Are solar panels worth it in Minnesota?

7 factors to consider before getting solar panels in Minnesota

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process, including several from Minnesota. Here’s what to consider before making the switch.

1. Solar panel installation costs
2. Your energy consumption
3. Minnesota solar incentives
4. Net metering rates
5. How long you stay in your house
6. How you pay
7. The solar company you hire

1. Solar panel installation costs: $10,000 to $30,000 

Average solar panel costs in Minnesota are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $15,450 to $30,900. That price drops to $10,815 to $21,630 after the full 30% tax credit.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. As of publishing, Minnesota’s average cost per watt is $3.09.

Average solar installation cost by system size in Minnesota

2. Your current energy consumption

It’s smart to get your electrical loads as low as possible before going solar. That way, you can get a smaller system, which will be cheaper overall. If you have older electrical appliances, upgrade those before investing in solar panels.

A typical Minnesota household needs a system with a capacity of 10.1 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

Once you know your current energy consumption, you can calculate your potential savings and the time it should take for your solar installation to pay for itself. If you also have an electric vehicle, solar panels will save you even more.

3. Minnesota solar incentives: federal and state 

Solar equipment is 100% exempt from sales tax in Minnesota. Depending on where you live, you might also be eligible for solar rebates from Minnesota Power, Austin Utilities, Dakota Electric Association, Rochester Public Utilities or Owatonna Public Utilities.

The federal solar investment tax credit (ITC) is the most significant incentive for a lot of Minnesota homeowners to go solar. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits.

The ITC drops to 26% in 2033 and then 22% in 2034.

For example, let’s say you spend $10,000 going solar. The ITC would be worth $3,000. If you owe $5,000 in federal taxes the year your system becomes operational, the ITC would cut that down to $2,000.

» EXPLORE: Minnesota solar incentives

4. Net metering in Minnesota: retail buyback rate

Sometimes, your solar panels might generate more electricity than your household can use. Net metering lets you sell that extra to the local power grid. In Minnesota, you earn a bill credit for every kilowatt-hour (kWh) of surplus electricity you contribute. 

At the end of each 12-month period, any remaining credits can be rolled over to the next year or cashed out. If you cash out the credits, you’ll be compensated at the utility's avoided cost rate, which is typically lower than the retail rate you pay.

» GREENEST STATES: Minnesota ranked 12th in 2024

5. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 11.5 years on average in Minnesota. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. Let’s say you spend $25,000 putting solar panels on a house that costs $400,000. It might sell for $16,400 more in a few years, but you miss out on some of that $59,279 in total avoided utility costs over 25 years.

Solar panels last 25 to 30 years.

In other words, don't get solar panels just because you want to sell your house soon. Consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen, instead. 

More good news: Minnesota has a solar property tax exemption, meaning that your property tax bill won’t go up just because solar panels add value to your home.

6. How you pay

It’s great if you can pay for the whole thing upfront. A lot of folks can’t. That’s when solar loans and leases come in.

• Loans: Solar loans work like any other type of loan. They have relatively low fixed interest rates. Once you pay it off, you own your system outright.
• Leases: A solar lease works like a car lease — you get to use the panels but don’t own them. Leasing can be good if you have limited savings. Solar lease agreements typically last 20 to 25 years.

» SOLAR PANELS: Lease vs. buy

7. The solar company you hire

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision.

In the best-case scenario, it’s easy to make the switch and you’re happy with your system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with no follow-up or support.

Use NREL’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house. Project Sunroof is a free solar savings estimator powered by Google Earth imagery.

Monthly costs: Solar payments vs. savings

Think of going solar in terms of your monthly costs. Given rising energy costs in Minnesota and elsewhere, financing solar panels makes sense as long as your monthly loan payment is less than what you would be paying the utility company anyway.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support the panel installation. Here’s what to think about before you commit:

• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Minnesota averages 3.5 to 4.5 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of my roof? Minnesota (and the rest of the United States) is in the Northern Hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels again.

Pros and cons of solar panels in Minnesota

Solar energy has numerous advantages, including a smaller carbon footprint and reduced energy bills. It’s also important to consider the drawbacks.

Benefits of solar panels in Minnesota

• Cheaper energy bills: Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower). Solar panels also protect you from future energy cost increases.
• Better for the environment: Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• More energy independence: Embracing solar paves the path toward true energy independence. It especially works out for people in areas susceptible to power outages.
• Higher home resale value: Installing solar panels can significantly increase a home's value. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in Minnesota

• Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Solar battery costs are generally between $7,000 and $18,000. Getting a solar battery might be strategic if net billing rates decline in Minnesota. That way, you can store energy at home instead of tapping into the local grid when you need to.
• Potential roof leaks: The installation process involves drilling holes into the roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage.
• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in Minnesota

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Minnesota’s top solar companies to learn more.

Bottom line: Is going solar in Minnesota worth it for you?

Going solar in the Land of 10,000 Lakes isn’t just a green move; it's often a smart money move. With electricity costs continuing to rise, more homeowners find solar power is financially worth it in the long run.

Solar costs vs. savings: Minnesota and nearby states