Are Solar Panels Worth It in South Dakota?

6 factors to consider before getting solar panels in South Dakota

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

1. Solar panel installation costs

2. Your energy consumption

3. How long you stay in your house

4. South Dakota solar incentives

5. How you pay

6. The solar company you hire

1. Solar panel installation costs

Average solar panel costs in South Dakota are comparable to the national average. A typical residential solar panel installation costs $58,266 in South Dakota.

The average South Dakota household needs approximately a 16.84 kW system to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your household's energy consumption.

Solar panel costs by system size in South Dakota

2. Your current energy consumption

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.

Get your electrical loads as low as possible before going solar. (For instance, if you have older electrical appliances, upgrade those before investing in solar panels.) That way, you can get a smaller system, which will be cheaper overall.

3. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 10 years on average in South Dakota. 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, according to Zillow. But, you miss out on some of that $53,388 in total avoided utility costs over 25 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.

4. South Dakota solar incentives

Compared to some other states, South Dakota solar incentives are relatively sparse.

There is a property tax exemption for qualifying renewable energy systems. The exemption covers the greater of the first $50,000 of assessed value or 70% of the system's assessed value. That doesn’t help make the installation cheaper upfront.

South Dakota doesn't require utilities to offer net metering. Some utilities, including Xcel Energy, compensate qualifying customers for excess generation under separate small-power-production tariffs, generally at rates based on the utility's avoided costs.

5. How you pay

A solar panel installation costs roughly the same as a new car. You could pay cash, but people tend to finance or lease.

• Solar loans work like any other type of home improvement loan. There’s an application and approval process. You pay it back over time (with interest) each month.

• Leasing solar panels lets you set up a system without the high upfront costs. Monthly payments usually range $150 to $250. Agreements last 20 to 25 years.

6. 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 poor customer service and no follow-up or support.

» COMPARE: Best solar companies

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. South Dakota averages 4.5 to 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? South Dakota (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 South Dakota

It’s a common misconception that solar panels will completely eliminate your monthly power bill — this is not always the case. Still, you’ll likely be paying much less than you would for traditional utility bills.

Benefits of solar panels in South Dakota

• Cheaper energy bills: Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower).

• Better for the environment: Installing solar panels on your roof helps the environment by reducing greenhouse gas emissions and dependence on fossil fuels.

• More energy independence: Solar can reduce how much electricity you buy from the grid. If you pair your panels with battery storage, you may also be able to keep essential appliances running during an outage.

Drawbacks of solar panels in South Dakota

• 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.

• Solar equipment is expensive: 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.

• 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.

» MORE: Solar energy pros and cons

Find solar companies in South Dakota

Compare our picks for South Dakota’s top solar companies to learn more.

South Dakota solar FAQ

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

Going solar in South Dakota might be easier than you think. The main obstacle to going solar is the high upfront cost of purchasing and installing solar panels, inverters and other equipment. For most homeowners, it ends up being worth it as long as their cost savings over time outweigh the initial investment.

Solar costs vs. savings: South Dakota and nearby states