Idaho solar rebates and incentives: 2024 guide

Solar panel systems in Idaho are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in Idaho.

As an Idaho homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The three below are some of the most impactful ways to bring down your solar costs.

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

Idaho Residential Alternative Energy Tax Deduction

After your solar installation is complete, you can deduct a percentage of your system's cost from your taxable income for the first four years. The deduction can't exceed $5,000 each year and follows the schedule below:

• Year one: 40% of your system's cost

• Year two: 20% of your system's cost

• Year three: 20% of your system's cost

• Year four: 20% of your system's cost

Idaho State Energy Loan Program

For some, financing can be the biggest barrier to going solar. Idaho makes it easy with its State Energy Loan Program, which can be used for home energy upgrades including solar panels, insulation, windows, HVAC, and more. The interest rates vary depending on the loan you select, but won't exceed 7%. You can choose from the following options:

• 36-month, 3% loan

• 60-month, 5% loan

• 84-month, 7% loan

Unfortunately, Idaho doesn't offer any sales or property tax exemptions for solar.

Avista

If Avista is your utility company and you connect your solar panel system under 100 kW to the grid, you can benefit from net metering, one of the best solar panel incentives. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. 

When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. The credits won't roll over indefinitely, though. On March 31st of each year, you'll forfeit any unused credits from the previous 12 months.

Rocky Mountain Power

Rocky Mountain Power technically switched from net metering to net billing back in November 2020, but it didn't come with many changes for residential customers. If you install a solar panel system under 25 kW at your home, any credits you earn will still be worth the full retail electricity rate, just like with net metering. There's no limit on how long you can roll over the credits. 

Idaho Power

In December 2023, the Idaho Public Utilities Commission approved Idaho Power to shift from net metering to net billing. Unlike Rocky Mountain Power, Idaho Power's transition to net billing lowered the value of credits, meaning you won't save as much on your electric bills with solar panels now. 

It's similar to what just happened in California: Credits are now based on the avoided-cost electricity rate instead of the retail electricity rate. The Sierra Club estimates that Idaho Power's switch to net billing reduces solar export compensation by about 32%. 

The new rates took effect on January 1, 2024. If you installed or purchased your system by December 20, 2019, you're grandfathered into net metering until December 20, 2045. Otherwise, you're already receiving lower compensation and might consider adding a battery. 

Idaho doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh are eligible for the 30% federal tax credit. Batteries are great for increasing your energy independence and providing protection from blackouts in Idaho.

If Idaho Power is your utility company, you should strongly consider installing a battery with your solar panels. That way, you can store excess solar energy in your battery for use later on instead of sending it to the grid.