Your 2020 guide to getting solar panels for your home in Montana
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Montana 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!
** What's new for 2020 **
Montana legislators haven't done a whole lot to make it easier for you to go solar, but the state's Public Services Commission came through in a big way for 2020 and beyond. NorthWestern Energy advanced a frankly villainous proposal to end net metering, reduce compensation for excess solar energy made by home solar panels, and impose new fees on solar owners. Thankfully the PSC not only rejected the proposal, but responded with a resounding "NO."
The PSC not only rejected NorthWestern's proposal, but also decreed that net metering would be the law of the land until distributed solar generation reaches as much as 5% of the utility's peak load. For context, Montana currently has enough rooftop solar to meet about 1% of peak demand, which means you'll have solid net metering for years to come.
Why this matters for you
Want to get solar panels for you home? Net metering provides you with 100% credit for every kilowatt-hour your panels generate, meaning you save as much money as possible and solar pays off its cost faster. Montana's commitment to net metering means you can rely on it long into the future. If you're ready to see how much solar can save you, get quotes for solar now.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in Montana, 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 Montana. 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 Montana.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Montana Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Montana|
|Solar Loans in Montana|
|Solar PPAs in Montana|
|Solar Purchase Payback Time in Montana|
|Montana Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Montana
Figuring out the best way to go solar in Montana 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 to pay for solar panels in Montana
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. As you can see, Montana has the potential for decent financial returns. The purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a loan (the orange bars) and paying for the system over time means you'll never actually put down any of your own money.
That's what makes the solar loan option better. If you take a HELOC, you'll pay the system cost down monthly, but you still get a huge tax credit after the first year. All you need is great credit—or the equity for a HELOC.
Read more below about each of these two options for solar in Montana!
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. You'll see a net return of almost $17,800 in 25 years if you pay up front. But it requires a significant up-front investment.
If you have equity in your home or good credit, you can get a solar loan or HELOC with an interest rate of 4% or less. 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 $24705. 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 $17,800 in income. Solar offsets enough of your energy bill to save you about $1,172 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 when you pay up front for a 8.1-kW rooftop solar system:
- Installing a typical 8.1-kW solar system should start at about $24,705. 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 26% of $24,705, for a tax credit of $6,423. Montana also throws in a $1,000 tax credit for married couples who install solar panels. Your total investment is now down to just $17,282.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $1,172. That reduces your cost after the first year to only $16,110.
- Your system will pay for itself in just 6 years, and over its 25-year life, you'll see a total net profit of $17,793. The internal rate of return for this investment is a respectable 6.5%.
- And don't forget... your home's value just increased by around $12,900, too (your expected cost after solar incentives)!
- 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 251 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Montana. 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 $25,000 sitting around to pay for solar. As long as you have 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 Montana, 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. Your tax savings will be huge in the first year—more than enough to offset the small difference between the loan payments and electric bill savings. All this means you'll never have to spend a cent on solar, and you'll still come out way ahead over 25 years.
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 $24,705, with a fixed rate of 4% or lower 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 a Montana solar purchase with a loan:
- Installing a typical 8.1-kW solar system should start at about $24,705. 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 $1,172, but your annual loan payments will be $2,268, meaning you would spend $1,096 on solar this year, but...
- You'll also see a huge tax break. The Feds give you 26% of the cost of your system back as a tax credit, which in this case is $6,423. Montana also tosses in a tax break of $1,000 per married couple. You'll be paying over time but getting all the benefits up front!
- The electricity savings will continue for 25 years, while your loan payments will last only 15. By the end of the 25-year life of your panels, you'll come out $8,480 ahead.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 251 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Montana. 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)
Montana does not offer solar Power Purchase Agreements or leases. Perhaps it would be a good idea to contact a solar advocacy organization and ask them to fight for solar in your state!
Montana 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 Montana:
Montana's Renewable Portfolio Standard
15% by 2015
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.
Montana’s RPS was phased in over three multi-year periods. In 2008 and 2009 all public utilities and competitive electric suppliers had to generate at least 5% of retail sales from renewable resources. Starting in 2010 that minimum was raised to 10%. In 2015 the minimum amount of renewable resource-based electricity again rose to 15%, where it will remain.
Montana’s RPS has been 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 to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
15% by 2015 looked like a strong goal in the beginning, but 2015 has come and gone, and without further action, Montana will be stuck with no clear direction on future renewable development. The Renewable Portfolio Standards in other states go further, mandating from between 20% and 40% renewable energy by next decade. So while 15% by 2015 was an excellent short-term target, lawmakers in Helena have some work to do in the near future if they really want to spur incentives for solar power. The program could be even better if it had specific targets for Montana’s solar panels.
Montana's Solar carve-out and SRECs
The one thing Montana doesn’t include in its RPS is a specific requirement for solar. If the RPS contained specific carve-outs for clean and efficient solar panels, or mandates for environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.
Montana Electricity Prices
Montana homeowners pay an average of 11 cents per kilowatt-hour (“kWh”) of electricity. That’s really cheap! Nearly two cents below the national average. We know you like paying less now, but the long term costs of cheap electricity are simply astronomical. All that cheap electricity is produced by burning fossil fuels. Tons and tons of greenhouse gas spewing fossil fuels. As those environmental costs rise (and rise), monthly electricity bills are inevitably going to climb as well. Solar power is already cheap and efficient, even compared to current fossil fuel prices. Just imagine how much cheaper it will be in ten years, or even twenty, when your solar power system is still humming along. Just remember to thank us for the tip.
Montana Net Metering
In 2019, the Montana Public Services Commission rejected attempts by the state's main utility company, NorthWestern Energy, to reduce the amount paid for solar energy and levy new fees based on peak demand of solar owners. The Commission also put in place rules that net metering in the state would be preserved until the solar power reaches 5% of the state's total energy generation capacity.
Montana requires all investor-owned utilities to offer net metering. All surplus energy you produce will be applied as a credit to your next monthly bill. Unfortunately, if you manage to run a surplus for an entire 12-month period (customers may elect to start yearly cycles in January, April, July or October), the accumulated surplus is granted back to the utility without compensation. We think they should cut you a check. We’d also like to see the current 50 kW size limit raised or removed for net metered systems, allowing larger commercial and industrial customers to meet on-site generation needs.
While electric companies other than investor-owned utilities are not covered by the regulation, the Montana Electric Cooperatives’ Association (“MECA”) has adopted model net metering/interconnection guidelines that mirror state law, but with an even lower 10 kW system size limit. Net metering is available in whole or part from most MECA members.
Montana Interconnection Rules
Interconnection is a mixed bag here as well. While systems up to 10 megawatts are ensured access to the grid for all Montana utilities, including co-ops, all systems are also must be equipped with a redundant external disconnect switch that serves only to cost you extra money at installation. The state regulation does not mandate a standard agreement, but NorthWestern Energy does use a standard agreement for getting net-metered systems hooked up to the grid.
Montana Solar Incentives
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 26% 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 Montana 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.
Montana Solar Power Rebates
Way back in 1997, Montana had some of the first rebates programs. Sadly, here it is 20 years later and the state is lagging behind in helping its citizens go solar. We'd like to see a return to even the modest rebates that were here just a couple years ago, but we're not going to hold our breath.
The good news is the rebates of the past helped bring the costs of solar down so far, you can expect it to still make financial sense here in good ol' Big Sky country.
Montana Solar Tax Credits
In addition to the solar power rebate from NorthWestern Energy, when tax day rolls around you’ll also get some cash back from the state. Montana’s Residential Alternative Energy System Tax Credit offers a tax credit on 100% of the price of a solar power system, up to a maximum of $500 for individuals and $1,000 for households with more than one taxpayer. The credit may be carried over for up to four years.
Property Tax Exemption
100% for 10 years
In addition to the money you’ll get back on your state income taxes, our legislators have made sure you’ll also save bundles of money in property taxes. Installing a solar power system adds a great deal of value to your home. Thanks to the Renewable Energy Systems Exemption, up to $20,000 of assessed value from your solar power system is 100% exempt from all property taxes for 10 good long years. That’s thousands of dollars saved over the next decade!
Sales Tax Exemption
No State Sales Tax
Without a state sales tax in Montana, you pay zero extra dollars on the installation of that beautiful new solar panel system! Thanks, Montana!
Low-income Solar Programs
Grade: FLearn more about low-income solar programs available in the U.S.
The consensus on Montana solar incentives, rebates, and tax credits
Despite the reputation for cold winters, Montana actually gets a whole lot of sun. In fact, the solar resource potential for most of the state meets or exceeds that of even the sunniest parts of Florida. Unfortunately state legislators are doing only a so-so job of promoting solar power here. What’s really needed is an RPS strong enough to kick-start a strong performance incentive program. With ongoing performance payments for solar power production, the merely adequate 11-year payback timeframe would drop dramatically. For now, we give out a tentative “C” grade here.
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!