Are solar panels worth it in Michigan?

7 factors to consider before getting solar panels in Michigan

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

1. Solar panel installation costs
2. Your energy consumption
3. Michigan solar incentives
4. Net metering buyback 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 Michigan are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $15,750 to $31,500. That price drops to $11,025 to $22,050 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. In Michigan, the average cost per watt is $3.15.

Average solar installation cost by system size in Michigan

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.

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

A typical Michigan household needs a system with a capacity of 9.81 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on 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.

3. Michigan solar incentives: federal and state

Additional solar incentives in Michigan include low interest loans and utility company rebates. However, for most homeowners, the federal solar investment tax credit (ITC) is the most significant incentive for most homeowners to go solar.

The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits. For example, let’s say you spend $10,000 going solar. The ITC would be worth $3,000. If you owe $15,000 in federal taxes the year your system becomes operational, then it would reduce that to $12,000.

4. Net metering in Michigan: buyback rates

Net metering lets homeowners with solar panels sell any excess electricity they generate to their local power grid. In Michigan, buyback rates are shifting from the retail rate to potentially lower rates.

Legislative efforts are underway to improve conditions for solar customers, including proposals to lift solar caps and establish fair value tariffs. But the outcome remains uncertain. It’s best to contact your local utility for specific information on participating in the program and installing solar panels.

Getting a solar battery might be strategic if net billing rates continue to decline in Michigan. That way, you can store energy at home instead of tapping into the local grid when you need to.

» GREENEST STATES: Michigan ranked 44th 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 years on average in Michigan. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

Solar panels last 25 to 30 years.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. However, 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.

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 $53,663 in total avoided utility costs over 25 years.

6. How you pay

It’s great if you can pay for the whole thing upfront. You own the system from day one and receive the benefits of available tax credits; plus, you don’t have to pay interest on a loan. Of course, that’s not always an option, which is why loans, leases and other agreements can come into play.

• 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: Leasing panels is one way to get the benefits of solar energy without the high upfront cost. 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.
• PPAs: Similar to leasing, a power purchase agreement (PPA) lets you install solar panels without the upfront costs. You sign a long-term contract with a solar services provider to purchase the electricity generated by the panels at a predetermined rate.
• Home equity loans or lines of credit (HELOC): Eligible homeowners can borrow against equity in their home. These often have variable interest rates, meaning monthly payments can increase over time.

7. The solar company you hire

We’ve heard from dozens of solar customers in Michigan. 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. Use the National Renewable Energy Laboratory’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. 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 Michigan 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. Michigan averages 2.5 to 3.5 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? Michigan (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.

Pros and cons of solar panels in Michigan

In the best-case scenario, it’s easy, 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.

Benefits of solar panels in Michigan

• Cheaper energy bills: The average homeowner in Michigan uses a lot of power, which adds up to a lot of savings when you switch to solar. 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: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study mentioned above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in Michigan

• 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.
• 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 Michigan

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

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

Going solar in Michigan can be a worthwhile investment for homeowners looking to reduce their long-term energy costs and environmental impact. While the initial installation costs can be significant, federal tax credits and potential energy savings over time can make solar increasingly attractive.

However, recent changes to net metering policies in the state may affect financial returns, so it's crucial for prospective solar adopters to carefully evaluate their specific situation, including energy usage patterns and local incentives. Additionally, Michigan's variable climate means that while solar production may be lower in winter months, the long summer days can provide substantial energy generation, potentially offsetting annual electricity costs for many households.

Solar costs vs. savings: Michigan and nearby states