Iowa’s communities, especially our small, rural communities, are challenged to provide administrative services and resources. Their energy expenses (utility bills, maintenance costs, and necessary facility upgrades) are increasingly menacing.
The Inflation Reduction Act of 2022 reauthorized clean energy tax credits through 2033 for solar, geothermal, storage, and other qualifying projects for systems under 1MW in size and also enabled non-taxable entities to access those tax credits directly through a process called Elective Pay (also known as Direct Pay).
The “One Big Beautiful Bill Act” (OBBBA), enacted on July 4, 2025, requires that wind and solar projects either “commence construction” by July 4, 2026, or be “placed in service” by December 31, 2027, to qualify for federal clean energy investment tax credit.
SUCCESSFUL PROJECT EXAMPLES
- Clayton County, Iowa, installs 76kW Solar System Utilizing $49K in Direct-Pay Incentives
- Nonprofits in Allamakee County complete major energy projects
DOWNLOAD FACT SHEET for Non-Taxable Entities
CLEAN ENERGY ORDINANCE and RENEWABLE ENERGY SITING
One of the most valuable things a city or county can do for a clean-energy future is to review and adopt ordinances that facilitate smart siting for utility scale resources. Here are some ways our Iowa Energy Districts have approached this issue and implemented tax strategies that put utility scale renewable funds to work in their home district.
Renewable Resource Siting Ordinances and Best Practices
- Solar Farm Fact-Finding Task Force of Linn County RECOMMENDATIONS
These recommendations guided the collaborative work of Linn County Planning and Zoning officials, Linn Clean Energy District, and a diverse group of supporting and opposing influential community members, community leaders, and County Supervisors and staff. NOTE: While this documentation deals primarily with solar, many of its considerations also apply to utility wind siting. - Linn County ORDINANCES Regarding Utility Scale Solar Installations and Batter Energy Storage Systems
Three years of careful and unbiased analysis of siting issues of the Linn County Fact-Finding Task Force resulted in this ordinance language, which was adopted in 2023.
KEYS TO SUCCESS
- Clearly communicate neutral interest in evaluating utility scale solar. This PRESENTATION by the Linn County Task Force is a template for demonstrating a clear interest in research and data in service to the county’s best interest.
- Develop and adopt a Utility Scale Solar SCORECARD.
This RESOLUTION AND SCORECARD formally adopted by resolution of the Linn County Commissioners, creates a transparent and unbiased rating system to fairly evaluate proposed utility projects. - Ask County Commissioners for direct access to Planning and Zoning personnel.
This expedites communication and quickly uncovers utility siting issues.
FOR MORE on Linn Clean Energy District’s work on utility scale solar, please DOWNLOAD:
- MASTER OVERVIEW (with links to PowerPoint templates)
- PROJECT SUMMARY (PDF)
Tax Strategies for Utility Scale Renewable Resources
WIND
Wind energy conversion property is assessed and property tax is collected by the counties where projects are located.
In Iowa, counties may create an ordinance for special valuation of a wind energy system; this special valuation is based on the net aquisition cost. County officials decide if they will use a special valuation or a market valuation of the system. Then, they decide whether to tax the turbines as they would normally, or use Tax Increment Financing (TIF). TIF allows counties to finance community improvement projects to create economic development.
In Howard County, supervisors structured TIF and designated county bridge repair as the purpose of TIF-collected funds. “The county announced that they were going to TIF the turbines and use the revenue to fix roads and bridges (and we had LOTS of bridges in need of work),” says Amy Bouska of Howard County Energy District. Personnel went door-to-door to explain the direct improvement in transportation, particularly for farmers who had been driving out of their way to access fields during the growing season. “Everyone can see something good happening near them that the turbines are paying for.”
SOLAR
Taxation of utility scale SOLAR is two-fold:
- Iowa’s Replacement Tax
Replacement Tax consists of calculating 3 assessments of tax on electric generation, delivery of electricity, and on electric
transmission. Replacement tax liability is collected by county treasurers and distributed to local taxing bodies. - Property Tax
Utility-scale solar projects are also subject to a statewide property tax assessment, and revenue goes to the State’s general fund.
Solar arrays generate property tax revenue which is paid to counties. It can support a range of public benefits including:
-
- Roads and bridges
- Health services
- Schools
- Debt service
- Reduced need for revenue from other sources
For an easy-to-follow explanation of Iowa’s tax options for wind and solar, DOWNLOAD THIS FACT SHEET from the Clean Grid Alliance.
ADDITIONAL TAX INFORMATION from the Center for Rural Affairs:
- RESOURCE GUIDE: Taxing Utility Scale Solar Projects in Iowa
- FACT SHEET: Iowa Wind Energy Tax Revenue
- COUNTY TAX IMPACT STUDIES: Windswept Fields of Opportunity
Renewable Resource Strategic Partners
- Bluegreen Alliance
The Iowa BlueGreen Alliance unites labor, environmental, and community organizations to promote climate action and good union jobs, a just transition for workers and communities negatively affected by the shift from fossil fuels, and a seat at the table for workers and marginalized communities in decisions that shape the new economy. Our work is conducted with a focus on widely-shared prosperity and equity to ensure that the transition to a clean energy economy is accessible and beneficial to all. - Iowa Labor Center
The Labor Center conducts educational programming for workers and their organizations, both bringing workers from across the region to campus to attend our on-campus programs and taking the University to them with tailored off-campus programs. Since the Labor Center’s founding in 1951, tens of thousands of Iowa workers and union members have participated in Labor Center classes on labor and employment law and leadership development skills.Today, as part of The University of Iowa College of Law, the Center annually reaches over 2,500 adult learners through a wide range of non-credit course offerings both on and off campus. The Labor Center also conducts applied research; develops adult educational curriculum; hosts regional and national leadership schools; provides information on labor and workplace issues to faculty, students, and the public; and mentors and helps place students interested in careers in labor-related fields.
Additional Resources
CEDI also works to assist communities in understanding and implementing clean energy solutions:
- Representation of counties and communities to the Iowa Utilities Commission (IUC) in rate cases and rate-making procedures
- Join the CEDI Coalition to protect your community from backroom historic rate increases by Alliant Energy
- Follow Iowa’s rate-making legislation and policy
- Ongoing explanations of state and federal funding opportunities for municipalities and counties
- Technical assistance to assess energy needs, costs, and opportunities
- Templates and case studies for applying for funding, designing projects, and implementing solutions
Please contact us with any questions about municipal energy opportunities!
Posted: April 10, 2024
