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Welcome to the Ultimate Guide to Solar Panels in Iowa

This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Iowa 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!

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** What's new for 2020 **

The Iowa solar tax credit continues to help homeowners here install solar on their homes for 2020 and beyond. It helps provide some cash back in the first year, and payback timeframe and return on investment are a little better than average. Pair that with the 26% Federal tax credit, and you've got a compelling investment case for home solar here. Read on to learn all you need to know about incentives, policy, and savings for home solar power in Iowa.

Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Iowa solar incentives you see below.

What you'll find on this page:

The Solar Strategy section is focused on the 3 ways of paying for solar in Iowa, 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 Iowa. 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 Iowa.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Generate an accurate online solar estimate for your home

Your Solar Strategy in Iowa

Figuring out the best way to go solar in Iowa 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 should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels in Iowa

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 utility companies in Iowa are actively fighting against allowing 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 (or credit), 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. A better option is to take a solar loan or home equity line of credit (HELOC). You'll put $0 down and end up with a big, big tax break at the end of the year.

Your loan payments over 15 years will be more than your electric bill savings, but you'll still come out thousands of dollars ahead by the end of your panels' 25-year warranty, with the potential to continue the savings long into the future.

Read on to find out more about each option.

How much can solar panels on roof save you?

Option 1: Paying cash for solar

Paying up front used to be the only way to get panels on your roof, and it's still the option that allows you the most control, but it isn't the best option from a percentage return on investment standpoint—that award goes to the solar loan option.

Still, an outright purchase returns the most money over time, because you own the system from day one and reap all the benefits. The 30% Federal solar tax credit, combined with Iowa's own 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 nearly $14,000 in income.

Net Present Value: $1,369

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 Iowa's $1,369 NPV on a 5-kW solar system means you'd be that much better off investing your money in solar in here over 25 years than in, say, stocks. With investment return like that, you'll be padding your wallet while you save the planet. Good job! 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 work for an Iowa solar purchase with a 5-kW rooftop solar system:

  • Installing a typical 5kW solar system should start at about $21,250. Don’t worry–with tax credits and energy savings, it'll be a lot cheaper after year 1.
  • Since the Feds calculate their incentive based on actual out of pocket costs, no state rebate means a bigger federal solar tax credit. Subtract $6,375 (30% of $21,250) for a new price of $14,875. Note: you can take the credit over as many years as necessary to get the full amount.
  • Iowa gets in on the game with its own 18% tax credit, netting you another $3,825 total. We estimate about $1,000 in each of the first 3 years, and you can take over a total of 4 years if necessary. If you know your annual Iowa income tax, this credit will wipe it out, up to $3,825.

  • Don't forget your first year’s energy savings, which we estimate to be about $749. That brings your cost after the first year to $13,126.
  • By the time your system pays itself back in year 13, you’ll be seeing over $1,000 per year in savings until the end of your system’s 25-year warranty, and the panels will probably keep working for longer!
  • When all is said and done, our 25-year estimate shows a total net profit of $13,826, with an internal rate of return of 6.8%. That's better than a 25-year investment in the stock market!
  • On top of those returns, your home's value just increased by just about $19,000, 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 104 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Iowa. 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

It's simple: taking a loan to pay for solar is a great idea. Someone else (your bank) puts down all the cash, while you get the big first-year tax credits—then your system produces electricity that helps offset the cost of loan payments. It's like investing in a business that's already successful.

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 repayment term of your loan, you'll be spending more than you're saving in electricity costs, essentially investing a total of about $5,500 until you pay the loan off.

But from there, it's up-up-up! After your loan is paid off, you'll be saving more than $1,000 per year in electricity costs from your fully-owned solar panels. You'll end up over $6,783 to the good after 25 years, after which your panels will likely still work; they'll just be out of warranty.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can qualify for a solar loan or home-equity line of credit (HELOC) for $21,250, with a fixed rate of 4.5% or lower and a 15-year repayment period.
  • You have an appetite for making money with a long-term investment, while also producing benefits for the environment.

Net Present Value: $3,097

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 Iowa's $3,097 NPV on a solar loan means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. That's a huge number, and it shows how getting a loan for solar is so much better than the alternatives. You can rest easy with an Iowa solar loan knowing you're doing right for your pocketbook at the same time as you're doing right by the planet!

Here’s how the numbers pencil out for an Iowa solar purchase with a solar loan:

  • 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 $749, but your loan payments will total $1,886, for a difference of $1,137, or about $95 per month.
  • That's not so bad when you consider your tax savings for the year will be $7,375! You'll come out more than $6,200 ahead in year 1, and you'll get a $1,000 tax credit in years 2 and 3 as well!. That should help ease the burden of loan payments for a few years.
  • When your loan’s paid off after year 15, you’ll start to 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 great returns, to the tune of $6,783, 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 104 trees every year!
Keep in mind, the numbers above are based on an average home in Iowa. 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)

Iowa 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!

Calculate solar panel cost and savings for your specific home

Iowa 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 Iowa:

Iowa's Renewable Portfolio Standard

105 MW

Grade: D

Iowa's Renewable Portfolio Standard grade

A Renewables Portfolio Standard (“RPS”) basically requires a certain percentage of a state’s energy production come from renewable sources by a specific date in the future. A great many states have passed such standards, sometimes with goals as high as 30%, even 50% renewable energy production in the near future.

So, where is Iowa in this awesome environmentally-friend policy trend? Sadly it’s still mostly in the solar dark ages (pun intended). Iowa technically has an RPS, but that RPS is perhaps the smallest and least effective we’ve seen of any state that has any RPS targets at all. How bad are the Iowa RPS targets? Pretty bad; they mandate only 105 MW of renewable energy from the state’s two investor-owned utilities – MidAmerican Energy (“MAE”) and Alliant Energy Interstate Power and Light (“AEIPL”). While that target has been declared met for years, based on the state’s remarkable 5,177 MW of wind-energy generation there is not a peep coming out of Iowa about increasing those pretty low standards, or including any requirements specifically for solar.

Iowa really needs to get with the program on this one. Colorado, California, New York, New Jersey, Connecticut, Rhode Island, Oregon, Washington, Arizona, and a whole bunch other states have legislated strong renewable energy goals to ensure a bright future for solar power. In fact, the absence of an RPS is probably the biggest reason that Iowa lacks (as we’re about to see) the financial incentives for solar that we see in those other states.

Learn more about Renewable Portfolio Standards

Iowa's Solar carve-out and SRECs


Grade: F

Iowa's Solar Carve-out grade

A solar carve out is basically a mandate that goes along with the RPS, and states that a certain amount of the renewable energy produced in a state must come from solar. Iowa hasn’t included a solar carve out in its RPS, perhaps too satisfied by the performance of the wind energy sector. But in a state that gets as much sun as Iowa does, we think the legislature is missing a great opportunity to bring Iowa into the future and bring costs down for interested homeowners.

Learn more about Solar Carve-outs

Iowa Electricity Prices


Grade: C

Iowa's Electricity cost grade

Iowa pays an average price of 12 cents/kWh for electricity; a little more than half a penny cheaper than the U.S. average. While Iowans at least don't pay those high electric prices that the coastal cities pay, we wonder how many homeowners here have thought about why electricity is relatively cheap.

It might have something to do with all of all the dirty coal we’re burning here to produce it in massive, inefficient, earth-killing ways. When all that fossil-fuel burning starts to catch up with us (and with the fossil-fuel supply), energy isn't going to be so affordable anymore.

You know what your neighbors will think you are with that shiny solar system humming along, producing clean, efficient, (still) cheap power? A genius! The best thing about a solar installation is that it keeps producing for you, long after it’s paid for itself; even when everyone else is complaining about paying too much for electricity!

Find out why electricity prices matter

Iowa Net Metering


Grade: B

Iowa's Net Metering grade

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 the surplus.

Iowa was one of the first states in the country to get on board with net metering, passing its first standard way back in 1984. The state's current net metering policy is solid, but not spectacular. First off, the net metering policy applies only to MAE and AEIPL – municipal and cooperative electric utilities are not covered. Second, MAE and AEIPL used to have to cut you a check for any surplus you generated, but more recent changes now allow the utilities to carry your surplus forward toward future bills, rather than actually giving you cash back. Don’t get us wrong –savings are savings– but we sure do like it more when the cash goes straight to you every month.

Learn more about net metering

Iowa Interconnection Rules


Grade: B

Iowa's Interconnection Standards grade

Interconnection reflects how easy it is to connect your Iowa solar panels to the grid. Since Iowa calls for reviews of solar installations, external disconnect switches, and extra insurance, that adds unnecessary cost home solar systems. We recommend that the legislature pass updated rules that help reduce costs for homeowners looking to go solar.

Learn more about solar interconnection rules

Iowa 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 Iowa 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.

Iowa Solar Power Rebates


Grade: F

Iowa's Solar Rebates grade

Iowa lacks a statewide rebate program to encourage renewable power, solar or otherwise. In some other states missing statewide programs we’ve seen utilities come to the rescue with strong solar power rebates of their own. Not so much in Iowa, where utility-backed rebate programs have been exhausted or phased-out. Of course, a more robust RPS with a solar carve-out might convince the utilities to start offering rebates to homeowners to help them meet the new standards...

Learn more about solar rebates

Iowa Solar Tax Credits

15% of Costs, up to $5,000

Grade: A

Iowa's Solar Tax Credits grade

Even without great statewide rebates, there are ways to reduce the cost of going solar. Iowa offers a personal tax credit equal to 50% of the federal solar tax credit of 30%. Both can be claimed on your yearly tax returns for after a solar installation was completed on your home. Individuals and businesses are eligible for a state tax credit up to a maximum of $5,000. Any excess credit (i.e., if your credit reduces your tax burden below $0) may be carried over for up to ten years, which is great news for Iowa homeowners interested in solar power.

New solar owners in Iowa must apply online by May 1st of the year after installation. Each year, the state has a $5 million cap for all tax credits, but timely applications will be put on a waiting list for the next year's limit. Once your application is approved, a tax credit certificate will be mailed to you. Read more about Iowa solar tax credits here, and apply here.

Learn more about state solar tax credits

Property Tax Exemption

100% for 5 years

Grade: B

Iowa's Solar Property Tax Exemptions grade

Your solar power system adds value to your home. A bunch of value – like, thousands, even tens of thousands of dollars of value. Normally all that added value comes with added taxes. In Iowa, however, the increase in property value resulting from the installation of a solar power system is exempt from all associated property taxes for five full assessment years. That’s not the full (i.e. doesn't expire) exemption we’ve seen in a lot of other states, but it IS a nice chunk of change you won’t be responsible for paying.

Sales Tax Exemption


Grade: A

Iowa's Solar Sales Tax Exemption grade

Another chunk of change you won’t be responsible for paying is the 5-7 % sales tax (depending on where you live) attached to most other items. Yep, Iowa exempts your solar power system from this one too. Good show, Iowa! You just made up for a bit of that incomplete property tax exemption with a simple and smart law that we’ve seen too many other states miss.

Learn more about tax exemptions for solar

Low-income Solar Programs


Grade: F

Iowa's Solar Sales Tax Exemption grade Learn more about low-income solar programs available in the U.S.

The consensus on Iowa solar power rebates and incentives

Iowa is far from the worst state we’ve seen regarding solar policy, but it’s also far from the best. What’s the bottom line here? The background policies are OK, with adequate grades in net metering, interconnection, and tax exemptions. What’s missing is solar power rebates and performance payment incentives. Money. Dinero. Moolah, people! Cold hard cash. The cost after year 1 is adequate, but not outstanding for a state with friendly foundational policies. Because starting costs remain somewhat high and there are no ongoing performance incentives, the payback timeframe on a solar power system here remains a fairly slow 12 years. Again, not the worst we’ve seen, but a long way from good. While we were tempted to give out a “B-” because of some friendly solar policies, without a strong RPS we’re still in “C+” territory here. Time to get on it, Des Moines!

28 thoughts on “2020 Guide to Iowa Solar Panels for Homeowners

  1. Avatar for Donna Strange Donna Strange says:

    Explain, why do they want you to pay to use power lines, when your selling stuff back?

    1. Avatar for Carole Buchmiller Carole Buchmiller says:

      Love this site but needs to be updated. the tv adds are misleading everone is charged for solar. the adds are paid for by Alliant. They want to have control of all the solar that goes up. Charging this extra tax is not fair and would shut down the solar industry in Iowa like it did in Nevada where they regret a similiar tax.
      My opinion from lots of reading. I wanted to put in solar but if I am taxed it will not be to my advantage!!

      1. Avatar for Ben Zientara Ben Zientara says:

        Thank you, Carole, and we absolutely agree. Iowans need to fight for their right to solar energy!

  2. Avatar for Julie Julie says:

    Has this been updated since the recent 2017 changes? If not, what do they score right now?

  3. Avatar for Iowa Reader Iowa Reader says:

    Please update this page to reflect the current solar situation in Iowa. An Iowa Supreme Court case several years ago decided that PPAs are allowed; the Iowa tax credit is 15%, not 18%; and at least the city of Ames offers credits to homeowners purchasing solar panels. I’m sure there are more changes since this site was last updated, and would find it a helpful resource if it is made current.

  4. Avatar for Warren McKenna Warren McKenna says:

    I’m the GM at FEC, the Cooperative that you have given a D for its performance payments. This feed-in-tariff has resulted in 2,000 watts of solar per customer. More connected watts per utility customer than anywhere in the world. A hybrid feed-in-tariff like ours is the only long term business model that can grow a long term win-win-win (utility, customer, installer) solar market.

    1. Avatar for Ben Zientara Ben Zientara says:

      Hi, Warren

      Thank for writing in. I guess it’s not clear enough in the section, but the state of Iowa earns the “D” grade, not FEC! We really admire what you’re doing, and I’m going to update the text to reflect that. Thanks again for your comments.

      -Ben Zientara
      Lead Researcher and Policy Analyst

  5. Avatar for Anonymous Anonymous says:

    The reason it’s a 15 year paypack period is because solar costs us the same as the rest of the nation, but our electricity rates are much lower than the rest of the nation. Even then, 15 years may be your ROI, but it’s also 15 years of CLEAN energy

  6. Avatar for Business electricity rates Business electricity rates says:

    If you want to obtain a good deal from this paragraph then you have to apply
    such methods to your won blog.

  7. Avatar for Keith Hicks Keith Hicks says:

    Last time I checked, Iowa’s tax credit was only for systems greater than 2MW. Which seems outrageous. Can you please state your source for the 15% tax credit?

  8. Avatar for Dan Hahn Dan Hahn says:

    Rich, that 15% tax credit is accurate. We’ll update this page in the next week to reflect it!

    – Dan

  9. Avatar for Rich Clewell Rich Clewell says:

    Attended a solar training workshop last night and the guy said Iowa provides a 15% tax credit based on the cost of installation. Is he incorrect?

  10. Avatar for Bo Bo says:

    Dear Dan,

    On your website, you said:

    “In addition to those direct savings on your monthly electric bill, you also just increased your home’s value by more than 12 grand – tax free for the first five years!”

    How did you get the number of $12,000?



  11. Avatar for Thomas Bahls Thomas Bahls says:

    I operate a not-for-profit in Davenport and have had a couple of energy consultants review our building and both haev suggested an (approximate) $175,000 PV system will reduce electrical costs by @ $12,000/year. We are very motivated to move forward, but tax credits do us no good. Resources for grants and funding are needed!


    Tom Bahls
    563-386-7477, 263

  12. Avatar for Eric Eric says:

    I am looking for a qualified solar panel installer to do work in Oskaloosa, IA. I am a home builder and have a customer that wants me to get pricing on that. Can anyone help.


  13. Avatar for Stef Stef says:

    We are purchasing a home in Iowa with a 11′ X 17′ outbuilding that we want to turn into usable space. We’d like heating, cooling and hot water in there. Presently it has only electricity. Any helpful, affordable suggestions would be appreciated.

  14. Avatar for Scott Scott says:

    This is madening and a joke. Politicians wonder why the youth of Iowa leave this state. Maybe because the leadership of this state has no clue about establishing meaningful forward looking legislation.

  15. Avatar for Peter Peter says:

    Iowa is not a homeowner friendly state for funding alternate energy. The best return is on Solar – and even with that, if you purchase a 6KW gridtie solar system on sale the best timeframe you can hope to break even on it is about 15 years. That’s just about the time you have to start fixing everything – not to mention the 25k dollars tied up in equipment that is not earning anything for 15 years. Read the Iowa laws – if you take the property tax exemption you are not eleigible for the state tax credits. Ha!!!! Go solar – yeah right!! I have 2500 sq ft of southern facing barn roof, when Iowa gets serious about solar -I will too!!!

  16. Avatar for Angie Angie says:

    I am very disappointed in the lack of rebate funds, in comparison to other states for solar and wind power. It is sad for Iowans who want a better environment for our children. YOU CAN COUNT ON MY VOTE TO REFLECT MY FEELINGS ON THIS MATTER,

  17. Avatar for Dan Hahn Dan Hahn says:


    Not sure about the wind power credits in Iowa, though I’m sure there’s a fair amount of wind blowing across the state. Unfortunately it seems most of that wind is coming out of Des Moines in your case. We encourage you to look at what the utilities are starting to offer Iowa homeowners for going solar.


    – Dan

  18. Avatar for Jeff Jeff says:

    From what I see, Iowa looks like a poor state for wind power credits. No surprise, Chet Culver is more interested in taking our money than providing tax breaks for people trying to help the environment.

  19. Avatar for Dan Hahn Dan Hahn says:


    We have friends in Iowa who would love to talk to you, fill out our form and we’ll get the ball rolling. Incentives are out there in Iowa, they’ll break out the numbers for you.


    – Dan

  20. Avatar for solarium solarium says:

    unless I find out different Iowa is all talk and no go for assistance in solar or wind installation at residential level. Im ready,own my home have lots of land and some money. If you can point me in a direction please do.

  21. Avatar for Shane Shane says:

    I own an electric company here in Des Moines and we are geared up for installing a lot of large solar systems in the near future. We have been trained by some of the largest solar producing compaines and are now working with some very well known companies in Des Moines. We really need the state to jump on board and realize how much ability the state has for solar production.

  22. Avatar for Dan Hahn Dan Hahn says:


    Iowa provides a 1.5 cent per kilowatt tax credit for solar over a period of 10 years. Granted, that isn’t a whole lot of cash but many utilities are now required to derive at least a certain percentage of their energy from renewable sources by next year. Therefore, more generous incentives are popping onto the horizon from them, not the state government.

  23. Avatar for Warren McKenna Warren McKenna says:

    Are you kidding! Iowa sucks when it comes to funding site based renewable energy. They don’t offer a single tax credit for residential or business for PV or Wind. Look at the surrounding States like MN, WI, MO for better deals. Come on Iowa give us a bone, like $ 2 per watt for PV if you would.

  24. Avatar for Dan Hahn Dan Hahn says:


    Hopefully the visibility issue has been resolved. We do know our page is best viewed using Mozilla Firefox. We encourage you to download that browser instead. You’ll also be safer on the web.


    – Dan

  25. Avatar for Don Davison Don Davison says:

    I am attempting to read / view this web page using Microsoft Internet Explorer and see there is a problem with the HTML code, because I can see the code between some of the lines of text on the web page. Although the colors are appropriate for Iowa (black & gold, the gold border around the black background behind the gray text is extremely difficult to read. I know a different color combination will be greatly appreciated by most viewers and hope you have the opportunity to view and agree, and modify.
    Thank you for your consideration.
    Don Davison

    [email protected]

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