Your 2020 guide to getting solar panels for your home in Idaho
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Idaho home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2020 **
The Idaho Public Service Commission UNANIMOUSLY rejected Idaho Power’s late-2019 attempts to destroy net metering, whew! However, we're expecting to see stronger laws that codify protections for solar owners in 2020 and beyond. Read on to learn all you need to know about going solar in Idaho - solar panel policy, incentives, and savings!
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in Idaho, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Idaho. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Idaho.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Idaho Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Idaho|
|Solar Loans in Idaho|
|Solar PPAs in Idaho|
|Solar Purchase Payback Time in Idaho|
|Idaho Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Idaho
Figuring out the best way to go solar in Idaho can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
How to pay for solar panels in Idaho
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan. Since economic conditions in Idaho don't allow for homeowners to get solar through a third-party agreement like a lease or Power Purchase Agreement, we included two different sizes of solar loans—one for people with a lot of equity, and one for people with just a little.
As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a home equity line of credit (HELOC) or solar loan, though, your payments over 15 years will be more than your savings, but you'll still come out thousands of dollars ahead in the end.
Read on to find out more about each option.
Option 1: Paying cash for solar
This is the best option in Idaho if you want solar and you've got the cash to spend. An outright purchase returns the most money over time, because you own the system from day one and reap all the benefits. That 30% Federal tax credit, combined with the state tax deduction and electricity savings bring your first-year costs way down.
In our example, you put down $21,250, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced almost $9,000 in income.
That might sound like a great deal of savings over the years, but it pales in comparison to the potential returns from other states. That's not because Idaho lacks sun—it's because the state has cheap electricity prices and no statewide rebates for solar. The internal rate of return on a solar investment here is just 4.3%, which is not as good as an investment in, sya, the stock market.
Net Present Value: -$2,107
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Idaho's -$2,107 NPV on a 5-kW solar system means you'd be that much better off investing your money in stocks over 25 years than in Idaho solar. But check out what happens to NPV if you buy the same system with a loan that you can pay back over time.
Here’s how the numbers pencil out for an Idaho solar purchase with a 5-kW rooftop solar system:
- Installing a typical 5kW solar system should start at about $21,250. Don’t worry – even without state incentives, you can still knock a big chunk off the price right off the bat.
- Since the Feds calculate their incentive based on actual out of pocket costs, no state incentives means a bigger federal solar tax credit. Subtract $6,375 (30% of $21,250) for a new price of $14,875.
- After the tax credit, subtract Idaho's tax deduction savings. You can read more below about how this works, but what you need to know now is that it will save you $370 in the first year, reducing costs to $14,505.
- Don't forget your first year’s energy savings, which we estimate to be about $643. That brings your cost after the first year to $13,862.
- By the time your system pays itself back in year 18, you’ll be seeing over $1,000 per year in savings until the end of your system’s life.
- When all is said and done, our 25-year estimate shows a total net profit of $9,228, with an internal rate of return of 4.3%. That's actually not bad compared to some investments, but you're probably better off with your money in an exchange-traded fund.
- On top of those returns, your home's value just increased by just about $15,000, too (your expected annual electricity savings over 20 years)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 107 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Idaho. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 2: Using a loan to pay for solar
Usually this is the place where we tell you that taking a loan to pay for solar is a great idea. That's because it's usually true. High electricity prices around the country make a solar panel system into an income-generating asset.
The returns in Idaho are still pretty good, but they miss the excellence of the best solar states by a wide margin. The state enjoys some of the lowest electricity prices in the nation, and that means savings are a little slimmer.
Still, as you can see from the chart above, you'll start out with a big windfall, because even though you're not putting any money down, you get the Federal 30% tax credit for the whole installed cost of your system. Then, over the 15-year life of your loan, you'll be spending more than you're saving in electricity costs, essentially investing a total of about $8,800 until you pay the loan off.
But from there, it's up-up-up! After your loan is paid off, you'll be saving $1,000 or more per year in electricity costs from your fully-owned solar panels. You'll end up over $2,185 to the good after 25 years, which is great for an investment where you put nothing down!
Net Present Value: $-379
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Idaho's $-379 NPV on a solar loan means you'd be that much better off investing your money in another investment over 25 years than in solar. But that $379 is so tiny, it seems almost a small price to pay for the beneifts of clean, reliable solar power.
Here’s how the numbers pencil out for an Idaho solar purchase with a solar loan or HELOC:
- Installing a typical 5-kW solar system should start at about $21,250. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $644, but your loan payments will total $1,886, for a difference of $1,242, or about $104 per month.
- That's not so bad when you consider your tax savings for the year will be $6,745! You'll come out $5,500 ahead in year 1, which should help ease the burden of loan payments for a few years, at least.
- When your loan’s paid off in year 15, you’ll start see over $1,000 per year in savings until the end of your system’s life.
- For our 25-year estimate, you'll see some decent returns, to the tune of $2,185, even after all the payments.
- And the future is going to look a little brighter, since your system will mean green for the environment. It'll be like planting 107 trees every year!
Keep in mind, the numbers above are based on an average home in Idaho. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
Idaho does not offer solar Power Purchase Agreements or leases. Perhaps it would be a good idea to contact a solar advocacy organization and ask them to fight for solar in your state!
Idaho Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Idaho:
Idaho's Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) basically requires utilities in the state to source a percentage of energy from renewable sources by a given date. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar.
Unfortunately, despite being one of the most productive states in the renewable energy game (thanks to hydroelectric), Idaho does not have any RPS at all, not even the voluntary targets we’ve seen in some nearby states that also lack true RPS mandates. No RPS generally translates to little or no solar incentives offered by the utilities, and unfortunately that’s the case here.
No utility incentives means a whole lot of missed opportunity, and wasted solar resources. The southern half of Idaho, in particular, gets a great deal of sun—as much as Florida—and could produce a great deal of clean solar power with the right programs to encourage homeowners like you to make the switch. A strong RPS would force the utilities to pick up a lot of the cost of providing those incentives here.
Idaho's Solar carve-out and SRECs
No RPS means no solar carve out.
Idaho Electricity Prices
Idahoans pay an average of 10 cents per kilowatt-hour (kWh) of electricity. That’s the lowest price in the region and even one of the lowest in the country (chalk it up to the state's beefy hydroelectric dams).
We know you like paying less now, but the long term costs of cheap electricity are through the roof. All that cheap electricity is produced by building massive dams, which are often criticized for damaging nearby ecosystems. The reservoirs required for these large-scale projects eat up sizable areas of biologically rich terrain and negatively affect both upstream and downstream environments. Make the clean and responsible decision with solar -- you can thank us later!
Idaho Net Metering
Most Utilities Offer
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for any surplus. It’s an essential part of strong solar policy, because it’s a big money saver for you. Idaho currently has no law requiring utilities to offer net metering, or governing interconnection (getting on the grid to get net-metered).
Despite not being required, all three of the state’s three investor-owned utilities — Avista Utilities, Idaho Power and Rocky Mountain Power — have independently decided to offer net metering programs. The framework of all three programs is similar. All of the programs limit individual system size, but those limits won't affect homeowners much.
All three programs also handle residential net metering the same way: all surplus energy produced is applied as a credit to your next month’s bill at the full retail rate. So for every kW extra you produce one month, you pay for one less kW the next. Avista specifies (sadly) that surplus credit reverts back to the utility without compensation after 12 months. Idaho Power and Rocky Mountain Power do not specifically address “rollover” limits or other annual surplus accounting policies.
Idaho Interconnection Rules
Depends on utility
While things look pretty standard on the net-metering front, there are fragmented policies in terms of how easy it is to connect to the grid which vary from utility to utility. Idaho could benfit from uniform standards, which would come as a directive from the state capitol.
Regardless, here are the Idaho big three’s interconnection policies:
Idaho Solar Incentives
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 26% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Idaho measures up:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
Idaho Solar Power Rebates
Idaho lacks any utility rebates for solar power. This is a direct result of the lack of an RPS. With an RPS in place, and the accompanying penalties for utilities that fall short of RPS goals, you can bet the utilities would start offering incentives to switch to solar power. How do we know? Because it’s worked everywhere else. RPS’s inevitably spur the creation of incentives that are cheaper for the utility companies than the penalties of the RPS.
Idaho Solar Tax Credits
$370/year for 4 years
With no utility incentives to speak of, we have to commend the legislature for stepping up with a pretty strong solar tax credit. The lack of utility incentives is the legislature’s fault for not passing an RPS, of course, but nevertheless, the personal deduction that Idaho has made available is a big step back in the right direction.
When you install a new solar power system in your home, you are entitled to a state income tax deduction for 40% of the cost of the project in the first year, and 20% each year for the next three years. It's important to note that this is a deduction, not a tax credit, which means it simply reduces the amount of your income the state can tax.
A typical 5-kW system will cost about $16,250, which means you can deduct 40% of that in the first year, or $6,500 from your income for Idaho income tax purposes. Given the state's 7.4% tax rate for any income over $22,086 (married couples), a deduction of $6,500 would be worth about $481 in year 1. Using those same numbers, the next 3 years' deductions of 20% would equal $241 per year. All told, you can expect to get back about $1,204 over the four years after you install solar. Cha-ching!
Of course, your Idaho solar tax credit will vary based on the amount you pay for your solar system and the tax bracket you find yourself in. If you make more than, say $40,000 per year as a married couple, you can figure your estimated Idaho solar tax credit by multiplying the cost of the system by 0.0296 for the first year, and 0.0148 for the following three years.
And don't forget: Idahoans benefit from the Federal Solar Tax Credit as well, and that is a direct dollar amount off your federal taxes based on your total solar costs. There's no cap on the federal tax credit and you can claim any amount leftover on subsequent years' tax returns.
Property Tax Exemption
With that handy solar tax credit in place, we can’t imagine how the other solar friendly tax policies slipped through the cracks. Both a property tax exemption and a sales tax exemption would save you money without ever actually removing a single dollar from the state’s bank account.
Sales Tax Exemption
One of the simplest ways for the Idaho state legislature to encourage small scale clean energy adoption is to declare solar panel equipment exempt from state sales taxes as many other progressive states have done. Sadly, there is no such declaration.
Low-income Solar Programs
Grade: FLearn more about low-income solar programs available in the U.S.
The consensus on Idaho solar power rebates and incentives
We’ve reviewed solar policy in a whole lot of states–all of them in fact–but we’ve never seen a state quite like Idaho before. No RPS, no utility backed solar incentives, heck, no mandatory net metering or interconnection standards! Virtually nothing, except for that mediocre Idaho solar tax credit. And at the end of the day, it’s really the money that talks. With a 16 year payback time frame, Idaho surely has a ways to go regarding its residential solar policy.