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2019 Policy Grade


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

2019 Policy Grade


Avg. Savings/year


Your 2019 guide to getting solar panels for your home in Minnesota

This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Minnesota home. Since there's a lot 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!

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** What's new for 2019 **

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.

Recently, Minnesota 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 solar help. You can get discounted pricing as low as $4,500/kW! This is paired with the strong Minnesota solar panel incentives below.

The Solar Strategy section is focused on the 3 ways of paying for solar in Minnesota, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.

The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Minnesota. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.

Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Minnesota.

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:

How should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels 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!

How much can you save with solar?

Find out

Option 1: Paying cash for solar

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.

Option 2: Using a loan to pay for solar

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.

Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)

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:

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 PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

How much can you save with solar?

Find out

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 Georgia—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:

Minnesota's Renewable Portfolio Standard

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.

Learn more about Renewable Portfolio Standards

Minnesota's 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!

Learn more about Solar Carve-outs

Minnesota Electricity Prices


Grade: C

Minnesota's Electricity cost grade

Minnesota electricity consumers pay an average of 13 cents per kilowatt-hour of electricity. That’s pretty close to the national average of 13.6 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.

Find out why electricity prices matter

Minnesota Net Metering


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.

Learn more about net metering

Minnesota Interconnection Rules

Statewide w/caveats

Grade: 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.

Learn more about solar interconnection rules

Solar Incentives in Minnesota

Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.

These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.

Let's see how Minnesota measures up:

The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.

Minnesota Solar Power Rebates


Grade: C

Minnesota's Solar Rebates grade

Because Minnesota has such a strong RPS, there are a number of great utility rebates offered for solar. Most are paid as a simple calculation of dollars-per-kilowatt of generating capacity, but there's one that's different.

Minnesota Power offers a solar rebate program based on your first-year estimated production. The current incentive is $.83 per kilowatt-hour (kWh), and with an average 5-kW system pumping out about 6,200 kWh, you can expect around $5,150 back as a rebate. That's a great incentive, but they disappear fast, so get in touch with a solar expert near you today and get the ball rolling on that rebate!

Utility CompanyRebate amountCap
Austin Utilities$500/kw$5,000
Brainerd Public Utilities$500/kw$2,500
Dakota Electric$500/kw$4,000
Minnesota Power$.83/kWh (est. 1st year production)No maximum
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
Learn more about solar rebates

Minnesota Solar Tax Credits


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.

Learn more about state solar tax credits

Minnesota Solar Performance Payments

$0.08/kWh for 10 years

Grade: B

Minnesota's Solar Performance Payments grade

Xcel energy offers a great incentive program called "Solar*Rewards" that pays 8 cents per kWh of generation, in addition to any energy bill savings you gain from solar. The program allows you to install a solar system sized to meet 120% of your average annual usage, and you can increase that further if you plan to buy an electric car that you'll be charging at home.

Read more about the Solar*Rewards Program here.

If you're an Xcel customer in MN (that's most of you!), this program can help you save hundreds of dollars per year on top of energy bill savings, so connect with a local solar expert today and see how much you can save!

Learn more about SRECs

Property Tax Exemption


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.

Sales Tax Exemption


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.

Learn more about tax exemptions for solar

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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I'm Going EcoAvatar for Dave LlorensBen ZientaraAvatar for Dave Llorensrichard Recent comment authors
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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… Read more »

I'm Going Eco
I'm Going Eco

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


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


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 no longer exists since that rebate program no longer exists.

Ben Zientara

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!


i am going to make money






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How much would it cost for a city like minneapolis


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