Idaho is renowned for majestic wilderness, scenic beauty and an abundance of natural resources. However, renewable solar energy has yet to take hold as a priority for the state‘s policymakers and utilities. With average retail electricity rates of just 10.57 cents per kWh already on the low side nationally, what motivation do Idaho homeowners have to install rooftop solar panels?
As it turns out, between federal tax incentives, net metering potential and substantial long-term power bill reductions, going solar can still pay dividends for qualified Gem State residents. This guide will break down exactly how to capitalize on the savings opportunities solar currently offers within Idaho‘s limited renewable energy landscape.
Overview of Solar Power Potential and Economics in Idaho
At first glance, Idaho seems primed for a rooftop solar boom – it ranks 16th nationally averaging 4.7 hours of peak daily sunlight across the state and has vast rural areas with an abundance of viable installation spaces. Plus, nearly 65% of households could support solar panel systems from an ownership, financial and sunlight access standpoint.
However, average retail electricity rates have held relatively low here for years at around $0.10 per kWh, giving residents less incentive to seek alternatives to traditional utility providers.
With substantial upfront equipment and installation costs to go solar in Idaho, faster payback periods through utility bill savings become crucial. So what options exist currently to help improve solar panel return on investment for interested homeowners?
Breakdown of Solar Incentives Currently Available
While state support remains underwhelming to date, there are still a few helpful incentives Idaho residents can utilize to reduce overall solar costs:
| Incentive | Overview |
|---|---|
| Federal Solar Tax Credit | 26% system cost credit through 2023, phasing down by 2033 |
| Idaho State Solar Tax Deduction | Up to $5k deduction per year over 4 years |
| Net Metering | Available from major utilities but not mandated |
Given the situation, navigating the federal tax credit properly becomes critical for maximizing Idaho solar savings. Let‘s explore each of these incentives more closely.
Federal Solar Investment Tax Credit
Without question, the 26% federal solar tax credit (ITC) provides the most lucrative savings opportunity for Idaho homeowners in 2023. This credit currently reduces your federal tax bill by 26% of total system costs for residential arrays installed this year.
Based on the rough average cost of $3 per Watt in Idaho, that could mean $3,510 back on a typical 5 kW system or $6,930 back on a large 10 kW system. Quite compelling, even in a state with minimal electricity rates!
Try our solar tax credit calculator to estimate savings by system size
While always consulting a tax professional before filing is wise, claiming the ITC is reasonably straightforward:
- File for credit on next tax return after system is activated
- Must own solar array (no leasing)
- Primary residence only
- New equipment only
Homeowners considering solar panels should move quickly to capitalize, as this credit will incrementally step down each year through 2034 before phasing out completely:
| Year | Federal Solar Tax Credit |
|---|---|
| 2023 | 26% |
| 2024 | 26% |
| 2025 | 22% |
| 2026 | 22% |
| 2027 | 18% |
| 2028+ | Expires |
Clearly, federal policy remains quite favorable currently, making 2023 an opportune year for Idaho residents to pursue solar power as a substantial money saver.
Idaho State Solar Tax Deduction
Complementing the federal ITC, Idaho offers a relatively unique solar incentive – a 4 year state income tax deduction capped at $5,000 per year related to solar system costs.
Ultimately over the first 4 years post-installation, homeowners can deduct up to $20,000 cumulatively from their state taxable income when calculating owed state income tax. For the average household, this should translate to ~$1,500 in total tax savings depending on income level and system size.
To qualify for this deduction, you must:
- Purchase and install new solar array on residential property
- Itemize solar costs on state tax returns
- Deduct no more than $5k per year
Unlike some states that have capped their solar incentives after reaching participation targets, Idaho‘s deduction should remain available to all eligible homeowners that move forward with solar installations.
So while not as robust as an equivalent state tax credit, this deduction still allows Idaho residents to recoup roughly 5% back on the total costs over time by reducing state income taxes owed. Helpful, but just one piece of the savings equation.
Net Metering to Offset Ongoing Electricity Costs
Beyond upfront incentives, qualified Idaho homeowners can utilize net metering through their local electric utilities to reduce bills over the long run. This allows solar customers to export any excess power generated from their panels back to the grid in return for energy credits on their monthly statements.
Most major utilities in Idaho offer some form of net metering already, although programs can vary widely in reimbursement rates and specific policies.
| Provider | Net Metering Rate |
|---|---|
| Idaho Power | 10.8¢ per kWh (residential) |
| Rocky Mountain Power | 8.4¢ per kWh (Schedule 135 residential) |
| Avista Utilities | 10.7¢ per kWh |
Rates above as of 2/2023 but can fluctuate over time
Based on average solar production data in Idaho‘s climate, a 5 kW rooftop system could expect to produce ~625 kWh monthly. Assuming 75% of that is net metered back to the grid at ~10¢ per kWh would result in ~$56 in monthly bill credits.
$56 per month adds up to ~$650 yearly in net metering savings – not insignificant by any means. Over the 25 year lifespan of a solar array, net metering in Idaho could save upwards of $15,000.
The key takeaway? While state support may be lacking, federal and net metering savings together can still generate compelling return on investment timelines for patient Idaho homeowners.
Buying vs. Leasing: The Right Solar Strategy
Given the substantial upfront investment solar can require, some homeowners consider leasing arrangements that allow for $0 down payments and predictable monthly equipment rental fees on panels. However, leasing simply doesn’t make financial sense given Idaho‘s current incentive landscape.
Why? Because only solar panel system owners can access critical tax credit savings that account for 25-30% of overall costs in Idaho. Additionally, leased systems often require locking into 20+ year contracts that end up costing thousands more overall compared to buying that same capacity outright.
To illustrate this point, let‘s analyze total 20-year costs of buying vs leasing a 5 kW solar array:
| Solar Purchase | Solar Lease |
|---|---|
| Initial Cost = $15,000 | $0 down |
| Federal tax credit = $3,510 | $0 tax credit savings |
| Out-of-pocket after ITC = $11,490 | |
| 20 years of loan payments on remaining $11,490 = ~$17,000 | 20 years lease payments = ~$29,500 |
| Total 20 Year Cost = ~$28,500 | Total 20 Year Cost = ~$29,500 |
Clearly, the lack of qualifying for federal tax credits under a standard lease agreement drastically shifts the equation away from leasing in the Idaho solar market.
For the substantial majority of Gem State residents, buying solar panels outright (or financing the purchase) will prove the far more prudent path forward both ethically and economically. The key will be taking advantage of federal tax credits before they decrease in 2024 and beyond.
Who Stands to Benefit Most from Idaho Solar?
Given the information covered, which Idaho homeowners make ideal solar power candidates positioned to maximize savings potential right now?
In no particular order:
- High electricity consumers – Larger homes with bigger utility bills offset more by producing their own solar power
- Climate conscious residents – Regardless of immediate savings, solar aligns values around sustainability
- Rural locality – In remote areas, solar can provide greater independence from the main energy grid
- Longer-term homeowners – To see complete ROI on solar, plan to stay 10-15 years in your home
For Idaho residents fitting one or more of those categories, solar panels purchased upfront before federal tax credits phase down could prove a shrewd investment in energy independence and lowered home expenses over time.
Key Takeaways on Idaho Rooftop Solar Savings
Hopefully this guide provided a helpful overview of navigating the solar landscape in Idaho’s currently limited renewable energy environment. To recap:
- Leverage 26% Federal Solar Tax Credit before it steps down in coming years
- Take advantage of Idaho‘s 4 year state income tax deduction
- Project utility savings accurately from net metering incentives
- Focus on buying not leasing to maximize ownership tax benefits
While state support may need time to catch up, Utahns have opportunities right now to capitalize on the smart grid-tied battery savings potential solar energy offers. Discuss your circumstances with qualified local solar professionals for tailored guidance.
