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Clear info on home solar power rebates, tax credits, and other benefits

2017 Policy Grade

B

Avg. Yearly Savings

$112

Congratulations! You've found the ultimate guide to going solar in Minnesota

2017 Policy Grade

B

Avg. Savings/year

$112

At Solar Power Rocks, our dream is to turn your thoughts of solar power for your home into reality

Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.

What's so great about home solar power in Minnesota?

Some unhappy campers have said that Minnesota has only two seasons: winter and road construction. However, that’s not quite true. The state has four distinct seasons, even though it isn’t uncommon to see snowfall during three of them. Nevertheless, Minnesota still gets a pretty fair amount of sunlight, even when it’s 20° below outside. Heck, these days, even the big energy companies are getting into solar in a big way, but residential customers still have the catbird’s seat.

Minnesota has a strong Renewables Portfolio standard, guaranteeing a commitment to renewable energy into the future. Solar panels here are tax exempt and there are even some rebates to help pay for them. On top of that Xcel will pay you a little extra for every kilowatt-hour of solar electricity you send their way.

2017 Update:

Recently, Minnsota has been trying out community solar, after a 2013 law that specifically directed utility companies to set up ways for non-homeowners to invest in solar.

All told, the North Star State loves the sun, and going solar here can be a great financial decision, too! Read on to learn more about the ins and outs of solar in Minnesota.

Questions? Our network of solar experts are on call to assist you! Simply sign up for personalized help. You can get discounted pricing as low as $4,500/kW! This is paired with the strong Minnesota solar panel incentives below.

Your guide to going solar in Minnesota

We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in Minnesota. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

The Solar Strategy section is all about the various financial options you have in Minnesota. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.

The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Minnesota. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.

Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Minnesota is doing to make solar more affordable for its citizens, you'll find it here.

We hope you find our work useful. If so, please help us keep our research and advocacy as strong as possible by sharing it with someone who might also find it interesting, contributing any amount you can, and by getting yourself personalized savings estimates from our trusted partner network.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Your Solar Strategy in Minnesota

Figuring out the best way to go solar in Minnesota can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

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Compare the Return of Different Solar Investments in Minnesota

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a solar loan or Home Equity Line of Credit (the orange bars) and paying for the system over time means you'll actually put down less of your own money, while reaping a big financial benefit in year 1.

That's because you're paying over time for the system, but you still get a 30% federal tax credit based on the entire cost. You'll start out ahead, so your payments over 15 years will have less impact on you than plunking down a big pile of money up front. All you need is equity or great credit.

The option with the smallest savings is for a solar Power-Purchase Agreement, or PPA, which means you put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. PPAs are an excellent option if you don't have any equity or cash to put down, and they still save you money.

Read more below about each of three very good options for solar in Minnesota!

Net Present Value of Solar in Minnesota

“Net Present What?!” Don’t panic, this isn’t an economics test. NPV is just a tool used to compare investments. Basically, it asks, “if you had X dollars to invest, which investment would get you the best return?” It relies on the idea that getting a return on your investment sooner is better than later, because you can reinvest your early profits and keep the gain train going.

We compare an investment in solar to a “what-if” investment in a Standard & Poor’s (S&P) 500 stock index fund, which has seen growth of about 7% per year over the past 25 years. We use the cost of solar in Minnesota and ask “how much better or worse (in 2017 dollars) is an investment in solar than stocks?” Here's what we found for the three different ways of going solar in Minnesota:

Look at all that green! A solar investment in Minnesota should provide a better return than the stock market whether you choose a PPA, a loan, or pay up front. Here's some more about how we got these numbers:

Solar PPA NPV: $1,791

Saving money without having to put anything down is always going to have a positive NPV. In the case of Minnesota, you’ll save $3,766 over a 20 year contract, which is worth $1,791 in today’s dollars. Read more about PPAs in Minnesota below.

Solar Loan NPV: $4,089

As we’re fond of saying, taking a loan for solar is a no-brainer, because it’s like agreeing to pay over time for something that is also making you money, plus you get 30% of the loan value as a tax credit (cash in your pocket) after making payments for only 1 year. In the case of Minnesota, that tax credit windfall helps push the NPV of a solar loan to $4,089 better than a similar investment in the stock market. Read more about solar loans below

Solar Purchase NPV: $465

The biggest reason a solar purchase in Minnesota has a positive NPV is it allows you to recoup 30% of that investment within 1 year, and reinvest that amount in whatever you choose. On top of that, the money you save on electricity is also available for future investment. But you can see above what happens to NPV if you choose a solar loan instead. It’s a much smarter way to pay for solar panels. Read more about solar purchases below.

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blue  Solar Power-Purchase Agreements in Minnesota

A PPA is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. In Minnesota, it's possible to get solar panels for $0-down and see savings over 20 years!

The North Star State doesn't quite have the financial benefits of states with more sunshine or higher electricity prices—or both. For now, getting a PPA for a 5-kW solar system will save you just about $110 per year, which might not sound like a great deal, but as the utility company raises rates, you will start to see monthly savings. Over 20 years, our estimate shows a total savings of $3,766.

So you can get free solar panels on your house, which will mean you're greatly reducing greenhouse gas emissions and helping the environment. The panels will be installed and maintained by professionals, and all you have to do is brag to the Andersons down the street about your green habits!

Here's more about how a solar PPA works:

Example savings in Minnesota

Annual Electric Bill Before Solar

$1,166

Annual Electric Bill After Solar

$417

Est. Annual Solar Payments

$636

Average Annual Savings

$112

Power-Purchase Agreements (PPAs) are the most popular form of what's called "third-party solar." A PPA just means your solar company owns the panels on your roof, and you pay for the electricity they produce. The numbers above show the savings with a solar PPA for an average home in Minnesota. The typical electric bill before solar power is super expensive, but with a PPA, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!

Here's an estimate of the monthly savings for a solar PPA in Minnesota:

Monthly solar PPA savings in Minnesota

With a PPA, your solar company essentially becomes a second utility provider, only the solar electricity is sold to you at a lower rate than the fossil fuel electricity you've been buying from the electric company! Note: your PPA won't eliminate your power bill from your regular electric provider, because you'll still need energy from the grid when the sun isn't shining. But it will save you money!

The less-popular cousin of the third-party solar family is the solar lease. It's basically like renting your panels for a set monthly payment, and getting all the energy they produce—however much it is. Don't get spooked by that language, though. A typical solar lease comes with energy production guarantees that will make sure you're getting what you paid for. In fact, if you're not offered a production guarantee with a solar lease, walk away.

Here's the best part of third-party solar: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.

Keep in mind, the numbers above are based on an average home in Minnesota. If you're ready for a custom quote for a solar lease or PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Home Solar Power: PPA vs. Purchasing

To PPA, or not to PPA? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.

In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!

Additionally, if you go the PPA route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar PPA company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).

orange square  Solar Loans in Minnesota

You don't need $19,000 sitting around to pay for solar. As long as you have good credit or equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.

That’s because, in Minnesota, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. That's right: a HUGE tax break!. You'll come out thousands ahead this year, and you'll still see a handsome profit over the 25-year life of your system.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can qualify for a solar loan or home-equity line of credit (HELOC) for $18,750, with a fixed rate of 4% or so and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
  • You love making money without much risk.

Here’s how the numbers pencil out for an Xcel customer who makes a solar purchase with a loan:

  • Installing a typical 5-kW solar system should start at about $18,750. That's how big your loan will need to be to cover it.
  • The electricity you'll save in the first year of operation would have cost $749, but your annual loan payments will be $1,664, meaning you'll spend $915 on solar this year, but...
  • You'll also see a huge tax break. The Feds give you 30% of the cost of your system back as a tax credit, which in this case is $5,625. You'll be paying over time but getting the benefits up front!
  • But wait, there's more! On top of the electric bill savings, Xcel will pay you $.08/kWh! Your system will produce 6,240 kWh per year, so you'll end up with $499 more. And those extra payments keep going for 10 long years!
  • All those incentives mean you'll come out $5,208 ahead after year 1. Your loan payments will be about $76/month more than your energy bill savings, but that difference will get small as the utility company raises rates every year.
  • By the time you've paid off your loan in 2031, you'll see yearly savings of greater than $1,000. After 25 years, your total profit will be $9,952!
  • On top of the green that will stay in your pocket, your system will mean green for the environment, too. 104 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Minnesota. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

green square  Buying Solar in Minnesota

An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true, but based on percent return for the money, a loan is a better option.

If you have equity in your home or can get a large loan with an interest rate of around 4%, that's the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.

If you've got cash and you prefer to pay up front, you'll have to plunk down $18,750. But by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced about $18,750 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you about $750 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...

Here’s how the numbers pencil out for a 5-kW rooftop solar system in Xcel's service territory:

  • Installing a typical 5kW solar system should start at about $18,750. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
  • The Feds calculate their incentive based on actual out of pocket costs, so take 30% of $20,000, for a tax credit of $5,625.
  • After the tax credit we subtract your first year’s energy savings, which we estimate to be $749. That reduces your cost after the first year to only $12,376.
  • But wait, there's more! On top of the electric bill savings, Xcel will pay you $.08/kWh! Your system will produce 5,850 kWh per year, so you'll end up with $499 more from Xcel, bringing your costs down to $11,877. And those extra payments keep going for 10 long years!
  • Your system will pay for itself with electric bill savings in 11 years, and you'll see a total net profit of $16,167 in our 25-year estimate period. The internal rate of return for this investment is a solid 8.8%. Better and more sure than the stock market!
  • And don't forget... your home's value just increased by more than $18,000, too (your expected annual electricity savings over 20 years).
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 104 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Minnesota. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

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Minnesota Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Minnesota:

RPS

31.5% by 2020 (For Xcel only)

Grade: B

Minnesota's Renewable Portfolio Standard grade

A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of a state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for homeowners in the form of solar power rebates and performance payments when they switch to solar.

Minnesota’s RPS sets different goals for Xcel (the state’s largest electric company) and all other utilities. Xcel is required to generate 31.5% of its electricity from renewable resources by 2020. The current minimum is 18%, which will increase to 25% by the end of 2016 before reaching the final 31.5% mark by the end of 2020.

All other Minnesota utilities are required to produce 25% of their energy from renewable sources by 2025, and investor-owned utilities must produce an additional 1.5% of energy from solar alone. The current minimum is 12%, which rises to 17% in 2016 and 20% in 2020, before making the final jump to 25% by December 31, 2025.

Those figures are solid, though definitely not the best we’ve seen. The public utility targets get a boost by including a solar-specific carve out of 1.5% of total retail electric sales.

What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.

An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.

RPS solar carve out

1.5% by 2020

Grade: B

Minnesota's Solar Carve-out grade

In 2013, the Minnesota state legislature enacted H.F. 729, which requires Xcel and all other public utilities to generate 1.5% of their power from solar installations by 2020. 10% of that energy must come from small-scale solar installations of 20 kW capacity or less, meaning the utility companies have an incentive to encourage homeowners to contribute power toward meeting that goal!

What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.

Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.

For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!

Minnesota Electricity Prices

$0.12/kwh

Grade: C

Minnesota's Electricity cost grade

Minnesota electricity consumers pay an average of 12 cents per kilowatt-hour of electricity. That’s pretty close to the national average of 13 cents/kWh, and nowhere near as expensive as some east coast states. Minnesotans have been enjoying the historically-low prices for natural gas and coal, but these resources have long-term environmental costs and are unsustainable over the long term. As fossil fuels become more scarce and energy prices from traditional sources start to rise, electricity rates are going to skyrocket. When that happens, homeowners who take advantage of state solar benefits programs now will be very happy they switched to solar power.

Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.

The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.

Minnesota Net Metering

A

Grade: A

Minnesota's Net Metering grade

Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume. If you run a surplus, you get credit for it.

Minnesota’s net metering law applies to all utilities, and requires them to provide net metering for all solar power systems less than 40 kW. Overall we gave net metering in Minnesota a weak grade because of that size limitation. The cap should be raised significantly or removed altogether to allow commercial and industrial customers to meet on-site generation needs. That said, the 40-kW limit should cover virtually all residential solar systems, which typically come in somewhere around 5-kW for a single-family home.

While commercial and industrial customers may not be able to take advantage of net metering, it’s a pretty sweet deal for your residential system. You get compensation for any surplus you generate at the “average retail utility energy rate.” Minnesota has a specific formula for determining what that is, but it basically amounts to the same as the retail rate you pay every month for electricity. Compensation may come as either actual payment (i.e. a check) or a credit on your future bills.

What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.

The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.

Minnesota Interconnection Rules

C

Minnesota's Interconnection Standards grade

Minnesota’s interconnection rules aren’t as good as those in other states, because homeowners with solar installations are required to purchase additional insurance and have an external disconnect switch on their system, which adds cost in the end. To drive additional solar adoption among residential customers, Minnesota could improve this area by adopting new standards more in-line with the best solar states.

Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.

Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.

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Solar Incentives in Minnesota

Minnesota Solar Power Rebates

Varies

Grade: C

Minnesota's Solar Rebates grade
Since Minnesota has such a strong RPS, there are a number of great utility rebates offered for solar:
Utility Company Rebate amount Cap
Austin Utilities $500/kw $5,000
Brainerd Public Utilities $2,000/kw $4,000
Moorhead Public Service Utility $1,500/kw $30,000 total program budget
New Ulm Public Utilities $1,000/kw $2,000
Owatanna Public Utilities $500/kw $5,000
Rochester Public Utilities $500/kw $5,000

How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.

The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.

Minnesota Solar Power Tax Credits

None

Grade: F

Minnesota's Solar Tax Credits grade

Minnesota does not currently offer any tax credits for solar power. With all those strong utility rebates available, the legislature is missing a golden opportunity to piggyback onto the existing programs and drive even more conversion to renewable energy.

About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.

(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)

The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.

Solar Power Performance Payments

$0.08-$0.35/kWh for 10 years

Grade: B

Minnesota's Solar Performance Payments grade

Minnesota residents planning new solar installations on homes they own can take advantage of two performance incentive programs. Xcel Energy customers can enroll in the Solar*Rewards program for rebates of up to 8 cents per kWh, not to exceed 120% of the customer’s energy usage. This is as good a deal as homeowners can get from Xcel, but sadly, it replaces Xcel’s former direct-pay rebate program.

The savings with Solar*Rewards aren't insignificant though—the program nets you $500 per year above your already great electricity bill savings, and it runs for 10 years. MN residents in municipalities not served by Xcel can still take advantage of their utilities' rebate programs.

But, wait! Don’t lose heart. There’s still good news for Minnesotans: if you buy panels manufactured by Minnesota companies, your get an additional incentive, which could be up to $.27/kWh above the Xcel price. That could mean as much as $2,164 more per year.

Of course, many variables can make the decision about which mixture of rebates and/or performance payments are right for you. Why not sign up for personalized assistance on our special solar deals page?

Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!

Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.

Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.

If you don’t know what an SREC is, or how they work, check out this great SREC video

Property Tax Exemption

100%

Grade: A

Minnesota's Solar Property Tax Exemptions grade

A newly-installed solar power system is 100% exempt from associated property taxes. When a solar power system is installed, your home value rises significantly – twenty times estimated annual electricity savings. With the Minnesota property tax exemption in place, you’ll never pay any taxes on that home value jump.

About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).

For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!

The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.

Sales Tax Exemption

100%

Grade: A

Minnesota's Solar Sales Tax Exemption grade

The purchase of your solar power system in Minnesota is 100% exempt from sales tax. That saves you almost 7% up front.

What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).

The consensus on Minnesota solar power rebates and incentives

With some utility-backed solar power rebates, the 30% federal solar tax credit, and the potential for big benefits from using Minnesota-made equipment, Minnesota offers a low initial cost, leading to a solid overall payback timeframe. While it would be much preferable to see a direct rebate program from Xcel, it is possible to design and build a solar system in any part of the state that will be paying you dividends for years to come. We respect the ways Minnesota is encouraging solar enough to give it an “A,” especially with a strong RPS ensuring that those solar payments and utility company rebates should continue.

And of course, if you’d like some personalized assistance, get in touch with us and we’ll have an expert contact you in a jiffy.

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29 thoughts on “Minnesota Solar Power for your house – rebates, tax credits, savings

  1. Anonymous says:

    The Made in Minnesota rebate is available to apply for only Jan 1- Feb 28 each year and is an option for Xcel, Otter Tail, and MN Power customer. Xcel also has its own year round production based rebate called Solar Rewards. As of 10/29/2016 there are Solar Reward funds still available for 2016, and the MN Dept of Commerce who runs the Made in MN program has said it will be available again come Jan 2017. A $50,000 system will put out a LOT of power, but if you use it, you’ll spend that money with the utility well before the warranty on the panels would be up. And with financing (loan not lease), many people find that they can save money right away on their monthly budget, AND once that loan is paid off (10-15 years), they have 10-15 years of no payments to anyone for their electricity. Read the date the article was published, and also when they took their data; articles published March 2015 probably have 2013 data, and so much has changed in the industry in just 2016.

  2. I'm Going Eco says:

    Are panels best installed on the south roof in MN? How about west/southwest facing panels?

  3. Anonymous says:

    Hi I am looking for help in contacts of who can help as a resource i am interested in building a facility that uses as much solar engery as possible

  4. Anonymous says:

    It looks like the information under the “Minnesota Solar Power Rebates” section may be out of date. Specifically, Xcel Energy (the largest utility company in the state) is no longer providing rebates for solar systems and has a new performance-based incentive program only. The link that points to http://dsireusa.org/solar/incentives/incentive.cfm?Incentive_Code=MN138F&re=1&ee=1 no longer exists since that rebate program no longer exists.

    1. Ben Zientara says:

      Thanks for pointing that out. That link to DSIRE is actually broken because DSIRE recently completely changed the way their database is organized, but you’re correct that Xcel’s rebate program no longer exists. The performance-based program that replaced it is very weak by comparison, but there are still some pretty sweet “Made in Minnesota” rebates you can attachto it that make it a decent deal. Thanks for writing!

  5. Anonymous says:

    i am going to make money

  6. Anonymous says:

    hi

  7. warit says:

    2mill

  8. Anonymous says:

    web sight sucks

  9. richard says:

    How much would it cost for a city like minneapolis

  10. Jason in St. Paul says:

    Thank you for the informative and thorough website- very nice. I have just one quick comment: I think it is just a touch ironic that the above photograph at the top of this page is a picture of a diesel powered locomotive… pulling train-cars full of coal. It just seems a bit incongruous on a website promoting solar energy.

  11. David says:

    I’m in Colorado and a have sold 8 million in solar here, and Johnm you are correct 3/watt is very doable. This is the math I understand out of Minnesota. a 10kw system at a cost of 30k- xcel rebate 15k, – fed tax credit 4,500 would be a net 10,500. This system in a ideal orientation would produce 13,000 kwhs at a local value of 1,400 annual savings. This would be less than a 7 year ROI! Not bad and very sellable!

  12. This must be a joke says:

    I think its a crap investment:
    Annual savings = $0.11/kwh X 9840kwh X 50% = $541.
    Cost = $36K less 30% less $6.4K = $19K
    Payback = $19K / $541 = 35 years.
    No thanks.

    1. Aall says:

      Couple things about your math I have a question about, but if it is correct, I have to agree with you, not close to a good deal. Under savings, where do you get the X 50% from, it significantly reduces your ROI, and under the cost, from everything I’ve read, they pay 60% of the total cost in rebates, so it would be $36k X 60% = $21,600-36.000=$14,400, which would equate to 26.6 years, still a long time assuming your 50% figure under savings is correct. If it was closer to 100%, it would be closer to a 15 year payback, not super but better.

    2. johnm says:

      I’m not understanding your calculation. I come up with much different numbers. I think you could do (and people are doing it) a system for about $3/watt. which is about a 12 kW system.. at 14% capacity factor would produce about 14,700 kWhrs annually.. if you purchase more efficient panels the annual cf may go higher.

      (a 9 kw system for 4 bucks/watt would yield about 11,000 kwhrs annually and an appx 20 year payback… not so good)..

      so if you multiply the 36000 x .3 = about 25200 to pay off. it depends on your interest rate and how much you can buy down..at current rates of .11/kwhr..and at .11/kwhr would produce about $1600/year in electrical savings I come up with about 15 years or so to pay off at 3 bucks/watt..

      Since pv panels last 20 – 25 years maybe it’s not such a bad investment..if you can get it done for 3/watt.

      and electrical costs go up generally each year with inflation and if the EPA rules start to kick in the rates may jump higher than normal and it would pay itself off faster. I think you at least need to put a cost of living escalator in there somewhere to accurately reflect year to year energy costs.

      I know you can get panels for about 70 – 80 cents/watt right now.. inverters another 50 cents/watt or so.. which leaves your racking and electrical breakers, wires etc.. which you should be able to do in my opinion for the 3 – 4 dollar mark. I know it’s under what they’re quoting but I’ve talked to developers who are doing projects in the 2/watt range so I don’t think it’s totally unreasonable. I think the national average is about 4 – 5 bucks a watt..which is too much imo.

      first time I’ve been here.. pretty good website.

  13. Chris says:

    Does anybody know of a business that can or will install a small grid tie system. Small as in under $2500, something that you can expand on at a later date.

    1. Dave Llorens says:

      https://solarpowerrocks.com/free-solar-estimates/
      sign up there and someone will give you a buzz for a free quote. If you live in one of 13 or so states, you can get it for zero down and just pay for the energy ($0 is way below $2500). Otherwise, that will be tough. Best way is to sign up and find out.

  14. Eric Sandeen says:

    For the folks lamenting the $36,000 to $50,000 cost (pre-incentives) see the article on this site about the enphase micro-inverters – https://solarpowerrocks.com/solar-trends/microinverters-my-turn-the-boring-technical-stuff/ – which lets you do a much smaller system with a nice linear cost. i.e. small system, small cost.

    I checked into a -tiny- 3-panel system, maybe just 700W or so, and it nets out to around $2k. For maybe $1k each or so, I can add a panel+inverter to that as I’m able to afford it … don’t buy a flat-panel for the den, buy one for the roof! :)

  15. marshall says:

    IS EXAMPLE RESIDENTIAL SOLAR INSTALLATION calculation pretty old? Federal rebate is now 30% not $2000 maximum.

    1. Marshall….yes. We’ve got to update all of our pages. So sorry, but we’re only 3 solar dudes, but we will get to all of them. :)

      As you noted, the $2000 cap is no more until 2016, so get it while you can from the feds. A 30% tax credit applied after all of the local rebates have been subtracted.

  16. Grahm says:

    I think it is fantastic how the stimulus funds are making a difference. They are being taken advantage of all the time with the installation of geothermal heat pumps to replace high energy heating and cooling systems.

  17. Allen says:

    I’ve read about systems wherein some solar panel companies will estimate the monthly energy cost of an individual household. Then the solar company will offer the individual household a monthly bill that will be less than their energy bill would have been. That new monthly bill, paid to the solar company, over a 20-30 year plan, will pay for the cost of panels and installation. So, the consumer saves by paying a monthly bill that’s less than what their energy bill would have been without solar panels, and the solar company saves by being able to install a far greater number of panels for a more diverse group of people, while still getting their money, just over a longer period of time.

  18. Pam says:

    we live outside the town limits, but in the township of a town on 20 acres and I was thinking about solar pannels for our home & or garage. How much would this cost on an existing structure & is it worth the effort? Also what can you tell me about geothermal energy?

  19. dana says:

    we are building a house in the country with no trees we would love to put pannels on our shop roof but there is no way to fund a new house and $50000 worth of pannels to do it right the first time, is there a lease option?

  20. Eric Ortiz says:

    Hi, What about sponsering groups of people to start solar store business locally to support interest and demand. I have been having a great deal of difficulty financing a business although all perspective investors think its a great idea no one has the $$$$ to move on it.

  21. Mary,
    The best option we can see currently is what is known as Renewable Energy Payments (aka Feed-In Tariffs, though we don’t like using the word ‘tariffs’ because of the political connotations).
    It is how the Germans moved the cause forward so quickly; and have demonstrated it works. On this site (and others) you will find quite a bit of information regarding REP’s. (Set up a google alert for any of these terms and acronyms. You will get an intense education.)
    Hope you join us in getting more of these statutes passed. Call your Senators and Representatives. Tell them your wants. There are new versions of such bills being authored in many states in the coming sessions. MI, MN, VT, IL, FL, many others. Hope you get involved!!!

  22. mary hoffman says:

    36 Thousand I simply cannot afford as a single homeowner. Can we come up with a reverse electrical bill of some sort and I begin with 10 thousand loan from the bank with so low interest payment? How can we all work together on this.

  23. Mike Jerger says:

    What about the rest of the state? There seems to be less info about the potential of rural residential/farming set-ups. I’m talking about something like 40 acres of land with solar or wind installed which you can swath around for bio-fuel.

  24. random-individual-117823 says:

    My buddy has a solar panel system in (on) his home and is getting PAID by the utility company for his excess power.

    Knowledge is power — FOR REALZ! And solar power doubly-so.

    Minnesota Roxxors! (in terms of providing opportunities for running your electric meter backwards via solar panels)

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