Welcome to the 2015 South Dakota solar power rebate and incentive information page!
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.
With Mount Rushmore, the Crazy Horse Memorial, the Badlands, and the Black Hills, who wouldn’t want to be out in the sun in South Dakota. Oh yeah, it’s the home of the Sturgis Harley rally too. With people coming from all around the world to visit, South Dakota should use renewable energy to keep powered up while protecting its great natural environment. Here’s what the state legislature has done to promote clean solar energy so far…
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the South Dakota solar incentives you see below.
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
First, take a look at a typical electric bill before considering solar power. That's a nasty outlay of cash. Imagine what you could do with the money you'll save each year with solar.
As a result of what state legislatures in leasing states have accomplished, you could instead save a bunch of cash. Imagine getting this bill in the mail instead. Whew!
Now, while you have a drastically cut back power bill, you also have a solar lease payment. Essentially, you're renting out your rooftop to a company who then pimps it out with solar panels. Then, you pay a lease payment to them for the power it produces. In each case, this payment added to your existing power bill will be lower than your previous bill, netting you instant savings with nothing down out of pocket! How awesome is that?!
Leasing vs. Buying If you decide not to go with the leasing option, we've calculated the amount of time it would take for your home solar panel system to pay for itself if you put up the cost of the install out of pocket or financed it yourself. This calculation (see the bottom of the page under "5kw Solar System Purchase Payback Time") takes into account all the rest of the incentives below, and assumes you meet all the criteria to take advantage of them (e.g. - having a tax appetite, south facing roof with limited shade, etc.)
10% by 2015 (voluntary)
A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
South Dakota has set an objective of 10% renewable energy by 2015. While that would ordinarily be an adequate first step for an RPS, South Dakota’s RPS is entirely voluntary. There are no penalties or other sanctions for utility companies that do not meet the 10% goal.
Unfortunately, the pattern we’ve seen elsewhere is repeated in South Dakota: a voluntary RPS simply is not enough to spark meaningful incentives for solar power. This voluntary status makes an otherwise respectable RPS seem pretty weak in comparison. Additionally, the program lacks a solar carve out. More on that next.
South Dakota’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them via compliance fees. For South Dakota’s solar scene to really take off, they’ll need to drop the “voluntary” compliance and crack down on utilities if they don’t step up their solar game.
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.
RPS solar carve out
As mentioned above, South Dakota’s RPS lacks a solar carve out, or specified targets for solar production. If the RPS contained specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.
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!
South Dakota Electricity Prices
South Dakota homeowners pay an average of 12 cents per kilowatt-hour (kWh) of electricity. That’s definitely on the lower end of the spectrum and well below the national average of 13.14 cents/kWh. We know you like paying less now, but the long term costs of cheap electricity are through the roof. All that cheap electricity is produced by burning fossil fuels -- tons and tons of earth-killing fossil fuels. When the astronomical environmental costs start to mount, monthly electricity bills are inevitably going to rise as well. When that happens you’re going to feel pretty darn smart for making the early switch to producing your own clean, efficient 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.
South Dakota Solar Power Rebates
South Dakota currently lacks any sort of solar rebate programs. If the RPS set mandatory levels of renewable energy production, we can guarantee the utility companies would offer incentives to help you make the switch to solar. How do we know? It’s worked everywhere that a real RPS has been implemented. Get on it, South Dakota!
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.
South Dakota Solar Power Tax Credits
No State Income Tax
Since South Dakota doesn’t have any income tax, there aren’t any solar tax credits to redeem!
Luckily, you will still benefit from the 30% Federal Solar Tax Credit. There's no cap on the federal tax credit and fortunately for South Dakota, having no state rebate to deduct means a larger tax credit coming your way. Sample calculations follow below -- keep scrolling!
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.
Property Tax Exemption
$50,000 or 70% (greater amount) of total property value
While you won’t save money on your state income taxes, you will save bags and bags of cash with South Dakota’s property tax exemption. All solar power systems less than 5 megawatts (all but the very largest solar power systems) are assessed in the same manner as a conventional energy system (even though the solar power system is actually worth significantly more because of long-term savings on your electric bill). That’s what we’re used to seeing in a property tax exemption. South Dakota then takes it one dramatic step farther: the first $50,000 or 70% of the assessed value of the property used for producing solar power (i.e., your home), whichever is greater, is exempt from property taxes for four years. That may well be the strongest property tax exemption we’ve seen in the country.
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
It may seem like nit-picking given the thousands the property tax exemption is going to save you, but we’d like to see lawmakers add a sales tax exemption as well. Especially due to the lack of utility rebates, that 4-6% a sales tax exemption would save you can really add up -- typically to savings of more than $1,000 on the typical residential solar power system.
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).
Solar Power Performance Payments
South Dakota lacks any utility solar power performance payments. Again, this can be blamed on the voluntary RPS. Mandatory RPS = better solar incentives.
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
Time it Takes for 5kW of Solar Power to Pay for Itself
If you were to install a 5kW solar energy system on your house, we calculate it would pay for itself in 16 years! We based our calculations on a typical resident of Sioux Falls.
How do all the numbers typically add up? Glad you asked! Let’s see:
- Installing a typical 5kW solar system should start at about $25,000. Don’t worry – even without state incentives, you’re still going to save a lot, just in the first year.
- Since the feds calculate the federal solar tax credit based on actual out of pocket costs, no state solar power rebates or other incentives mean a bigger federal tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,500.
- After the federal solar tax credit we subtract your first year’s energy savings, which we estimate to be about $796. That brings your cost after the first year to $16,704.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 16 years. Even with that somewhat slower payback time frame, you can still expect to get about 9 years of profits out of your solar power system. We estimate those profits to be nearly 15 grand through 2039.
- In addition to those direct wallet-fattening savings, you also increased your home value by $15,912, tax free for the first five years!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 120 trees a year, every year your solar power system is humming.
Keep in mind, these numbers are estimates, and your home is unique. Your cost (and your savings) will depend on a lot of factors, including your utility company, roof type, energy usage, and lots of other things. In fact, check out these 9 ways it could be more expensive.
The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. After you fill out that form, 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.
South Dakota Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume to make sure you get credit for any surplus. South Dakota currently lacks any statewide regulations governing net metering, or (more importantly) ensuring that utilities offer net metering in the first place.
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.
South Dakota Interconnection Rules
Curiously, for a state without standard net metering, South Dakota does have statewide interconnection standards governing how you get tied into the grid. The standards are solid overall, adopting the same 4-tiered system we’ve seen in other states. There is, of course, always room for improvement.
First we’d like to see requirements for a redundant external disconnect switch prohibited. Right now, that decision is left to the utility. We’d also like to see insurance requirements eliminated for residential systems. Currently a tier 1 system (those under 10 kW, which covers most residential systems) requires “proof of adequate homeowners, general liability or commercial liability insurance sufficient to insure against all reasonably foreseeable direct liabilities given the size of the small generator facility.” While that requirement is certainly less onerous than others we’ve seen, we think that any insurance requirement is unnecessarily constraining on small systems given their very low risk of accident or injury.
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.
Home Solar Power: Leasing Vs. Purchasing
To lease, or not to lease? 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 leasing route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar leasing company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).
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The consensus on South Dakota solar power rebates and incentives
Despite our reputation for cold weather, we actually get a lot of sun here. As much as most parts of Florida in fact. Unfortunately that tremendous solar power potential is being squandered. The lack of state or utility backed incentives is keeping costs high (compared to solar-friendly states) for homeowners like you to make the switch, and keeping payback time frames slow. The legislature should be harnessing our natural solar resources to help bring down initial costs. That tax credit and the property tax exemption are tremendous, but without any mandatory renewables standards, or any state incentives in place, we’ve gotta give South Dakota a “D” at the moment.