Idaho is considered a prime candidate for solar energy. The state boasts over 200 days of sunshine per year and offers a cool climate with plenty of farmland available for solar installations.
Idaho is aiming for a carbon-free power sector by 2035, so what exactly is its administration doing to encourage the installation and use of solar energy?
Right now, besides the USA-wide tax credits and incentives, there isn’t anything specific for farms and agricultural businesses. Most of Idaho’s incentives are geared toward residential solar installations, such as the Residential Alternative Energy Tax Deduction and State Energy Loans Program.
However, there are a few tax incentives to be aware of that you can benefit from if you install a solar system on your farm.
Here’s what you need to know.
In a Nutshell
Before we get stuck into the details of each incentive, here’s everything you can apply for at a glance:
| Incentive | What you can get |
| REAP Grant | A grant for up to 50% of the cost of a solar installation ($1m max) |
| Federal solar tax credit | 30% investment tax credit (ITC) off federal income tax liability |
| Domestic content bonus | 10% ITC bonus if enough domestic content is used |
| Low-income bonus | 10% ITC bonus if installation is located in a low-income area and an additional 20% if classified as a qualified low-income economic benefit project |
| Property tax exemption for solar energy | All property related to a solar installation is exempt from paying property tax. Instead, a 3.5% tax is levied on all gross energy earnings. |
| Net metering | There is no mandated net metering policy in place, but Avista Utilities, Idaho Power, and Rocky Mountain Power allow net metering. |
1. USDA REAP Grant (USA-Wide)
What Is It?
The USDA Rural Energy for America Program (REAP) is aimed specifically at agricultural businesses, farms, and rural enterprises based on US soil. Funded by the IRS Inflation Reduction Act, it serves to provide grants by application of up to 50% of the total cost of a solar system (capped at $1 million).
This multi-billion dollar fund can also provide a guarantee for loans of up to 75% of the eligible cost of a solar installation project.
Applicants can request a grant or a loan guarantee, or they can apply for a combined grant and loan guarantee of up to 75% of the project’s total cost.
Time is running out on this incentive and it is unclear whether or not it will be extended. Rest assured – 8760 Solar will keep you updated on any movements when they become known.
Here are the designated application windows remaining for the USDA REAP grant:
- December 31, 2023
- March 31, 2024
- June 30, 2024
- September 30, 2024
Whichever benefit you apply for under this scheme, you must ensure that your solar project:
- Consists of commercially available technology
- Has technical merit
- Receives and passes an energy audit or assessment
- Receives and passes an environmental review
What Can You Get?
Grants:
- Must be for a minimum of $2,500 up to a maximum of $1 million
- Funds must be matched by the applicant
Loans:
- Rates are determined by the lender and can be fixed or variable
- You are required to put up 1% of the loan value as a fee
- You must also self-fund at least 25% of the cost of the solar project
Who Can Apply?
The grant is not for everyone and there is a specific criterion that you must fulfill to qualify.
If you are an agricultural producer:
- At least 50% of your gross annual income must come from your agricultural operations;
- You must not have any outstanding taxes, debts, judgments, or debarments.
If you are a rural or agricultural business owner:
- Your business operations must be located in an area with a population of 50,000 or less;
- If you are located in an eligible area, your business must be:
- A private for-profit entity (Sole Proprietorship, Partnership, or Corporation)
- A tribal corporation or business
- A cooperative
- Or an electric utility
- Your business must fulfill the Small Business Administration size standards in accordance with 13 CFR 121;
- You must not have any outstanding delinquent federal taxes, debt, judgment, or debarment.
To apply, click here and complete the relevant forms.
2. Federal Solar Tax Credit (USA-Wide)
What Is It?
There are two tax credits available that you can take advantage of once you have a solar system installed:
- 30% investment tax credit (ITC): This is a reduction in your federal income tax liability and is calculated as a percentage of the cost of your solar system.
- ITC is awarded upfront and your solar system’s performance has no bearing on the amount you receive as a credit.
- 2.75 ¢ per kWh production tax credit (PTC): Once the solar system becomes operational, you can receive a per kilowatt-hour (kWh) tax credit for the electricity you generate for ten years.
- These credits can be backdated for up to three years and carried forward for up to five years.
- Your solar system’s performance has a bearing on this credit. The better your system’s performance, the more you receive.
Technically, you should not be able to claim both credits simultaneously, unless your solar system includes battery storage. In this case, ITC is claimed for the solar installation cost, and the PTC can be claimed for the energy you harvest and store.
If you are unsure whether you can or can’t apply for both, consult the guidance issued by the IRS.
What Else Can You Get?
You can boost your ITC credit percentage if your solar installation or business fulfills the following criteria:
- Domestic content bonus: If your solar system comprises at least 40% US-produced steel, iron, and components, you can get a 10% increase on your ITC or PTC. This can be tricky to achieve, though. Make sure you check out our full article on this subject.
- Energy Community Bonus: If your solar system is installed within an energy community, you will qualify for a 10% ITC or PTC increase.
- Low-Income Bonus: If your solar system is installed within a low-income community or on Indian-owned land, you can get a 10% ITC or PTC increase.
- This amount can be further increased to 20% if your solar project is qualified as a low-income economic benefit project.
Who Can Apply?
All businesses within the USA can apply and qualify for this tax credit as long as they fulfill the following criteria:
- Your solar system must be installed on US soil or US territory soil.
- All solar equipment must be new or have had limited previous use.
- Your solar installation must have become operational in 2022 or later.
- Your equipment cannot be leased out to an entity that is tax-exempt.
- For solar projects that begin in 2033 or later, the construction phase must have started in 2033 to qualify. This is because the incentive is due to finish at the end of 2033.
To claim the ITC, you must complete and attach form 3468, and to claim the PTC, you must complete and attach form 8962. Both forms must be attached to your tax return.
Who Can Apply?
The USDA is actively accepting applications and will conduct funding competitions on a quarterly basis through September 30, 2024.
For additional information on application deadlines and submission details, please refer to page 19239 of the March 31 Federal Register.
3. Property Tax Exemption for Wind, Solar, and Geothermal Energy Producers (Idaho Specific)
What Is It?
The Property Tax Exemption for Wind, Solar, and Geothermal Energy Producers was initially established in 2007. In 2016, the qualifying criteria were expanded to incorporate solar energy.
This policy exempts you from paying any property tax on any real estate, commercial buildings, fixtures, or other property that is related to your renewable energy system.
However, instead of paying property tax, solar producers must instead pay a 3.5% tax on their gross energy earnings. Considering installing a solar system can raise property tax rates, this can be a considerable reduction in the amount of tax you have to pay.
Who Can Apply?
The property tax exemption applies to all businesses that produce wind, solar, or geothermal energy on a commercial basis. Therefore, this incentive is not for anyone who is merely producing energy for their own use.
To get the property tax exemption and pay the 3.5% gross energy earnings tax, you must file a statement with the State Tax Commission of the state of Idaho.
Net Metering in Idaho
What Is It?
Idaho does not have a mandated net metering policy in place. However, three top investor-owned utility companies have net metering tariffs in place that have been filed with the Public Utilities Commission. The three utility companies in question are:
- Avista Utilities
- Idaho Power
- Rocky Mountain Power
To participate in net metering:
- Small residential and commercial service customers must be 25 kW or smaller
- Large general service, large power service, and agriculture irrigation service customers must have a system that is 100kWh or smaller
The net metering policy operates on a 1kWh credit earned for every solar kWh that is sent to the grid. Credits earned can be carried forward either indefinitely or for a certain time period depending on the utility company.
Idaho Power has been trying to fight net metering and wants to put a less favorable policy in place based on on-peak and off-peak export rates. If it succeeds, existing net-metering customers will remain on the current setup, while new customers will have to sign up for the new structure.
Ready to Go Solar?
Even though there aren’t any significant Idaho-specific incentives for farmers and agricultural businesses to go solar, it doesn’t mean it’s not worth applying.
On the contrary, the federal tax incentives and available grants mean you can get a significant portion of your investment returned. And through the use of net metering, you can save up to 96% on your energy bills.
If you’re ready to know more about solar energy and how it can benefit your rural business, we welcome you to get in touch with our team at 8760 Solar. Although we are based in Colorado, we have our Idaho-based trusted and reputable install partner at your disposal.
Text “READY” to 719 470-0254 or via email: sales@8760solar.com and we’ll put you in touch right away.
Frequently Asked Questions
Does Idaho Offer Solar Incentives?
Idaho offers a Residential Alternative Energy Tax Deduction and State Energy Loans Program to help residents get solar energy for their homes. Where farms and businesses are concerned, there are the USA-wide tax incentives and credits, plus net metering, and a property tax exemption if you are a commercial-scale solar producer.
Does Idaho Have a Tax Credit for Solar?
The Residential Alternative Energy Tax Deduction enables residential taxpayers to save up to 40% on the cost of their solar installations. Farms and businesses that install solar can enjoy the federal solar tax credit of 30%.
Can You Get Solar for Free in Idaho?
You cannot get solar for free in Idaho. However, the available tax credits and grants, as well as net metering provided by investor-owned utilities can significantly reduce the cost.
Should I Go Solar in Idaho?
Idaho benefits from over 200 days of sunshine per year. Additionally, it has plenty of farmland and a cool climate, meaning the solar panels will be very efficient. Therefore, it is worth going solar in Idaho.
How Much Do Solar Panels Cost in Idaho?
Solar panels vary greatly in cost across brands, types, and manufacturers. Consult 8760 Solar to get a quote for your solar setup.