Home Solar in Minnesota:
Local installers, tax credits, and rebates.
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Minnesota residents who experienced power outages in a span of ten years¹
Prices have fallen 54% over the last 10 years²
Average yearly savings for homeowner's who switch to solar³
Minnesota, or the Land of 10,000 Lakes, is one of the northernmost states in the US. Much of Minnesota is prairie that has been turned into farmland. It is home to the city of Minneapolis-Saint Paul, where half of the state’s population lives. Other cities include Duluth, Mankato, Moorhead, and Rochester. Minnesota state government policies favor solar tax incentives. Despite relatively low energy prices, the tax incentives and encouraging utility policies make Minnesota a favorable place for businesses and residents to install solar panels and battery systems.
Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and battery systems in Minnesota.
Incentive Programs, Tax Credits, and
Solar Rebates in Minnesota
|Federal ITC - 30%
|Solar PV systems installed in 2022 - 2032 are eligible for a 30% tax credit. The credit can only be claimed by on the original installation of the solar equipment located at a residence of yours. You must also purchase it using cash or financing, but you're not leasing the system or paying a solar company for the electricity produced by the system.
|Instant Rebate from EnergyPal
|EnergyPal secures group discounts by leveraging the depth of our network. We pass these savings onto homeowners every day!
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Minnesota provides multiple solar energy rebates and incentives that help to reduce the overall cost of solar systems. Our EnergyPal Advisors can help you navigate all of the solar incentives available in Minnesota and also apply them to the available solar panel offerings.
- Minnesota Power’s SolarSense program pays you back $0.56 per estimated kWh of solar energy produced in one year.
- XcelEnergy’s SolarRewards program pays a $0.07 per kWh performance incentive for any solar customer and a $2.00 per watt up-front incentive for income-qualified individuals. These incentives are paid out every year for 10 years.
- No Sales Tax on solar panels, systems and related equipment
- No property tax on any increase in property value from installing solar
Minnesota Rebates and Tax Breaks
Here are more details about the incentives available in Minnesota:
- If you have Minnesota Power, its SolarSense program pays you back $0.56 per estimated kWh of solar energy produced in one year up to the lesser of $10,000 or 60% of your costs. Budget is limited, so it’s first come, first served.
- If you have XcelEnergy, its SolarRewards program pays a $0.07 per kWh performance incentive for anyone and a $2.00 per watt up-front incentive for income-qualified individuals. These incentives are paid out every year for 10 years, and funds are limited.
- The state government in Minnesota provides a tax break where you don’t pay any sales tax on solar panels, systems or related equipment.
- The state government in Minnesota provides a tax break where you won’t pay additional property taxes if your property value increases when you add a solar system (and with solar, your property value does go up!).
Other Solar Energy Incentives
The US federal government helps residents and businesses pay for their solar systems. The federal investment tax credit (ITC) allows for a tax deduction of 30% of the cost of a solar system currently. Tax credits can be rolled over if you can’t use the whole credit this year. The ITC cannot be claimed for solar leases or power purchase agreements (PPAs) where the third party financier takes the credits themselves, but that is typically baked into a reduced lease/PPA monthly for you. For the actual US government bill, see 4908 of the HR 133 (It’s a giant file, so watch out!).
If you purchased a $20,000 system, your savings from the federal tax credit would look like this:
$20,000 X 0.26 = $5,200 savings
So if you spent $20,000 on that system, your cost would go down to $14,800. You can save even more by enrolling in the SolarRewards or SolarSense program.
Utility policy factors determine what your utility provider pays you for the excess power you produce and what you save on your power bill by reducing electricity usage. Minnesota gets a high score for utility policies.
Net Metering and Interconnection Policy
One important policy for solar customers is called Net Metering. Net Metering is a billing mechanism that allows solar customers to push electricity to the grid for credit that can be used later, like at night when your solar panels aren’t generating power. This incentivizes people to go solar, provides clean energy for others to use and prevents waste. Some states have poorer net metering policies than others, meaning that credits may not be able to be rolled over to the next month or year, or that you don’t earn full watt-for-watt credit for your excess energy.
Minnesota’s Net Metering program is favorable. You are paid full retail credit for your excess energy up to 120% of your consumption amount. Credits can be carried over into the next month, but expire at the end of the year. Depending on your utility provider, you may be compensated at a lower rate for credits at the end of the year. You can connect a system up to 40 kW in size. The exact details depend on your electricity provider’s policies.
Solar Setup Fees
You must have a bi-directional meter (necessary for Net Metering), which you could be charged for.
Electricity prices in Minnesota are on the low end. Usually you don’t want high prices, but with solar, the higher the prices, the more you save, and the more economical a solar system becomes.
According to the US Energy Information Administration, the average total cost of electricity in Minnesota is $0.129 per kWh for residents. The national average for all states is $0.134 per kWh, ranging from $0.967 to $0.288 per kWh.
Rate designs are comprised of monthly fees and either a flat or tiered rate you pay for electricity. Good rate designs, which save you money when you conserve energy, are tiered and have low fixed monthly fees. Poor rate designs have flat rates and high fixed monthly fees.
Minnesota is above average when it comes to the quality of its electricity bill rate design. It has tiered rate programs and low fixed fees (around $8–$10 per month).
You still pay fixed monthly fees when you go solar because you are still tied to the grid. Being tied to the grid is a good thing, because otherwise you might not have power at night or if your system stopped working suddenly. Even if you go off of the grid and rely on a battery source, the high cost of the battery would not outweigh the low monthly fee and the savings obtained from a net metering program.
PACE stands for Property Assessed Clean Energy and is a financing program for solar projects that is tied to the home instead of the homeowner. A residential PACE program is not available in Minnesota.
Home Solar Financing in Minnesota
There are three pathways to powering your home with solar energy in Minnesota: purchasing the solar system outright, obtaining a loan for its financing, or opting for a leasing program. Solar systems can be financed by bank loans, solar installer financing, new home mortgages, energy loans and home equity loans or lines of credit. Cash works too. Regardless of your choice, solar panels can reduce your home energy expenses, contributing to financial savings and a cleaner power supply. Our Energy Advisors can guide you to the best solar deals in Minnesota. Here's a comparison:
- Optimal Return-On-Investment
- Potential Reduction of Bills to near $0
- Enhances Property Value
Outright Solar Purchase: Homeowners with a stronger financial position often cover the full cost of solar upfront, yielding the highest return-on-investment over the system's lifespan. By paying in cash, homeowners in Minnesota can claim tax credits and rebates, avoid interest charges, and directly enjoy the savings on their electricity bills. Some of our customers experience virtually no electricity expenses from the moment they install solar. We offer top-tier products at attractive cash prices.
- No Initial Expenses
- Ownership of the System
- Appreciates Property Value
Solar Loan Financing: Utilizing a solar loan enables you to save and own your solar system, as our financiers cover the upfront expenses (similar to an auto loan). Homes equipped with solar systems command higher value due to their lower operational costs. Depending on the chosen solar loan, you can achieve greater monthly savings or complete your financing earlier. Our team will help you secure the most favorable rates and terms to match your requirements. To learn about our latest offerings, connect with us
- No Initial Investment Required
- Complete Maintenance Coverage
- Lower Monthly Payments
- Guaranteed Rates
Solar Leasing: Leasing solar panels provides an accessible and cost-effective path to solar adoption. With zero upfront costs—often referred to as “$0 down solar financing“—installation and maintenance are entirely managed, and your home benefits from the energy generated by the solar panels. You pay a consistent monthly fee and save compared to your existing electricity bill. The reduced electricity rate are what many homeowners like about this option.
Talk to your EnergyPal Advisor about financing solar options in Minnesota. We regularly source the best deals and terms for our customers. Let us guide you through the finance and application process from A-Z.
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Frequently Asked Questions
Is it worth going solar in Minnesota?
In most cases, yes, solar will save you a significant amount of money. Solar panels produce electricity and reduce how much power you have to purchase from your electric company. The typical homeowner in Minnesota pays around 15.17¢ cents per Kilowatthour.
What is the payback period for solar panels in Minnesota?
Homeowners who install a solar array sized to meet 100 percent of their energy needs can still pay off the upfront cost in as little as 5-6 years. The typical payback period in Minnesota averages 9.1 years.
How much are solar panels in Minnesota?
As of August 2023, the average solar panel cost in Minnesota is $3.45/W. Given a solar panel system size of 6 kilowatts (kW), an average solar installation in Minnesota is $14,490 with 30% tax credit applied.
What incentives are available for solar in Minnesota?
Solar installations in Minnesota are eligible for the 30% solar tax credit. Connect with us to learn more about all the local Minnesota incentives, tax credits & rebates you qualify for.