Update 1/10/14: Today the Iowa Department of Revenue confirmed that 2013 tax credit applications have reached the $1.5 million annual cap.
The Iowa Department of Revenue recently announced that it awarded $1.3 million in solar tax credits during 2013, more than double the amount awarded in 2012, and more tax credit applications remain to be processed. The increase in solar tax credits is a sign of strength in Iowa’s solar marketplace. It may also indicate a rush to complete solar installation before the suspension of a popular utility incentive program.
The legislature approved Iowa’s solar tax credit in 2012, and credits are available for solar energy installations completed beginning in January of that year. The credit can reduce the income tax liability for individual Iowans up to $3,000 and for businesses up to $15,000. Information about how to claim the credit is available from the Department of Revenue.
The figure the Department of Revenue reported for 2013 does not include 65 applications the agency had not processed by December 27, spokesperson Victoria Daniels confirmed to the Iowa Environmental Council. When those applications are evaluated, it is likely that demand for the credit in 2013 will exceed the program’s $1.5 million annual cap, she said.
In recent years, data from around the country and in Iowa has indicated a substantial increase in solar installations, fueled by declining prices for solar panels and other technologies. After supporting the original creation of the tax credit, the Iowa Environmental Council called on the Department of Revenue to prepare for strong demand by improving a proposed waiting list of applicants for the credit if the cap is reached.
“The result of this will be that if the 2013 applications reach the cap, those not able to receive the credit can be at the front of the line in 2014,” said Nathaniel Baer, the Council’s energy program director, who filed comments with the Department of Revenue calling for changes to the waitlist in 2012. “It is fortunate the Department has provided this opportunity, but if the tax credit program reaches the cap , it will be necessary for the legislature to raise the annual cap on the program.”
Baer said that Iowa’s solar tax credits, paired with a similar federal tax credit, will be a more significant factor for the solar market in 2014 because Alliant Energy has suspended a popular renewable incentive at the end of December, 2013. Several solar installers working in Alliant’s territory have told the Council the Alliant program was an increasingly important selling point for their customers and that interest in the program had been running high as word of its suspension spread.
Overall, Iowa is a national leader in wind energy production with more than a quarter of energy generated in the state coming from wind. While the state’s technical potential solar for solar energy is surprisingly strong—ranked 16th in the nation according to federal government data—installations currently in the state reflect only a tiny fraction of this potential.
“Because of the declining costs for solar technology and the state’s experience with wind energy, we think Iowa is a place where solar energy can play a substantial role,” Baer said. “The economic and environmental benefits that could bring are significant, and this is a very exciting time for the industry.”