Idaho Solar Rebates and Incentives

How Much Can You Save on Solar in Idaho?

• Idaho offers various solar rebates and incentives, including a Federal solar tax credit of up to 30%.
• Net metering is offered by three major utility companies in Idaho
• Property Tax Exemption is available for commercial establishments that produce renewable energy.
• For the Idaho residential alternative energy tax reduction, applicant must own a house in Idaho

Idaho Energy Profile

Idaho receives an average of 4251 kilojoules of sunlight each year. The state generates 644 megawatts of energy, enough to power approximately 83,500 homes.

As of 2023, there are 16 solar installations across the state of Idaho. With an investment that approximates $ 1 billion, the solar capacity is expected to have increased by at least 38% over the next five years.

Renewable energy generation and consumption in Idaho are encouraged by an established framework of rebates and credit programs. Here is a table that summarizes some of these programs in their most essential details:

Idaho Solar Tax and Incentives at a Glance

How Affordable is Electricity in Idaho

According to the US Energy Information Administration (EIA) costs about 8.17 cents per Kilowatt hour, which is relatively low compared to other states in the US. The affordability can be partly attributed to the large renewable energy portfolio.

As of 2023, solar panels cost $2.93 per watt in Idaho without the Federal tax credit. Going by this value, a 6kw solar panel costs $17,580 without the Federal solar tax credit. For homeowners that leverage the solar tax credit in Idaho, per watt, a solar panel costs $2.06. A 6kw solar panel in Idaho, therefore, costs $12,360 with federal solar tax credit.

With the Federal tax credit, homeowners can save approximately $5,274 on a 6kw solar panel purchase and installation.

As of 2020, it was estimated that one person in Idaho consumes energy that averages 297.7 million British Thermal units across sectors. For residences, the energy consumption per capita was estimated to be 72.3 million British Thermal Units. Commercially, the state had a total energy per capita of 48.6 million British Thermal Units in 2020.

Renewable Energy in Idaho

As of 2023, Idaho generates approximately 70% of the energy it consumes. The state has an advanced renewable energy portfolio, with about 74% of its power generated from renewable sources. The major sources of this energy include hydroelectricity, geothermal sources, wind energy, biomass, and solar sources.

Hydro sources contribute the most significant portion of Idaho’s energy. In 2021, about 51% of the state’s electricity was generated from hydroelectric sources. Out of the first ten power plants by size, six are hydroelectric power plants.

As far as hydroelectricity is concerned, Idaho has a three-dam complex on the deepest river gorge in Northern America –the snake river. The state’s largest conventional privately owned power plant is located to the extreme west of the state, at the Idaho-Oregon borders. The snake river also houses the state’s wind facilities, which generate about 16% of the state’s electricity.

Up until 2023, the state has no legislation that limits the amount of electricity that retailers can get from renewable sources. Also, Idaho does not have a renewable portfolio standard for energy purchases. Going by that, homeowners can purchase 100% of their electricity from renewable sources.

Federal Solar Tax Credit in Idaho

The Federal Solar tax credit, also known as the Investment tax credit, is a financial incentive available to taxpayers in the United States. The Investment tax credit is geared toward encouraging the adoption of solar energy systems in the United States. It was originally introduced in 2005, and it was set to expire in 2021.

However, the United States extended this incentive and modified its parameters in 2021 through the Consolidated Appropriations Act. Part of the modifications includes new deadlines and new tax credit percentages.

Taxpayers in Idaho are eligible for a 30% tax credit for solar energy systems installed between 2022 and 2032. From 2023, Taxpayers are eligible for only a 26% tax credit. The tax credit further falls to 22% in 2034.

Solar energy systems bought and installed after 2035 are not eligible for the solar tax credit. Essentially, homeowners can install solar energy systems at considerably lower prices. Poor-income families can also totally offset the cost of installation after activating federal and state solar energy incentives.

According to the United states department of energy, the federal solar tax credit covers the following costs:

• The contract cost of labor. This cost covers onsite preparation for the installation. It also includes Offsite assembling and coupling of the energy system. Most importantly, it covers the cost of installation itself.
• Cost of permit, inspection, and development.
• The cost of equipment, including wiring and mounting equipment, inverters, and batteries. It also covers the cost of the tools and equipment necessary to get the solar system functioning.
• The cost of storage batteries. Taxpayers can remit solar tax credits a year after they install their photovoltaic system.
• The taxes on sales for all expenses considered eligible in the legislation.

Eligibility

The following are the necessary criteria to be eligible for the Federal solar tax credit as a homeowner in Idaho:

• Ownership: To claim the Federal solar tax credit, you must legally own a solar energy system. Ownership could be either by purchase, inheritance, or by lease. Once you lease off a property, it does not qualify for the solar tax credit.
• Installation Timeline: Solar energy systems installed after 2034 do not qualify for a solar tax credit. To qualify, your solar energy system must be operational before December 2034 unless the legislation is repealed.
• Type of Energy system: The solar energy system must generate electricity for residential, industrial, or commercial consumption. Heating, bathing, and pool systems do not qualify for a renewable energy tax credit.
• Tax Liability: As a taxpayer, you must possess enough tax liability to be credited against. If a homeowner is not sufficiently liable, the renewable energy tax credit can be rolled over for four years.
• Safety Requirement: To be eligible, your solar energy system must be certified as safe and functional according to the minimum safety and regulatory requirement. The solar energy system must be approved for operation by the necessary state, local and Federal agencies. Unsafe panels do not qualify for the Federal solar tax credit.

How do I claim the Federal Solar Tax Credit in Idaho?

Here are the steps to take to claim the Federal Solar Tax credit as a taxpayer in Idaho:

Step 1. Confirm you are Eligible: It is important that you pay your taxes regularly. Also, depending on the amount you apply for, you may need to have good credit information. Finally, check your panel against the criteria above to confirm your eligibility.

Step 2. Gather the Necessary Documentation: To apply for the solar tax credit, you need documents that confirm ownership. This includes purchase and installation documents, receipts, and property tax assessment documents. These documents are necessary to evaluate the eligibility, the cost of installation, and the appropriate amount in dollars.

Step 3. Fill out the IRS 5695 form: You need to request the residential energy credits form from the tax assessor’s office and complete it. This form is necessary to estimate your tax credit and determine the amount you are eligible for. The form also collates details about your solar energy system.

Step 4. Fill out the IRS 1040 form: The IRS 1040 is also known as the primary tax form. The form is necessary to estimate your income tax return. It also collects your taxpayer's information for assessment.

Step 5. Submit at the Tax Office: After filling out the necessary forms, submit them to the local tax assessor’s office alongside the necessary documents. Depending on the situation, you may want to use the expertise of an accountant to file your taxes.

Net Metering in Idaho

Idaho does not have a Net metering policy for residences or commercial establishments. Also, the state does not have a law governing interconnection or mandating utilities to offer net metering to consumers.

However, Rocky Mountain Power, Idaho Power, and Avista utilities – which constitute the major utility companies in the state – independently offer Net metering to the consumers.

The framework of net metering is similar across these utility companies. Surplus energy is credited back at the full retail rate to the next electricity bill of the consumer. The excess energy is credited per Kilowatt hour, and it is used to offset the electricity bill of the homeowners in the state.

While Avista has a rollover policy, the remaining two utility companies have no specific policies. According to the Avita utility company, surplus credit is reverted to the utility company after 12 months.

How to Enroll for Net Energy metering in Idaho

To apply for Net Metering in Idaho at any of the utility companies, you must:

• Ensure that you are Eligible: At the very minimum, your solar energy system must meet the minimum safety requirements. You must also be registered with any of the three major utility companies. Finally, you should check with your company for their specific eligibility requirements.
• Apply With the Utility company: Visit the website or office of your utility company to request the Net metering form. Usually, the forms request information about the size, capacity, and type of your solar energy system. Lastly, depending on the company, you may need to fill out an interconnection agreement.
• Install a Bi-directional Meter: Ideally, the utility company should guide you on this. The bi-directional meter allows you to read and record the energy flow between your energy system and the power grid. The meter also confirms interconnection.

Idaho Property Tax Exemption

Idaho has no property tax exemption program for residential solar energy systems. However, the state has tax exemption schemes for renewable energy producers. The exemption is backed by legislation introduced in 2007.

In 2008, the legislation went into full function. Initially, the scope of the legislation only covered wind energy production. In 2016, under H.B. 534, the exemption expanded in scope to accommodate solar energy systems.

Commercial establishments that produce renewable energy are exempted from property taxes on their energy systems. However, there is a caveat: wind energy producers pay a 3% tax, and solar energy users pay a 3.5% tax. This is a significant reduction from the 100% tax they would have originally paid. This tax exemption scheme is solely available to commercial establishments.

Applications for the tax exemption are made to the tax assessor’s office. Eligibility criteria may cover the safety of energy systems, ownership, and presence in the state. Other criteria may include tax records, permissions, certifications, and industry affiliations. To apply, documents like the primary tax form, the property exemption form, and purchase invoices may be necessary.

Idaho Residential Alternative Energy Tax Reduction

Instead of a tax exemption, Idaho offers its taxpayers an income tax deduction that totals 40%. All taxpaying residents of the state are eligible for this tax reduction by the state laws.

With this, the state aims to reduce its carbon footprint and encourage the private and individual generation of renewable energy. That is, 40% of the total cost of the property tax estimated on a renewable energy system is deducted. The energy tax reduction can be applied in the same year of installation or afterward.

This renewable energy incentive in Idaho covers all alternative energy systems, including systems used to heat water. Alternatively, 20% can be deducted from the tax cost of a solar energy system for an additional period of three years. Each residence can claim a $5000 minimum tax reduction. The maximum claimable amount in tax reduction is $20,000.

Eligibility

To qualify for the Idaho alternative energy tax reduction program, you must:

• Own a house in Idaho and reside in it
• Have a straight tax record
• Own a renewable energy system. Qualified energy systems may be wind, solar, or geothermal.
• Ensure that the renewable energy system meets the minimum safety requirements. To qualify for a tax reduction, the North American Board of Certified Energy Practitioners (NABCEP) must certify the solar panel.

How to apply for the Idaho Residential Alternative Energy Tax Reduction

Follow these steps to apply for the Idaho residential alternative energy tax reduction:

• Install a qualifying renewable energy system. You must ensure that a licensed contractor installs the system. That way, you are more likely to avoid regulatory complications.
• Obtain the necessary documents. It is important that you get purchase receipts, tax information documents, and installation invoices.
• Contact the Tax assessor’s office in your county or local government. You will be provided with the tax reduction form. You may also need to fill in the primary tax form.
• Submit the form and the documents to the tax assessor’s office. Usually, the office gives you a comprehensive list of the documents you should provide.
• After submission, the county’s tax assessor reviews your application and gives you feedback on the result.

State Sales Tax Exemption in Idaho

Idaho does not have a State sales tax exemption. However, there are other Idaho renewable energy rebates. One of these rebates is the Idaho State Energy Loan Program. Under this scheme, the office of the Energy Market Regulation, in collaboration with the Department of Environment Quality, offers low-interest loans to residents, commercial establishments, and industries for executing efficient energy systems.

Some of the important criteria include project size, purpose, scale, and scope.

For single-family houses, the minimum available amount in loan is $1000. Single-family housing is eligible for a $50,000 maximum loan amount. The maximum available amount for commercial establishments, industries, multi-unit families, and agricultural establishments is $150,000.

According to the state government, consumers may combine the loan with other energy efficiency incentives to offset costs and build cheaper systems. With this loan program, homeowners can install renewable energy systems at a very affordable cost.

Ownership is another important application criterion. Applicants must legally own the renewable energy system to qualify for the loan. They must also have good financial records. The loan is only approved for credit-worthy consumers.

Most importantly, the applicants must demonstrate the ability to repay the loan. Applicants with excellent financial standing are prioritized for loan disbursement. Finally, the project must be deemed feasible by the disbursement body. Unrealistic projects are not considered for loan disbursement.

Factors to Consider Before Solar Installation in Idaho

Despite the advanced portfolio of solar energy incentives in Idaho, solar installations still pack a considerable financial punch. It is, therefore, important that thorough considerations are made before installation. Here are some of the most important factors to consider:

• Roof: According to the United States Department of Energy, solar panels are more efficient at angles between 15-30 degrees. Solar panels are also optimal when they face southward towards the sun.
• Laws: Ideally, State laws explicitly prohibit homeowners associations from limiting solar installation. However, homeowners and local authorities still wield considerable influence over solar panel installation. For instance, homeowners or real estate managers may have roof usage policies. It is important to be certain of these factors before installation.
• Permits and Licenses: You should consider the necessary licensing and permits you may need to obtain for solar installations. The cost and the number of permits are dependent on your county or local government authority. You may also want to consider the financial implication of these possible regulatory bottlenecks.
• Location: Your house’s location and roof design may affect the amount of sunlight your panel may receive. You may want to consider the presence of shades and the distance of your house to coastal areas or rivers. It may be helpful to consult a professional to decide on panel configuration when it matters.

Idaho Profile

Idaho is a state in the Pacific Northwestern part of the Western region of the United States. By size, it is the 14th largest state in the United States.

However, it is the 13th least populous and the 7th least dense of all states in the country. The most recent census estimated the state population at about 1.8 million.