How to Save Money on Solar Panels In Indiana

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How to Save Money on Solar Panels In Indiana

The Hoosier State hopes to add 8,000MW of solar energy to the grid in the next 5 years. This massive endeavor shows how solar panels in Indiana are gaining traction. Homeowners can save thousands of dollars on their electricity bills with an array of their own.

With growing, state-level support, Hoosiers can drastically reduce the cost of an installation. Federal, state and municipal programs exist to help homeowners save money. Read on for an in-depth guide to available solar incentives in Indiana.

Solar Panels in Indiana: Overview

Due to varying weather conditions in Indiana, homeowners might not consider renewable energy right away. However, the cost of solar panels in Indiana is among the lowest in the country. With growing state-level support, homeowners may find several avenues to lower installation costs. Typically, opportunities come in the form of:

  • Federal credits
  • State credits and rebates
  • Government regulations

Indiana has a voluntary set of renewable regulations. This means that municipalities aren’t required to promote solar. However, many utility companies offer credits when connecting to the grid. Additionally, tax exemptions and performance programs exist for those that want to earn a little back on their array. Let’s cover each benefit in more detail.

Solar Panels in Indiana: Federal Incentive

Indiana homeowners should first consider applying for the federal solar tax return. This incentive comes as a 30% credit for all purchases made toward a solar array. Hoosiers that take advantage of the federal return can lower the cost of their new system by nearly $4,500.

Homeowners planning to buy solar panels in Indiana need to meet a few prerequisites to qualify for incentives. These include:

  • Owning the solar panel system (leases do not count)
  • Living at the home where the system is installed
  • Purchasing new equipment

Hoosiers can take advantage of this benefit through 2032. After that, the discount drops to 26% in 2033 and 22% in 2034. The program ends in 2035 unless it’s renewed.

Indiana’s State Credits and Rebates

One way states promote solar energy is through tax credits and physical cash rebates. While Indiana’s support is growing, it doesn’t quite include state credits or mandated rebates through utility companies. 

However, the Hoosier State does offer net metering and simplified interconnectivity regulations. While not mandated, this program asks municipalities to pay for a portion of excess solar energy from residents connected to the grid. However, senate changes to the regulation no longer require utility companies to pay the retail rate. We hope this changes in the future as the state’s standards increase.

Those getting electricity from NIPSCO can sign up for the company’s feed-in tariff. This allows homeowners to sell a portion of their solar electricity at a rate of $0.15 per kWh. Over time, this can add up to a decent return for your system’s lifespan. 

Solar Panels in Indiana: Government Regulations

One of the main reasons for Indiana’s modest solar incentives comes from its renewable portfolio standard. (RPS) We use a state’s RPS to determine its intention to invest in the future of renewable energy. 

The Hoosier State has a voluntary goal of 10% renewable production by 2025. This is relatively weak compared to some states but better than those that have none at all. This tells us that while solar energy isn’t currently pressed, it’s a topic of discussion for the legislature. Essentially, the state won’t force businesses to incentivize solar, but it can offer benefits of its own.

One benefit that stems from Indiana’s RPS is the state’s tax exemptions. Hoosiers can take advantage of both property and sales tax exemptions, reducing the initial and ongoing costs of owning a solar panel system. Up front, this saves homeowners 7% on purchases. It also keeps them from paying extra for the increased value of their home.

Should Hoosiers Lease Solar?

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Fixed solar panel on a residential roof.

©Jessica Kirsh/Shutterstock.com

In most cases, there’s not much financial benefit to leasing a solar panel system. The monthly lease cost does not often outweigh the utility bill that an array would cover. This is the case in Indiana, where homeowners would only see marginal returns after 20 years with solar. It also disqualifies homeowners from several incentives, including the federal solar tax credit. Overall, it’s not recommended to lease solar panels in Indiana. 

Solar Panels in Indiana: Incentive Summary

Federal Tax Incentive30% credit
Indiana Tax Credits / RebatesNone
Net MeteringDiscontinued 2022
Renewable Portfolio Standard10% by 2025, voluntary
Property Tax ExemptionYes
Sales Tax ExemptionYes
Performance Payment ProgramNIPSCO feed-in tariff

How to Save Money on Solar Panels in Indiana: Further Reading

Investing in solar panels in Indiana makes sense thanks to developing renewable portfolio standards and low rates on equipment. For more on how the Hoosier State supports emerging technology, check out these articles below.

Frequently Asked Questions

Do you actually save money going solar in Indiana?

Although the state often has cloudy weather, the low cost of equipment makes solar an affordable option. Homeowners that make the switch can save over $20,000 or more on electricity.

How long does it take for solar panels to pay for themselves in Indiana?

In the Hoosier State, homeowners can pay off a 6kW system in 9.7 years with an electricity bill offset of $1,536.04 a year.

How much do solar panels cost in Indiana?

In Indiana, solar panels typically cost $2.49/W. For a 6kW system, homeowners could expect to pay about $14,940 before incentives.

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