Iowans are hurting from the COVID-19 pandemic, especially farmers and small businesses. As legislators return to the Capitol, they have an opportunity to use solar energy to provide immediate economic stimulus.
Solar energy in Iowa has been so popular that the state’s solar tax credit, capped at just $5 million annually, has a current waitlist into the year 2022. Who is on the waitlist? Farmers, small businesses owners and homeowners who have already invested in solar energy.
A one-time stimulus appropriation of $7.6 million could clear the waitlist, and return money immediately back into the pockets of these Iowans. Not only would this one-time appropriation clear the waitlist, it can also spur additional investment this year because Iowans won’t have to wait until 2022 to receive their tax credit.
Tax credits are important economic development tools that spur private investment. If a litmus test existed to gauge the success of a tax credit, the solar tax credit would excel in every category. Working exactly like a tax credit should, the solar tax credit:
• Benefits both rural and urban Iowa with projects in all 99 counties.
• Creates good-paying jobs with nearly 1,000 Iowans employed in the solar industry.
• Supports robust supply chain and manufacturing industries.
• Keeps investments in-state.
• Benefits both businesses and residents.
• Spurs private investment with more than $249 million invested in solar projects around the state since its inception.
• Increases home and property values.
Legislators should also consider increasing the cap on the program to $10 million annually so we can avoid another backlog of projects in the future. In 2019, 90.3% of the year’s cap was used by projects on the waitlist from previous years. For 2020, 72% is already committed or pending for the waitlist. This number continues to grow, meaning most or even all taxpayers that install solar in 2020 will go straight to the waitlist if something is not done.
Last but not least, legislators need to decouple our state solar tax credit from the federal tax credit so Iowans are in the driver’s seat. The fate of the federal Investment Tax Credit (ITC) has been hanging in limbo in Congress as it debates COVID stimulus packages. Even though the pandemic has caused solar projects to be put on hold, time continues to tick toward the phasedown of the ITC.
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I urge our legislators to consider these common-sense policy ideas to help get Iowa’s economy jump-started and the sun shining again.
Ray Gaesser chairs the Iowa Conservative Energy Forum.