Indiana Solar Power: Check Your Savings, Costs, Tax Breaks, Incentives and Rebates
Indiana gets a decent amount of sunlight over the year, up to 5 peak sun-hours per day to the south of the state, and all of it represents potential solar energy savings for homeowners who invest in solar power!
The state capital of Indianapolis, for example, averages at around 4.5 peak sun-hours per day throughout the year and peaks at 6 peak sun-hours during July.
Other factors improving the outlook for solar power in Indiana are a favorable net metering and interconnection policy, as well as having both a property tax exemption and a sales tax exemption.
Combine this with the 30% federal solar tax credit, and going solar in Indiana actually makes you pay less taxes!
Return of Investment for Residential Solar Power in Indiana
The return on investment for a PV system is affected by installed capacity; larger projects are more lucrative because economies of scale bring down the cost of each installed kilowatt.
For most homes, a 5-kilowatt system offers a great balance between cost and energy output, so we will illustrate the project financials by assuming you install a PV system of that capacity.
- With no incentives, the system would cost you around $21,000. - However, the investment tax credit from the federal government removes 30% of your outlay as a tax credit, which is equivalent to subtracting around $6,300 from your net PV system cost. - In addition, you can expect to subtract around $750 from your electricity expenses over the first year. - Considering the tax credit and first-year savings, your net cost of going solar in Indiana is around $14,000. - The payback period you can expect is 16 years. - Your property will have increased in value by around $15,000, and you will not be taxed more for it. - The environmental benefit of your PV system will be comparable to planting more than 100 trees per year!
- With no incentives, the system would cost you around $21,000.
- However, the investment tax credit from the federal government removes 30% of your outlay as a tax credit, which is equivalent to subtracting around $6,300 from your net PV system cost.
- In addition, you can expect to subtract around $750 from your electricity expenses over the first year.
- Considering the tax credit and first-year savings, your net cost of going solar in Indiana is around $14,000.
- The payback period you can expect is 16 years.
- Your property will have increased in value by around $15,000, and you will not be taxed more for it.
- The environmental benefit of your PV system will be comparable to planting more than 100 trees per year!
The payback period of solar power in Indiana is extended due to the cheap electricity, costing $0.12/kWh on average.
However, these low prices are possible thanks to power plants burning fossil fuels such as coal, which means that the energy is cheap in cash but expensive in terms of environmental impact.
*Remember that every home is unique, to got a better idea about how much you will speciffically pay for the installment and upkeep of a solar system we recomment you visit our Pv panel calculater.
By going solar, you can help save the environment and still achieve considerable savings for doing it: expect a net profit of more than $14,000 over the 25 years of PV system ownership.
In addition, if stricter regulation for power plants fired by fossil fuels come into play, energy prices will rise and you will save even more cash in the form of avoided costs!
Keep in mind that all of this information is for the average conditions for solar power in Indiana.
- The south of Indiana receives slightly more sunlight than the north of the state. - South-facing rooftops receive more sunlight than those facing north. - When there are no significant obstacles capable of blocking sunlight, your solar PV system produces more energy throughout the day.
- The south of Indiana receives slightly more sunlight than the north of the state.
- South-facing rooftops receive more sunlight than those facing north.
- When there are no significant obstacles capable of blocking sunlight, your solar PV system produces more energy throughout the day.
These conditions represent the optimal scenario for solar power in the state of Indiana, but their absence is not necessarily a deal-breaker.
A great web resource to know the exact sunlight available at your location is the NASA Atmospheric Science Data Center, where you can input your coordinates to get detailed data tables for the available sunlight month by month, according to the tilt angle of solar panels. Yearly average values are also available.
Indiana Solar Power Incentives, Tax Breaks and Rebates
Although Indiana does not have a Renewable Portfolio Standard, there is a similar program, the Comprehensive Hoosier Option to Incentive Cleaner Energy (CHOICE).
The goal of the program is to obtain 10% of the energy from renewable sources by 2025, but as implied by its name compliance is voluntary for local utilities and so far none have signed up for it.
Fortunately, there are attractive tax breaks that help compensate for the lack of an RPS: solar power in Indiana is exempt from both the property tax and the sales tax.
Another strong point in favor of going solar in Indiana is the net metering policy in the state, which requires utilities to give you full credit for any kWh you put back into the grid, and there is no expiration date for accumulated credits.
Indiana Tax Credit
Although there is no state-specific tax credit for Indiana, the federal tax credit basically reduces the cost of your residential PV system by 30%.
The great thing about this tax credit is that it applies even if you go solar through a loan with $0 down: you get a sizable tax deduction in your next tax declaration even you still owe your PV system, and then you can use the money that would have been used for taxes to cover the first loan payments!
Indiana Tax Exemptions
Although the state of Indiana gives you no tax credits, at least you are not charged any taxes when you go solar!
Neither the sales tax nor the property tax apply when you purchase a residential PV system. The sales tax exemption translates to direct upfront savings, and the property tax allows you to increase the value of your home without being taxed more for it.
Indiana Electricity Rates
The average price of electricity in Indiana is $0.12/kWh, just below the national average, but unfortunately this is achieved with ample use of fossil fuels for power generation.
Going solar will save you over $14,000 over the 25 years of service life of your PV system, and you will also have contributed positively to the environment.
Is There Net Metering in Indiana?
The legal framework for net metering in Indiana is excellent:
- Utilities are required to give you full credit for any kilowatt-hour of energy you export into their power grid. This means that, if you don’t use the full output of a PV system during a specific month, you still save 100% of the cash value of the energy produced.
- Credits can be rolled over indefinitely, which is a great way to go fully solar without actually going off-grid: size your PV system to generate a surplus during the summer, and roll over all of those credits to cover the deficit in energy output during the winter! In other words, the law requires the utility company to be your battery for free if you go 100% solar.
To complement the net metering policy, there is also a favorable interconnection policy: any PV system below 10 kilowatts of rated capacity, which includes nearly all residential systems, can connect to the grid without paying any fees and without meeting any complex requirements.
You may be required to install an external disconnect switch, but only if considered necessary in specific cases.
Is there a Feed-in Tariff in Indiana?
There is no legal framework for a feed-in tariff in the state of Indiana, but if you are a customer of the Northern Indiana Public Service Commission (NIPSCO) today is your lucky day!
They offer you a feed-in tariff of 0.17 $/kWh, which is 5 cents higher than the local electric rates. In short, this means that PV system owners in Indiana who get their power from NIPSCO will save 42% more cash for a given kilowatt-hour production.
Are There $0 Down Payment Financing Options in Indiana?
Solar leasing and power purchase agreements (PPAs) are not available in Indiana, which means the only option for installing a solar PV system without paying any cash upfront is to take a loan, ideally a low-interest HELOC (home equity line of credit) with a term of 10-15 years.
Paying for a solar PV system with a loan allows you to make an interesting financial maneuver: you don’t pay any cash down, but are entitled to a huge tax break of 30% within one year!
Then, you can use that money to start paying the loan, and essentially you go solar without a huge dip in your finances, which is the case for a cash purchase.
Of course, there is no free lunch: a loan involves paying interest, and this reduces the total lifetime savings of a solar PV system.
Cash Purchase VS Loan: What’s Best for Indiana Homeowners?
Your cash availability, the payback period you are willing to assume, and the equity owned in your home are key factors when you are trying to decide between a loan and a cash purchase when going solar in Indiana:
- Purchasing a PV system in Indiana in cash involves assuming a 16-year payback period to save an extra $9,000 over 25 years. This is the recommended option if you have the cash availability.
- Purchasing a PV system in Indiana through a loanresults in less lifetime savings, but you can go solar for $0 down. If you are unwilling to spend $14,000 upfront but have a lot of equity in your home, this option is for you.
Keep in mind both options are viable, and in both cases you will get energy at a lower cost of energy compared to the scenario where you don’t go solar and purchase it all from the grid.
What is the Solar Power Installation Process in Indiana?
Having a simple interconnection policy makes the solar power installation process much less complex, with the same rules across the board regardless of the electric utility company from which you purchase energy.
If you have already taken the decision to install a solar PV system for your home, the procedure to follow is very simple:
2. Talk with trusted solar contractors near you to get accurate quotes.
3. Compare quotes (we recommend you get at least three) and choose the best option for you.
4. Have your contractor install the PV system, and enjoy clean power while helping the planet.
Keep in mind this whole article is based on a specific scenario: installing a 5-kW system that will be subject to the average sunlight conditions for Indiana.
The installation process is very quick after you sign the agreement, lasting only from 3 to 4 days.
Indiana has several strong points in favor of solar power: a favorable net metering and interconnection policy, coupled with exemption of both the property tax and the sales tax.
The state also receives plenty of sunlight, and the 30% federal tax credit rounds up the list of benefits.
Without access to solar leases and PPAs, the purchase decision boils down to choosing between a cash purchase and a loan.
The cash purchase offers higher savings at the cost of assuming a long payback period, while the purchase through a loan involves reducing your potential savings to go solar with 0 down.