most lucrative solar incentive, consider the $2.77 for every watt rate, this basically means that getting a 30% discount will have you save a whole $7,000 or more, depending on the total cost, which is a lot of money to deduct from the total installation cost.

To claim the federal solar tax incentive, fill out and submit the IRS form 5695 along with the Form 1040.17

Iowa Net Metering

Net metering allows you to get the best of both worlds,11 the use of clean renewable energy and the reliability of grid power.

Since you cannot have power at night and when there is weather interference unless you have battery storage, you can rely on power from the grid.

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

This is an excellent solar incentive that helps you earn credits for providing power to your local grid system.

So how does it work? You see, your panels sometimes produce excess power, most times more than what you need.

If you want to make the most of this, you can link to your grid and have it generate power for you when you need it, say at night.

In return for the favor, the system gives you credits that you use to offset the utility bills coming from the grid.

There are various ways that you can enroll for net metering in Iowa depending on your choice of utility company. The process can be a bit complex, but at least your solar installer can give you the ropes.

However, remember that net metering is optional. You can always go off-grid to avoid the whole process.

The only difference is that you will have to invest in a battery that will serve as a backup for when the panels are not generating any power.

Property Tax Exemption

You already know that solar panels increase the value of a home, but what should that mean for your home?

The higher the property’s value, the higher the property tax rate, which is what should happen after you have installed solar panels.

Solar panels situated on a building rooftop showing rows of solar panel installation with tall trees in the background.

(Image: GlacierNPS20)

Thankfully, Iowa is one of the states that want to encourage more solar power adoption and has put in effect the property tax exemption.

On average, you are supposed to be paying a tax rate of 1.29% on your home, and obviously, the tax should go up by the same amount on your now newly-improved property.

The tax exemption stops this from happening. The beauty of it is that your taxes stay the same, regardless of how expensive your home now gets, which saves you a lot of money annually and a fortune over the course of the life of the panels.

Sales Tax Exemption

Another thing that Iowans should be proud of is their sales tax exemption. This goes a very long way to show just how much the state wants to encourage you to purchase solar panels and all the equipment you need for the entire system to be fully operational.

This rule has successfully prevented the sales tax on solar equipment, allowing you to buy all the things you need at a lower cost. By doing so, you can save up to 6%.3

At this time, you want to utilize anything and everything that will save you extra cash, which is exactly what the sales tax exemption is doing.

Local Iowan Solar Incentives

There may not be a specific Iowa solar incentive that comes exclusively from the state, like a state solar tax credit,12 but there are local programs that are worth the hassle.

These incentives are available to you based on the city you reside in or the utility company from where you get your services.

There may be even more incentives, and you can always ask your installer because they usually know such details, and sometimes the rebates actually come from the companies themselves. A great example of a local incentive is the one that comes from the City of Ames.

If you live in the area, you can receive some cashback in accordance with how much power your system generates, particularly during peak hours (5 pm).

Apart from that, if you are a customer of Waverly Utilities, you can receive rebates of up to $30 for every square foot of power harnessing area, but the amount usually has a maximum limit of $3,000.

How To Use Iowa Solar Rebates and Iowa Solar Incentives To Reduce the Cost of Panels

Perhaps you are certain about going for solar panels, but one thing is holding you back, the expenses. Knowing that it will cost you at least $16,000 may seem a bit overwhelming but don’t panic yet, because the Iowa solar incentives are here to help, and here is how.

For starters, the federal ITC is one of the best that the state and country have to offer. 30% is quite a huge relief that will help you offset the costs that you incurred.

The system has a proper design that allows you to pay for up to five years if you don’t have that much as the amount you owe.

Taking full advantage of the ITC doesn’t mean that you should forget about the local incentives as well. They are also just as instrumental in helping you not only lower costs but also reduce the payback period of your panels.

If you want to make more in terms of savings, you can also check with your utility and solar companies in case they have extra rebate programs.

How Does Federal Solar Tax Credit Work as One of the Best Iowa Solar Incentives?

Do you want to know which is the best Iowa solar incentive that you should focus more on? Well, nothing seems to be as lucrative as the federal solar tax credit.

Over the past ten years, the state tax credit has paid out more than $15 million and has been of great benefit to about 4,600 Iowans.4 As famous as it is, there are still so many questions about how it works, especially from beginners.

It works for all taxpayers, giving them a tax credit or tax relief of 30% of how much it costs them to buy their panels. This is a pretty huge number because if you do the maths, you could end up saving up to $7,000.

The takeaway here is that this is not a cashback and there is no way that you will get the money on an instance.

What happens is that you can deduct the money in the next tax season out of the total amount that you owe the government.

But still, if you owe less than the whole 30%, do not be alarmed because it can always roll over to the next 5 years. How does the solar tax credit work if I don’t owe taxes? You may ask.

The unfortunate news is that the program is tailored specifically for the taxpaying citizens of the country. If you are unemployed and don’t pay taxes, you will sadly be left out of the federal solar tax credit.13

It will be impossible to give you a tax credit without any tax liability in the first place.

How Much Can You Save on the Cost of Solar Panels in Iowa?

On average, a solar-powered home can save as much as $17,000 all through the 25-year service life of the panels. This is money that you would have otherwise used for paying utilities.

The savings you make will obviously depend on how large your system is, how powerful the panels are, how much you use on utilities, your financing method, and several other factors.

A closeup of solar panels showing the top layer and solar cells with the cloudy sky in the background.

(Image: USDA Photos by Lance Cheung18)

If you want to save more money and reduce the payback period of the panels, you may have to go with paying in cash upfront.

This is unlike solar and personal loans that usually accrue interest. With cash, you can start saving money from day one.

The only problem is that not all homeowners can afford to pay for the entire system in full and will have to seek alternative financing.

There is also a disadvantage to solar leases. You don’t exclusively own the panels.

This means that you are automatically disqualified from the federal solar tax credit, and you won’t be able to make any savings in that aspect.

What Is the Solar Return Period in Iowa?

A common and warranted question that prospective solar panel owners ask is, how long will the panels take to pay themselves or what is the payback period?

It is crucial because it helps you know when you can start making real savings and obtaining power at virtually no cost.

The conditions are quite favorable in Iowa because all you need is 13 years for your system to pay itself off completely. This is in comparison with the national average that stands at 10-16 years, meaning that you are right on track if you live in Iowa.

Otherwise, if the payback time frame takes more than 16 years, it means that your ROI is less than that of the rest of the state.

Is There a Statewide Iowa Solar Tax Credit?

Some Iowans don’t know this, but the state previously had one of the best state tax credits in the entire country. It was worth a whole 50% of your total installation cost.

It was the most highly anticipated program for all new solar panel buyers, and it is easy to see why.

Imagine having the federal solar tax credit at 30% coupled with the state’s credit at 50%, what are you left with, only 20% to pay for, which is quite a great deal!

Sadly, the state did away with it in the year 2021, and you are only left with the federal ITC tax credit. However, the homeowners that had installed their systems and had them running before the end of 2021 could apply for an extension until June 2022.5,14

Factors To Consider Before Buying Solar Panels Iowa

Once you are very certain that you want to start one of the most important home improvement projects, you don’t want to run into any issues whatsoever along the way.

There are still a few considerations to make to ensure that the investment is worth venturing into. Take a look at the following factors and how they will probably affect your decision.

What Are the Upfront Fees?

Most likely the main deciding factor for any home renovation. Find out exactly what it will cost you to have the system up and running.

If you have the money saved up, it will be quite easy to get started.

Otherwise, you may have to consider alternative financing and in the case of loans, find one with favorable terms of payment that won’t be strenuous to pay back.

You may also want to factor in extra equipment like batteries for backup, which makes the setup even more expensive.

Net Metering Policies

Although it is one of the best Iowa solar incentives, you also want to make sure that you are getting a great deal out of it.

It starts with checking the rates from your utility company, and unfortunately if not favorable, the last resort would be to go off-grid and invest in a battery.

Weather in Iowa

With around 200 sunny days in Iowa,  the state is not too bad a place for setting up your solar panels. There is plenty of sunshine for your panels to generate enough power for you all through the year, making it a worthy investment.

You may also want to check that there are no shading buildings or trees nearby that will make your panels any less efficient.

Roof Condition

Many homeowners ignore this, but the design of your roof matters a lot to the installation of the panels.

If not properly tilted or damaged in any way, the panels may not be installed until the conditions are corrected.

A solar panel technician wearing a hard hat showing how to install solar panels on a residential house roof.

(Image: Pilar Blasco22)

In such cases, you will hear the installer suggesting either a roof renovation or ground mounting, both of which increase the total installation cost.

What If You Cannot Afford Solar Energy in Iowa?

A $16,000 minimum payment for solar panels is pretty huge. It makes you wonder why are solar panels so expensive?

The case is the same for all other states, but the difference is that it is more expensive in other regions.

Seeing that the government is going a step further to provide rebates, you can easily tell that they know that it is a costly investment and the people need a little encouragement to be able to afford it.

Not many homeowners can afford that much, at least not upfront, and this may lead you to question how to get solar panels for free.

There are free solar panels Iowa, but before you get all excited, it is not exactly what you may think. No company will give out panels that they have heavily invested in for free, at zero costs whatsoever.

What you hear being advertised are free panels are in fact, solar leasing contracts.15

This is what happens. When you sign the deal, you allow the company to foot virtually all the costs, that is from the equipment to the installation.

Everything is done at little or no fee, but there is a catch that you should carefully read on the contract before signing. You are expected to pay up to a certain fee at the end of every month.6

It is almost the same situation as obtaining power from the grid, but the difference is that your utility provider is now the solar company.

There is an advantage to this because you don’t have to worry about hefty upfront costs. However, be warned that you will never own the panels or obtain a tax credit for them.

What Factors Affect the Cost of Solar Panels in Iowa?

There is no one-size-fits-all when it comes to the cost of solar panels. You will have to go for a system that suits you and fulfills all your needs.

You may end up paying more or less depending on how much energy you use on a monthly basis, how many panels you need, the quality of the equipment, and the company that you hire for the installation.

Is Solar Panel Installation Cost Iowa Worth It? How To Tell

One thing that is probably concerning you as a prospective owner of solar panels is are solar panels worth it in Iowa.

It makes a lot of sense because you don’t want to make such a life-changing investment and later on wish that you could go back to the grid.

Solar panel arrays mounted at an angle on solar panel racking with the sky in the background.

(Image: U.S. Dept. of Housing and Urban Development (HUD)21)

So is it worth investing in? Absolutely.

For one, Iowa is a sunny state, and being able to receive that much sun means that your panels will have more than they need, and you may even have to “sell” some power back to the grid.

Also, most Iowan homes don’t really need too much power and end up going for smaller systems, which cost way less than the massive versions.

As long as your roof is facing the correct direction, there is no shading around your home, and you have considerably low energy needs, installing solar panels may be the best home improvement project you could ever undertake.

Are you living in Iowa and want to avoid the heavy utility bills that only seem to keep rising every month?

The solution is solar power. Solar power is the future of the country, and you are in luck because Iowa is one of the sunniest states,16 receiving 200 sunny days in a year against the nation’s average, which stands at 205.

It is an excellent idea, but there may be one thing holding you back, the cost. It may seem high at first, but when you take the time to do your calculations and realize how much money you will have saved over the course of its 25-year lifespan, you will find it the best investment that you could ever make.

Besides, who says that you have to bear all the costs on your own?

Thanks to the Iowa solar incentives and those from the government, the cost of solar panels in Iowa has significantly reduced, making now the perfect time to make the investment.

Frequently Asked Questions About Iowa Solar Incentives

Are There Statewide Iowa Solar Incentives?

Unfortunately, there are currently no state solar incentives in Iowa. Well, there was one that offered a 50% tax credit, but it expired in 2021, and now, you have only the federal solar tax credit that offers 30% of your installation cost as your tax credit.

Read More About Iowa Solar Incentives


References

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9IOWA DEPARTMENT OF NATURAL RESOURCES. (2023). Solar Panel Recycling and Disposal. DNR. Retrieved June 10, 2023, from <https://www.iowadnr.gov/Portals/idnr/uploads/waste/swfact_solarpaneldisposal.pdf>

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13Solar Energy Technologies Office. (2023, March). Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics. Office of ENERGY EFFICIENCY & RENEWABLE ENERGY. Retrieved June 10, 2023, from <https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics>

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