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Minnesota Solar Tax Credits, Incentives and Rebates (2024)
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Updated:
Jun 25, 2024
Written by
Faith Wakefield
Faith Wakefield
Edited by
Tori Addison
Tori Addison
Minnesota solar incentives can reduce the upfront cost of installing solar panels by thousands of dollars. Minnesota residents are eligible for solar incentives like the federal solar tax credit, net metering, tax exemptions and utility company rebates.
Keep reading to learn more about how much Minnesotans can save on their solar installation, or choose one of our best solar companies in Minnesota to speak with a local solar expert.
State Solar Incentives
In addition to net metering and other local incentives, Minnesota offers tax exemptions for solar equipment.
Minnesota Solar Sales Tax Exemption
Incentive value: 100% of state sales tax on a solar system
Frequency: Applied at the time of purchase
Minnesota exempts solar power and heating systems from the state’s 6.88% sales tax. Your solar installation company will fill out the Minnesota Department of Revenue’s Certificate of Exemption on your behalf, so you should not have to do anything to claim this tax break.
Minnesota Renewable Energy Property Tax Exemption
Incentive value: 100% of added property value from installing a renewable energy system
Frequency: Ongoing after initial home value assessment
Minnesotans are exempt from paying property taxes on the value added to their property after installing a qualifying renewable home energy system. Your local assessor will automatically exclude the value of your solar energy system when determining the value of your property for tax purposes.
Local Solar Incentives
Minneapolis and Chaska are two cities in Minnesota with notable city-wide solar incentives. However, many electric utilities across the state also offer generous rebates and funding incentives to solar system owners, making the cost of home solar even more affordable.
| Local Minnesota Solar Incentive | Eligible Location | Estimated Savings | Description | Frequency |
|---|---|---|---|---|
| Green Cost Share | Minneapolis | Between $200–$400 per kilowatt (kW) of installed solar capacity, up to $50,000 | This program offers solar funding to nonprofits, solar group purchases, multifamily units and those in the Minneapolis 4d Affordable Housing Incentive program. Energy efficiency projects are also eligible for funds. | One-time funding |
| Chaska energy rebates | Chaska | $250 per kW of installed solar capacity, up to $2,500 | The city of Chaska offers residents a rebate for installed solar and other home energy-efficiency upgrades. | One-time rebate |
| Minnesota Power SolarSense program | Minnesota Power customers | 60% of installation costs, up to $5,000 | Minnesota Power accepts applications for its solar rebate program between March 1 and March 4 of each year. Applicants are selected randomly to receive this funding. | One-time rebate |
| Xcel Energy Solar*Rewards program | Xcel Energy customers | Residential systems earn $0.02 per kilowatt-hour (kWh) of energy generated. Income-qualified residential systems also earn an upfront incentive of $2 per watt. | A performance-based incentive that is available to qualifying solar customers. Applications are accepted on a first-come, first-served basis starting at the beginning of each calendar year. | Annual payment for 10 years |
| Dakota Electric Association Solar Installation Rebate | Dakota Electric Association customers | Up to $4,000 over 10 years | A performance-based rebate in the form of a monthly billing credit worth $0.08 per kWh generated by residential solar systems. | Monthly credit for up to 10 years |
| Austin Utilities Solar Rebate | Austin Utilities customers | $500 | Austin Utilities customers can claim a rebate when they install an approved solar electric system | One-time rebate |
| Rochester Public Utilities (RPU) Conserve & Save® Solar Rebate | RPU customers | $500 | RPU customers are eligible for a rebate on solar installations larger than 2 kW. | One-time rebate |
| Owatonna Public Utilities (OPU) Conserve & Save® Solar Rebate | OPU customers | $500 | OPU customers are eligible for a rebate towards eligible solar electric and solar hot water systems. | One-time rebate |
| Shakopee Public Utilities (SPU) solar rebate | SPU customers | $500 | SPU customers are eligible for a rebate when they install a qualifying solar system. | One-time rebate |
You can learn more about local incentives in Minnesota by visiting the Database of State Incentives for Renewables & Efficiency (DSIRE) or your local government website.
How To Claim Local Incentives
Your solar installer can assist you in finding and applying for any incentives you are eligible for. However, your local government or utility company’s website is likely to have more information about applying for incentives.
Minnesota Net Metering Explained
Minnesota mandates net metering statewide, meaning that all homeowners with solar are eligible to sell excess energy generated by their solar panels back to their utility companies.
For most solar systems in Minnesota with a capacity of 40 kW or less (which covers virtually all residential systems), customers will receive the average annual retail electricity rate for electricity exported back to the grid.
Learn more about the net metering law in Minnesota on the Minnesota Public Utilities Commission website.
How To Enroll in Net Metering
You can apply for net metering through your utility company. Your solar installer will help you with this process by submitting an interconnection request on your behalf.
To learn more about enrolling in net metering, you can visit your utility company’s website.
Federal Solar Tax Credit
All Minnesota residents are eligible for the federal solar Investment Tax Credit (ITC) worth 30% of their total solar energy system cost. You can claim the credit by filing IRS form 5695 with your federal taxes for the year you install solar panels.
The ITC reduces what you owe in federal taxes and is worth thousands of dollars for most homeowners with a residential solar system. If your credit is worth more than your federal tax burden for a given year, then your credit will roll over for up to five years. Your solar installer can help you apply for this incentive.
This credit is available at the 30% rate through the end of 2032. It will decrease to 26% in 2033 and 22% in 2024 before expiring in 2025.
Estimated Solar Savings in Minnesota
The average cost of a 6 kW solar system in Minnesota is $17,880. However, the upfront cost of your panels will depend on your system size and energy production needs.
Plus, when you account for solar incentives, the upfront cost of your solar panel installation significantly decreases, helping you pay off your panels faster and start seeing energy savings.
The federal solar tax credit saves most solar customers in Minnesota thousands of dollars in federal taxes right off the bat — the tax credit drops the initial cost of a 6 kW system to around $12,516. And Minnesotans can save thousands more on a solar project between the state’s tax exemptions and utility companies’ rebate programs.
Additionally, a solar photovoltaic (PV) system helps you save on your energy bills by generating clean energy and drastically reducing your reliance on fossil fuels. Statewide-mandated net metering in Minnesota also means you can earn energy credits towards your electric bill for the excess energy you sell back to the grid.
The Bottom Line
Although Minnesota has limited statewide solar incentives, between the federal solar tax credit and the ample number of local- and utility-wide rebates available, installing solar panels can be a smart investment in the state.
If you’re ready to make the switch to solar or would like to speak with a solar expert about incentives in your area, click below to get connected with a reputable solar company. Or, you can learn more about our top picks for solar companies.
Frequently Asked Questions About Minnesota Solar Incentives
Minnesota does not currently offer a state solar tax credit. However, all Minnesota residents are eligible for the 30% federal solar tax credit. You can claim the credit the year you install a solar PV system.
Minnesotans are eligible for net metering, property and sales tax exemptions, the 30% federal solar tax credit and many more local- and utility-wide solar incentives programs in 2023.
Yes. According to the Solar Energy Industries Association (SEIA), the price of installing a solar system in Minnesota has decreased by 54% over the last 10 years, and the state now ranks 16th in the country for new solar installations.
Most solar installers offer solar loans for solar panel systems. Although solar financing does not necessarily lower the final cost of a solar system, it can make solar more accessible to homeowners who cannot afford to pay for an entire system in cash. You can also consider a community solar program if you cannot install panels for financial or other reasons.
If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.
