Iowa's state capitol building in Des Moines. (Photo by Jimmy Emerson via Creative Commons)

Iowa's state capitol building in Des Moines. (Photo by Jimmy Emerson via Creative Commons)

Iowa lawmakers see tax credits opening wider door for solar

While solar advocates didn’t get everything they wanted in the Iowa legislature this year, a nearly-unanimous vote to triple the state’s tax-credit fund for rooftop installations is expected to have a major impact.

Provided the bill is signed by Gov. Terry Branstad, it also could be a prelude to bigger developments next year, according to two lawmakers.

“I think this will give an enormous boost to an already rapidly-growing solar industry,” said Sen. Rob Hogg, one of the measure’s sponsors. Increasing the available tax credits “will allow us to keep up with the growth and boost it further.”

In addition to tripling the available tax-credit funds from $1.5 million to $4.5 million annually, the measure increases the maximum credit. For residential projects, the cap has been hiked from $3,000 to $5,000. For commercial projects, it’s been increased from $15,000 to $20,000. The law also enhances the total allowable claim from the current 50 percent of the federal solar tax credit to 60 percent of it.

Hogg thinks perhaps the bill’s most potent provision is the one allowing businesses with multiple locations — like retail chains, for example — to receive a separate tax credit for each facility. Businesses are the leaders in adopting solar in Iowa, according to Hogg, and allowing them to apply for a separate credit for each location puts a whole new spin on investing in solar energy.

“A lot of businesses have taken advantage of solar energy,” he said. “It’s being spread through the business community.” With the possibility of a $20,000 credit for each location with a solar installation, he said, “The day is coming when it will be the norm to put solar into a business project. I think we’re getting very close to that point.”

State Sen. Joe Bolkcom, who also advocated for the tax-credit expansion, expects “a lot more projects to be deployed” as a result. “There’s been a lot of interest in the credit.”

In fact, applications for the credit in 2013 far exceeded the $1.5 million available. A revenue department spokeswoman said that as of April 15, applications for about $755,000 in state tax credits were on a “waiting list” because last year’s $1.5 million pool was exhausted. Once the governor signs the bill, the agency will have the funds to resume processing those.

Bolkcom said he’s confident Gov. Branstad will sign the bill.

“He told advocates at a recent forum that if it got to his desk, he would sign it,” Bolkcom said

‘Keep the momentum going’

If the bill becomes law, installers generally expect the expanded benefits to add fuel to the solar fire.

“It will help keep the momentum going on solar,” said Roger Garde, who sells and installs solar systems in southeast Iowa. “People ran into the cap last year. Businesses maxed out and some homeowners did too. There were people who would have put in a bigger system, but they stopped because they ran into the rebate limit.”

People who run businesses out of their homes, and farmers – many of whom power their farm operations and homes on one residential meter – would gain from a higher cap, Garde said.

Michelle Wei, a solar installer based in Des Moines, predicted that more generous tax benefits “will definitely give some push to solar.” In particular, because of the $5,000 increase in the commercial solar cap, she believes that “on the commercial side it will pick up.”

Mike Haman isn’t so convinced. As the industrial program manager of the Iowa Energy Center, he closely monitors solar installations statewide. Lately, they’ve been concentrated in the part of Iowa served by Alliant Energy, which offered an extremely generous solar benefit last year. The Iowa Utilities Board allowed the company to terminate it last Dec. 31.

After those projects are completed later this year, Haman said, “I’d expect the activity will start to decline. If I saw more of a balance between MidAmerican [territory] and Alliant [territory], my conclusion would be different.”

Alliant’s solar rebates typically ranged between $7,000 and $10,000, Haman said. Even with state tax credits boosted to $5,000, he said, solar is now much less profitable for customers of Alliant without the rebates.

The flip side of that, Hogg pointed out, is that only about one-quarter of Iowans get their electricity from Alliant. So for the other three-fourths of the state’s electric customers, this expanded tax credit will be a gain.

‘Next year we’ll be back’

Hogg and Bolkcom expect to see more solar policy advancements during the 2015 legislative session. Given the overwhelming and bipartisan support for the tax credit bill – 46 to 0 in the Senate, and 90 to 4 in the House – Hogg thinks there’ll be support for more solar moves next year.

“Next year we’ll be back addressing the regulatory framework for solar,” he predicted. “The utilities need to find a way to make solar work for their customers.”

He’s spoken to the state’s major utilities, and believes they “are ready to embrace solar.”

Bolkcom, too, expects some further developments next year.

“We have some interim work to do, to see what it might look like,” he said. “There’s going to be some effort by utilities and advocates on how we can work together on building a renewables agenda.”

Hogg thinks that history could provide a way forward. About a decade ago, he said, wind was at the stage of development that solar is now. The legislature passed laws permitting utilities to own wind farms, and allowing for major changes in the way rates are set. As a result, he said, wind energy took off. It now generates about 27 percent of the power produced in Iowa.

“We made that work for everybody,” he said. “I think we can make solar work for everybody.”

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