I know what you‘re thinking – Indiana isn‘t exactly the country‘s sunbelt. But solar panels can still pay for themselves within 5-7 years and provide decades of free renewable power. Keep reading to unlock all the incentives and programs that‘ll maximize your solar savings!
Solar Energy Adoption Growing Fast in the Hoosier State
First, let‘s look at the solar landscape here. Indiana averages 4-4.5 peak sun hours daily – less than Arizona‘s 6.5 hours but on par with neighbors like Illinois and Michigan. Luckily, sunnier states subsidize manufacturing, making solar equipment super affordable at just $2.49 per Watt in Indiana.
With those low prices combined with new state initiatives aimed at increasing renewable energy over the next 5 years, solar is absolutely booming:
- Over 600% solar growth in Indiana since 2016
- The 8th cheapest solar panel costs in the country
- 139 megawatts of installed capacity as of 2021
- Goal to add 8,000 more megawatts by 2027
So while Indiana solar incentives have some room for improvement compared to leaders like California and New Jersey, you can still lock in major savings as adoption continues growing.
Federal Solar Tax Credits – Chop 26% Off Your Costs
Let‘s start with the solar incentive that should be every Indiana household‘s first stop – the federal Investment Tax Credit (ITC).
The ITC provides a dollar-for-dollar reduction in your federal income taxes equal to 26% of your solar installation costs in 2023. For a 5 kilowatt system running you $12,500, that‘s a whopping $3,250 off your final price tag!
| System Size | Pre-Incentive Price | Federal ITC Amount |
|---|---|---|
| 3 kW | $8,970 | $2,332 |
| 5 kW | $12,450 | $3,237 |
| 7 kW | $16,430 | $4,272 |
This credit applies to purchased solar panel systems for your home, but not leased installations. [Here are the full eligibility terms and legislative outlook for the ITC]. The credit remains at 26% until 2032 before stepping down and eventually expiring, so act fast!
Indiana State and Local Solar Incentives
In addition to Uncle Sam‘s contribution, Hoosier homeowners can tap into these Indiana solar incentives:
Net Metering
Most Indiana utilities allow net metering, where your solar panels earn bill credits for surplus energy fed back to the grid. However, the state recently ended mandatory 1:1 retail rate compensation – check with your provider for specifics in your area.
Property Tax Exemption
Solar installations are fully exempt from increased property tax valuations in Indiana. This will save you thousands over the system‘s 25+ year lifespan!
Sales Tax Exemption
You‘ll avoid the 7% state sales tax when purchasing solar panels or installation services. That‘s nearly $1,000 back on a full roof array.
Utility Rebate Programs
A small but growing number of municipal utilities like NIPSCO offer solar rebates, performance incentives, or feed-in tariffs to generate renewable energy growth. See what‘s offered in your neck of the woods!
Indiana Solar Panel Return on Investment
Now for the money question – how long do solar panels actually take to pay for themselves in Indiana?
Let‘s use the example of a 5 kW system for a home using 750 kWh of electricity per month. At $2.99 per Watt after incentives, that system costs $14,940 upfront and supplies ~60% of your household‘s power needs.
| System Details | |
|---|---|
| Size | 5 kW |
| Pre-Incentive Cost | $14,940 |
| Federal ITC Amount | $3,882 |
| Final Cost | $11,058 |
With monthly savings of $112.50 on your utility bill, the system pays for itself in just 7.3 years. And after that break-even point, it will provide free renewable energy for another 18+ years!
Check out how Indiana‘s solar payback period and ROI stacks up regionally:
| State | Payback Period | 30-Year Return on Investment |
|---|---|---|
| Illinois | 6.9 years | 29% |
| Michigan | 7.1 years | 21% |
| Ohio | 7.7 years | 33% |
| Indiana | 7.3 years | 26% |
| Kentucky | 9.5 years | 13% |
Should I Buy vs Lease Solar Panels in Indiana?
When weighing your Indiana solar options, we strongly encourage buying over leasing in almost all situations.
Purchasing maximizes access to incentives like the federal tax credit that dramatically accelerate ROI. The table below shows just how vast the differences are:
| Comparison Metric | Buying | Leasing |
|---|---|---|
| Federal Tax Credit Eligibility | Yes | No |
| Payback Period | 7-8 years | 18-20 years |
| Incentives & Savings | $7,000+ | $500 |
| Ownership After Payoff | System | Nothing |
While buying has higher upfront costs, you‘ll break even faster and own a valuable asset that can help power your home for decades essentially free of charge. That‘s by far the smarter long-term play.
Ready to run the numbers on solar panels for your unique home and energy needs? Use our [Solar Calculator] to get a custom ROI estimate including all incentives.
And for help assessing local rebates and programs in your Indiana utility territory, consult the Database of State Incentives for Renewables and Efficiency. Their experts can walk you through every available offering.
I hope this guide has shown that with the right solar incentives, Indiana homeowners can start harnessing free power from the sun quickly and affordably! Please reach out with any other questions.
