Great reasons to invest in solar

As we celebrate the summer solstice on June 21, this is a great time for Iowans to invest in solar energy systems for their homes, farms and businesses.

On May 30, Gov. Terry Branstad signed a bill that triples the size of Iowa's successful solar energy tax credit program and makes additional improvements to the program. The Iowa Senate passed the bill unanimously and the Iowa House passed it 88-4. Such broad bipartisan support is rare these days.

The Iowa Solar Energy System Tax Credit program is linked to two federal tax credit programs. When used together these tax credits almost can cut in half the cost of a solar water heating or solar photovoltaic electric system.

The federal Residential Renewable Energy Tax Credit allows taxpayers to claim a tax credit (IRS Form 5695) of 30 percent of qualified expenses to install a solar energy system, which includes the cost of the system, labor to install it, and piping or wiring to interconnect a system to the home. For individual homeowners, the Iowa solar energy system tax credit is equal to 60 percent of the federal tax credit related to solar systems provided in section 25D of the Internal Revenue Code. Unlike the federal tax credit, which has no cap, the Iowa credit for an individual homeowner cannot exceed $5,000.

The federal Business Energy Investment Tax Credit allows corporations (which includes partnerships, limited liability companies and S corporations) to claim a tax credit (IRS Form 3468) of 30 percent of qualified expenses to install equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. For corporations, the Iowa solar energy system tax is equal to 60 percent of the federal energy credit as provided in Section 48 of the Internal Revenue Code. Unlike the federal tax credit, the Iowa credit for a corporation cannot exceed $20,000.

To receive the Iowa tax credits, individual and business taxpayers must fill out an application at the following website: http://www.iowa.gov/tax/business/solarcredits.html.

These applications cannot be made, however, until the solar system is installed and placed in service. Any excess federal tax credits can be carried forward through tax year 2016. Any state tax credits can be carried forward for the next 10 years.

Iowans should consider investing in solar for several reasons.

First, all these tax credits are only available for property placed in service before January 1, 2017. The federal and state tax credits are slated to expire after 2016.

Second, Branstad has just tripled the amount of available tax credits to $4.5 million, but demand is high and that cap soon may become oversubscribed.

Third, electricity costs likely are going to rise in the years ahead as utilities make changes to comply with existing and proposed EPA regulations regarding power plants.

Fourth, propane-dependent households just went through an expensive winter. Solar heating systems can help reduce propane consumption and save money in the future.

Fifth, most Iowans can take advantage of net metering, which enables owners of solar photovoltaic systems to receive the full retail value for the electricity they generate. That means as electricity costs rise, so too will the value of the electricity produced by these systems.

As always, the first thing Iowans should do is invest in energy efficiency to drive down the size and cost of any solar energy system they install. Alliant Energy, Black Hills Energy and MidAmerican Energy are required to offer several programs for all classes of ratepayers. Most rural electric cooperatives and municipal utilities also have energy-efficiency programs. Information about all these resources is available online.

Finally, there are many trained and experienced solar energy system installers in our area eager to help you assess your solar resource, design what you want and install your system. A quick Internet search or a glance at the yellow pages in the phone book should be sufficient.

Iowa already is a leader in other forms of renewable energy, such as wind power. Iowans have a unique opportunity over the next two years to harness the power of the sun to power their homes, farms and businesses well into the future.

' Jim Martin-Schramm is interim director, Luther College Center for Sustainable Communities. Contact: marschja@luther.edu