Are solar panels worth it in North Dakota?

7 factors to consider before getting solar panels in North Dakota

Electricity is relatively cheap in North Dakota, so you’ll save less going solar than the average homeowner in California or New York, where solar panels typically pay for themselves within six years. Here’s what else to consider before making the switch:

1. Solar panel installation costs
2. Your energy consumption
3. North Dakota 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 North Dakota are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $12,100 to $24,200. That price drops to $8,470 to $16,940 after the full 30% tax credit.

If you compare quotes, you’ll hear installers talk about “cost per watt.” This is a little like “price per square foot" when you buy a house. It helps you compare the value of solar energy systems in different sizes.

Nationwide, a typical cost is between $2.50 and $5 per watt. In North Dakota, the average cost per watt is $2.42.

Average solar panel installation cost by system size in North Dakota

2. Your current energy consumption

Look at your latest utility bills to see how much electricity your house needs each month. This tells you what size and capacity your solar system needs to be. A typical North Dakota household needs a system with a capacity of 13.75 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. In North Dakota, solar panels usually pay for themselves within 12 years.

3. North Dakota solar incentives: federal and state

The federal solar investment tax credit (ITC) is a major incentive that reduces the upfront cost of going solar in North Dakota. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits. It will drop to 26% in 2033 and 22% in 2034.

North Dakota also has property tax exemption on the value that solar panels potentially add to your home. This benefit applies to residential and commercial installations.

» EXPLORE: North Dakota solar incentives

4. Net metering in North Dakota: various buyback rates

Net metering lets homeowners with solar panels sell any excess electricity they generate to their local power grid. In exchange for feeding solar energy into the grid, residents earn buyback credits, which offset future electricity bills.

Xcel Energy doesn’t currently offer net metering in North Dakota for solar systems under 100 kW (which excludes practically all residential panel installations). Where applicable, buyback credits are typically provided at the full retail rate, but not always.

For instance, Otter Tail Power Company purchases excess generation at retail rates, but Montana-Dakota Utility’s net billing system currently uses the avoided cost rate, which is $0.0269/kilowatt-hour (kWh) as of publishing. In Fargo, Cass County Electric estimates that a full solar panel system is projected to provide 10 kWh to 45 kWh in bill credits each month.

» GREENEST STATES: North Dakota ranked 43rd 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 12 years on average in North Dakota. 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. 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 by selling you would miss out on some of that $58,265 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. Instead, consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen.

6. How you pay

If you can, it’s often financially strategic to 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, cash isn’t always an option. That’s when loans, leases and other agreements come into play.

• Loans: Solar loans work like any other type of loan. They have relatively low fixed interest rates. Once you pay yours 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.
• Home equity loans or lines of credit (HELOC): Eligible homeowners can borrow against equity in their house to finance a solar panel system. These often have variable interest rates, meaning monthly payments can increase over time.

7. The solar company you hire

People have mixed experiences with solar companies. In the best-case scenario, it’s easy to make the switch and you’re happy with the system’s performance. In the worst-case scenario, you end up paying thousands for midtier solar equipment from a company with poor customer service and no follow-up or support.

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 NREL’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 North Dakota 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 a solar 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. North Dakota averages 4 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? North 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 a north-facing roof, especially if the roof has 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? You might have to replace your roof before installing 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.
• How old are my appliances? Make sure that your electrical loads are as small as possible. If you have an older refrigerator or air conditioning unit, for instance, it’s smart to upgrade before investing in solar panels. That way, you can get a smaller system, which will be cheaper overall.

Pros and cons of solar panels in North Dakota

In 2022 there weren’t many residential rooftop solar systems in North Dakota, but installers were seeing customer interest grow.

Benefits of solar panels in North Dakota

• Cheaper energy bills: The average homeowner in North Dakota 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 North 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: 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 North Dakota. 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.

» MORE: Solar energy pros and cons

Find solar companies in North Dakota

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for the top solar companies in North Dakota to learn more.

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

Going solar in North 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 a lot of homeowners, it ends up being worth it as long as their cost savings over time outweigh the initial investment. Others are happy to go solar for the environmental benefits alone.

Solar costs vs. savings: North Dakota and nearby states