Solar Resources for Local Governments

Solar PV can be a solid financial decision for your taxpayers, a critical kick-start to a local solar market, and an important leadership statement.  This page is meant to consolidate resources relevant to local governments in Iowa considering solar PV projects. Many of these resources are also relevant to other forms of renewable energy and to others interested in solar, especially other non-taxable entities. If your local government has installed renewable energy and is willing to be listed and contacted by others, please send us your information.

Establish a key point person within your entity, define a work team (facilities, financial, Board rep, etc), evaluate siting and ownership options, and use the solar contractor/developer base and your peer local governments as resources.

General Resources

Tax and Financial Incentives

Local governments may own systems outright, or choose to take advantage of tax incentives via third party ownership (covered in the next section). This is not an exhaustive list, but covers the most important and broadly applicable incentives.

  • Iowa DSIRE is the most comprehensive source of incentives and policy that support energy efficiency and renewable energy nationwide. All the opportunities listed below can also be found here.
    • Net Energy Metering allows solar owners to feed surplus power to the grid and receive one-to-one kWh credit.
    • The 10% Federal Business Energy Investment Tax Credit can be claimed by third party owners and (partially) passed along to customers.
    • Iowa has a solar system investment tax credit (DSIRE page here) currently worth 60% of the federal business tax credit (18% of total costs) up to a maximum of $20,000/project, and a production tax credit worth $0.015/kWh for 10 years (cannot be used together). Both were expanded in the 2015 legislative session and can be used by third party developers (with partial savings passed to the customer) but may still be oversubscribed.
    • Solar systems are eligible for depreciation (via the Modified Accelerated Cost Recovery System, or MACRS) of business property cost basis, which is another very significant financial incentive available to taxable entities and thus, to local governments only via third party ownership. If you work with a developer, have them explain how depreciation and tax credits are resulting in lower installed costs to you. The IRS Publication 946 is the authoritative guide, while the SEIA and this legal blogprovide good overviews.
    • Iowa’s Alternate Energy Revolving Loan Program is run by the Iowa Energy Center and offers 0% financing on up to 50% of project cost (up to one million).
    • The USDA Rural Energy For America Program offers competitive grants (up to 25%) and guaranteed loans on renewable energy systems, which a third party owner/developer could apply for.

Third Party Ownership

Third party power purchase agreements (3P-PPA) are mechanisms for 1) non-taxable entities to gain at least some of the benefits of tax incentives, and 2) any customer to purchase solar power directly from an on-site system without the up-front investment necessary to build and own the system. In 2014 the Iowa Supreme Court declared the PPA model a legal and viable option in Iowa, though the investor-owned utilities are current refusing net metering to PPA customers, an issue currently in front of the Iowa Utilities Board.

The Interstate Renewable Energy Council has recently produced an excellent toolkit to help local governments with solar financing, focused on the PPA model.

The US Department of Energy National Renewable Energy Lab has produced a set of standard contracts for power purchase agreements.

Other public entities that have executed 3P-PPA agreements in Iowa will likely be some of the best resources, and the actual PPA agreements are likely to be public documents as well.

Examples of Public Entity Solar in Iowa

(Have a solar system? Send us your details and especially contact information.)

Johnson County has added four solar PV systems to their facilities since 2015: three ground-mount and one roof-top for a total of 330 KW: www.johnson-county.com/solar. In 2016, the County won 1000 Friends of Iowa Best Development Award for Innovative Leadership for their solar efforts, including adding a soil quality restoration project and low-mow grass to the Administration ground-mount project.  Contact: Planning, Development and Sustainability Department at greenteam@co.johnson.ia.us or 319-356-6083.

The City of Dubuque was the first to attempt a 3P-PPA with Eagle Point Solar, which was challenged by Alliant Energy, and resulted in the Iowa Supreme Court decision validating 3P-PPA use in Iowa: contact City Manager.

WACO School District may be the first in the state to be near 100% solar powered, thanks to multiple phases of construction and diverse ownership arrangements: contact Superintendent Darrell Smith.

Luther College (not a public entity but a non-taxable entity faced with similar challenges) installed a 280KW array in 2012 under a lease agreement, and is currently installing an additional roughly 800KW under a 3P-PPA agreement: contact Jim Martin-Schramm.

Iowa Solar PPA Developers

Note, many electrical firms are now also solar installers, and some are considering entering the “developer” space and offering 3P-PPA structures. It is a field in flux.

Eagle Point Solar, Dubuque

Moxie Solar, North Liberty

Blue Sky Solar, Dubuque

SiteGen Solar, Cedar Rapids

Are you a solar developer in Iowa offering 3P-PPA services to local governments and other entities? Contact us.

Relevant Policy

Changes to net metering and other “distributed generation” issues are being considered by the Iowa Utilities Board open docket NOI-2014-0001. Our web page provides background and comment guidance for the most recent round of questions. We encourage all entities to submit comments as long as the docket is open, even if interim deadlines appear to have passed.

Freeing the Grid grades states on their net metering and interconnection policies, and provides context for where Iowa fits relative to our neighbors and the nation.

Utilities claim that solar customers, by reducing energy purchases, are not paying their fair share of infrastructure costs and thus requiring cross-subsidization by non-solar customers. This claim fails to recognize that distributed solar also provides many benefits (or subsidies) to the utility and grid including contributing power during periods of peak demand, reducing transmission losses, avoiding utility investment in new generation, and frequency and voltage regulation. Determining this true “Value of Solar” (VOS) may represent a future alternative to net metering. A VOS is already in use in Minnesota, in Austin, TX, and under study across the country. A Feed-In-Tariff is another approach to placing specific value on solar (and other renewable energy) generation, and establishing certainty via long-term contracts. It is the most successful solar incentive globally, and is worth considering in Iowa.

shared-solarCommunity or Shared Solar is the fastest growing segment of the solar industry. Considering fewer than half of utility customers have an adequate site for “behind-the-meter” solar PV, shared offsite arrays can allow everyone the opportunity to participate.

Sharedrenewables.org gives a snapshot of state-level policy, the Interstate Renewable Energy Council has developed model rules for shared renewables for states and regulatory bodies to follow, and our neighbors to the north have the most active program in the country. The time is right for shared renewable legislation in Iowa.