Incentives spur solar energy growth in Iowa

In the small town of Pilot Grove, Jenny Steffensmeier's metal fabrication company will invest $1 million to build a solar array that's expected to cover all the business' energy needs.

After about five years, Steffensmeier Welding and Manufacturing will recoup the cost of the solar energy system, and the $92,000 it would have spent annually on energy costs can be invested in the company — possibly new equipment, adding or training workers, or building markets.

"It's an idea that took off here. It became a no-brainer," said Steffensmeier, who has about two dozen employees at the southeast Iowa business. Gov. Terry Branstad toured the plant Thursday, when the company announced the solar investment.

Advocates say more businesses, homeowners and utilities in Iowa are adopting solar, given declining costs and state tax incentives that were boosted in the last legislative session. And they hope initiatives President Barack Obama announced this week could broaden adoption even more.

Still, Norman Atwood of Atwood Electric in Sigourney says the White House proposals are "just a drop in the bucket" of changes that are needed to make solar energy more attractive to consumers.

"It's a positive drop, but it's still just a drop," said Atwood, whose family-owned business has been installing solar for about three years.

Challenges include how much some utilities compensate customers for their excess solar energy, Atwood and others said. The Iowa Utilities Board has been looking at issues around wind and solar generation for about a year.

Solar advocates like Josh Mandelbaum, an attorney with Environmental Law & Policy Center, and Nathaniel Baer, energy program director for the Iowa Environmental Council, hope the Obama initiatives help cut some of the red tape that can discourage solar adoption.

The president wants to make it easier for affordable housing developers to incorporate more solar into their projects, make it easier for homeowners to borrow up to $25,000 for solar or energy efficiency projects, and encourage utilities to build more community solar projects that make the renewable energy available to renters and others.

Obama also seeks to boost worker training in solar energy, particularly for veterans.

"It's addressing some of the barriers and challenges that exist with solar," Mandelbaum said.

The solar initiatives also could be a plus for the state economy, say Mandelbaum and Baer. Greater solar adoption increases competition, drives down prices, creates greater demand and more jobs, they said.

Iowa employment in the young industry has grown from about 200 workers in 2012 to 900 workers in 2014, Baer said.

State lawmakers this year boosted the amount of money available for solar tax credits to $5 million, a $500,000 increase annually over two years. The Legislature also provided incentives for investor-owned and municipal utilities to build community solar projects.

Iowa incentives are "as good or better than most states," said Baer. He said more Iowans have sought tax credits than were available in the fund. "There's a significant waiting list," he said. "We've got a lot of interest in solar."

Tim Coonan, government relations director for the Iowa Association of Electric Cooperatives, said three rural electric cooperatives have or will build community solar projects. And others will be looking at the details of the president's announcement to see if it can help lower bills for consumers.

"That's our main concern — affordability and reliability," he said.

J.B. Conlin, chief operating officer at Conlin Properties, said the Des Moines-based company will look closely at federal initiatives targeting affordable housing.

"We've not been able to make the numbers work," given large upfront costs and the complexity of building solar into housing projects, Conlin said. "It's something that we want to do, but it has to make sense financially," both for the company and its tenants.

Atwood, whose family business is based in eastern Iowa, said the demand he's seen is mostly from farmers and mid-sized businesses.

State and federal tax credits for solar energy have been "driving a lot of development," Atwood said, adding that a business can recoup the upfront costs for solar faster than homeowners. Commercial users need five years to recoup their upfront costs, while it takes homeowners 10 to 15 years, he said.

Concerns about the environment are driving Bob Bernard's growing solar investment at his Urbandale home.

"Solar panels are a simple, efficient way to reduce my carbon footprint," said Bernard, a retired government worker. He's adding nine panels to his garage, bringing his total to 24. With the new panels, Bernard will be able to cover about 85 percent of his energy needs.

In southeast Iowa, Steffensmeier said her first concern was to improve her company's bottom line.

But she also likes the environmental benefits that come with the project. The company's project would be equivalent to planting 230,000 trees. "We like the idea of being more environmentally friendly," Steffensmeier said.

Troy Van Beek, owner of Ideal Energy in Fairfield, said Steffensmeier Welding and Manufacturing is among a growing number of companies looking to cover their entire energy needs with solar.

Iowa is considered a good solar-generating location, despite its cold winter months, Van Beek and others said.

Pam Mackey-Taylor, conservation chairwoman for the Iowa Chapter of the Sierra Club, believes Iowa has the "potential to generate as much solar energy as it does wind."

Iowa ranks second nationally for the amount of wind energy produced, following only Texas.