Michigan State Solar Power Rebates, Tax Credits, and Incentives

Red Matchstick of a fall tree near Petowskey

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Updated 1-16-10

Hey, Michigan! The sun shines on you with solar rebates and incentives, and maybe even a full time Feed-in Tariff. People think that just because it’s cold and snows in Michigan during the winter that you can’t go solar. Wrong.

Over the course of the year, a city like Detroit gets an average of 4.2 hours of sun a day. That’s plenty for solar, and thank goodness your politicians know it. Plus, solar panels are more efficient (produce more energy) when it’s cold, and less energy when it’s hot.

Since Michigan passed a renewable portfolio standard (RPS), utilities are now required to go solar, and they can’t do it without you. So they’re offering homes and businesses solar rebate cash for all you solar curious people in Lansing, Detroit, and pretty much the rest of the state, including the Upper Peninsula.

How much? For you?  That largely depends on your electric utility’s program and your own energy needs. Find your utility below and see what solar powered goodies (cash) is in store for you and/or your business.

Michigan Solar Rebates and Solar Incentives

DTE Energy “Solar Currents Program”

DTE Energy customers include Detroit, Ann Arbor, Flint, Livonia, and pretty much any city in the thumb of Michigan.

Solar Rebate Amount: $2.40/watt upfront, plus a production incentive of 11 cents/kWh for a 20 year contract. What does all that technical stuff mean? Allow me to explain.

• First, you get an upfront cash rebate. How much depends on the size (the number of watts) of your solar power system. If you have an average 5kW (5000 watt) system, that multiplies out to $12,000 off the top of your up front costs. Again, you might get a lower rebate if you need fewer solar panels to cover your energy needs.
• Second, you get a production incentive. This is similar to a feed in tariff. Essentially, DTE pays you 11 cents for every thousand hours (kWh) of solar power that your system produces. For the same 5kW example above, that adds up to an extra $610 in your pocket every year, give or take. (We’re assuming average Detroit rain, snow, good roof orientation, etc.)
• Third, like all Americans, you qualify for the 30% Federal tax credit. On a 5kW system, that could mean reducing your net cost another $6,900.
• Bottom line, before that $610/year production incentive, you’re looking at a net cost of around $16,100 after the tax credit.
• As to the production incentive, for a 5kW system, you’ll get another $10,000 to $12,000 over the course of the 20 year contract. Which brings your net cost:
• About $6,000 when it’s all added up.
• Of course, I haven’t even added in all the savings you’ll get over the next 25 years, which will more than make up that cost.  To find out how much specifically for you, you really need to get a free estimate from a local installer.

Consumers Energy – Experimental Feed-in Tariff

For all you Consumers Energy customers in Grand Rapids, Lansing, and the rest of the state, the good news is that there’s now an experimental Feed-in-Tariff. The bad news is that it’s already oversubscribed, but don’t bum out. They’re still taking reservations in case it becomes a regular, every day program, which is looking very possible.  Wisconsin just passed one and there’s a reason Michigan is doing this experimental program: They want to create solar jobs in both manufacturing and for installation.

Consumers Energy Solar Feed-in Tariff Amount: Over the next 12 years:

• Home owners will receive between 52.5 cents/kWh and 65 cents/kWh that your solar energy system produces.
• Commercial business will receive between 37.5 cents/kWh and 45 cents/kWh.
• How much does this mean? Well, that depends on how much electricity your panels generate and which of the above rates you get. (Early birds got the higher rates.)
• Warning! This is NOT an upfront payment, so for an average 5kW system, you’ll have to lay out perhaps 35 grand up front. BUT…
• Over the next 12 years, you’ll get paid by the utility somewhere between $34,800 for the lower rate and $43,200! (Based on an estimated 5550 kWh a year produced from a 5kW solar  system.)
• PLUS, with either rate, you still qualify for the 30% Federal tax credit, so you’ll be able to knock off another $10,500 of your net cost. But wait, there’s more:
• After 12 years, you won’t get any more Feed-in payments (unless there’s another program), but your system is long paid off and you get free solar electricity for the next 12 years or longer, until your solar system conks out.

Solar Fred Notes:

• Don’t forget that while the utility is paying you for your solar juice, you’ll still be paying them your normal electric bill.  Ergo, your net profit from the above will be reduced by whatever your regular electric bill is, but you’ll still come out way ahead.
• Also, keep in mind that you do not qualify for net metering under this program.  (See below for “net metering.”)
• If you use less energy by using CFL light bulbs or hang dry your clothes or turn off the air conditioning, your net profit is only going to go up over those 12 years. (Of course, even if you don’t go solar, it’s always good to do these things to save money.)
• Remember: As of 1/16/10, this is still ONLY A PILOT PROGRAM that may be extended …or not. As of this writing, they’re still accepting applications, but the utility says they are already oversubscribed. However, they are keeping applications in the order received in case the program gets extended.
• Contact a local installer to find out if you qualify for the current of future program.

WPPI Energy Utilities

WPPI Energy is the parent company of a bunch of rural utilities in Michigan, mainly in the Upper Peninsula. The rebates below apply to customers of Alger Delta CEA, Baraga Electric Utility, Crystal Falls Electric Department, Gladstone Power & Light, L’Anse Electric Utility, Negaunee Electric Department, and Norway Power & Light.

Solar Rebate Amount: Up to $10,000 for solar PV (electric) or 35% of installed cost.

• The upfront rebate is going to vary by the average kilowatt hours (kWh) of solar energy your solar panels produce over the course of the year. For example, an average 5kW DC residential system might produce 5550 kWh of power over the course of a year.
• You’ll get a $3 per/kWh solar rebate for new home construction.
• You’ll get $2.50 per kWh solar rebate for solar installed on existing home, but only if it’s installed by a NABCEP-certified installer. (NABCEP installers have the most experience.)
• Can’t find a NABCEP guy? The rebate goes down to $2/kWh for systems on existing buildings. (Obviously, they’re encouraging you to find a quality installer.)
• Example of a cash rebate for an average of 5kW DC system for an existing home: $10,000 (Really $13,875, but it’s reduced because the maximum allowed for one customer is $10,000.)
• You’ll also receive an additional Federal 30% tax credit from the Federal government, which could reduce your cost by another $7,500. Thanks, Unlce Sam!

Michigan Net Metering Program

Michigan does have a state wide net metering program. Net metering is when the utility keeps track of the extra solar power your panels produce during the day. Then at night, you get the extra power back at the same cost.

• Any net excess energy produced is credited to your next bill, but they will never pay you cash for the excess.
• That’s why your system should be sized correctly for your current electric needs by a qualifiedsolar  installer. If you buy too many panels, you’ll just keep adding to the credit. That’s like having extra cell phone minutes that you’ll never use. Switch to a cheaper plan, or in this case, buy the right amount of solar for your needs.
• Note: You can’t combine the Consumers Energy Feed-in Tariff and Net Metering. That’s like double dipping in the Michigan solar incentives. It’s one or the other.

CONSENSUS

With Governor Jennifer Granholm spear-heading the effort to spur solar energy use in Michigan, the skies look sunny for local residents considering going solar. However, until the feed-in tariff pilot by Consumer’s Energy gets out of the experimental stage, installing solar in the state is quite costly unless you’re a customer of one of the other utility areas with up front rebates.

Germany’s feed-in tariff created 170,000 jobs and resulted in the most solar installed per capita in the world. These results are encouraging, given that skies are sunnier in Michigan than Germany. Therefore, we think it will have a similar effect on the local economy when implemented in Michigan. Expect explosive things to happen to the Michigan solar industry if this proposal is approved. Meanwhile the other utilities have their rebate programs that you can use now.

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