Michigan solar incentives, tax credits and rebates

Financial resources for going solar in 2024

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Do you own or rent?

house with solar panels in the wintertime

The average residential solar panel system is $13,769 in Michigan after you use the full federal solar investment tax credit (ITC).

Michigan also has several statewide incentives, including the Michigan Saves loan program, which offers homeowners loans with low interest rates for solar panel installations and other energy efficiency improvements. Lansing Board of Water & Light (BWL) customers are also eligible to apply for rebates when they go solar.


Key insights

  • The average federal solar investment tax credit (ITC) value is $5,901 in Michigan.
  • You may also take advantage of rebates and loan programs in Michigan.
  • Michigan homeowners with solar panels save an estimated $23,652 over 25 years.

Solar incentives in Michigan

The federal solar investment tax credit (ITC) is the biggest factor in reducing the cost of going solar in Michigan. If you install a residential solar panel system by the end of 2032, you will receive a federal income tax credit equal to 30% of the system's total cost, including equipment, labor and permits.

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

For example, an average system in Michigan costs around $19,670. At that price, you can get a $5,901 credit when you file your taxes.

The solar tax credit is not a rebate or refund — you must claim it when you file federal taxes in the year that your solar panel system becomes operational. To do this, you have to complete Form 5695. The rebate is also nonrefundable, so any unused amount rolls over into the next tax year.

» MUST-KNOW: The tax benefits of owning a home: deductions and secrets

More residential solar incentives in Michigan

Michigan has two great loan and rebate programs for residents who are ready to go solar.

  • Michigan Saves loan: You might qualify for a $1,000 to $50,000 solar loan through the Michigan Saves program. As of 2023, homeowners are eligible for annual percentage rates (APRs) from 4.44% to 7.90%, with most financing at 5.50%. Terms are up to 15 years. However, rates, terms and loan amounts vary by lender and applicant.
  • Lansing BWL rebate: Lansing BWL customers can get rebates of $500 per kilowatt (kW), capped at 4 kW, for their new solar system.

What to know about net metering in Michigan

Net metering is when your solar energy system produces more energy than your home needs and you sell it to your utility instead of storing it in a solar battery. To qualify for net metering in Michigan, your system must be 20 kW or less. Payment for your extra electricity is credited to your next month’s electricity bill.

Solar resources in Michigan

Below are additional resources that can guide you through transitioning to solar in Michigan.

» GREENEST STATES: Michigan ranks No. 42

Find solar companies in Michigan

Compare popular solar companies available in Michigan below. Read our guide to finding the best solar companies for more.

Do you own or rent?

FAQ

Can I get solar panels for free in Michigan?

There are no programs we could find for free solar panels in Michigan. You can lease solar panels or enter a power purchase agreement (PPA) with little to no upfront costs, but it’s not free. Solar leases generally require a flat monthly fee.

» FREE SOLAR PANELS: Are they really free?

How can I pay for solar panels?

You can pay cash, but most people finance solar panels. A solar loan works a lot like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). If you are considering a solar loan, lease or PPA (power purchase agreement), always ask:

  • Is there a down payment?
  • How much will I pay per month?
  • Will monthly payments increase, and by how much?

» SOLAR PANELS: Lease vs. buy

How much can I save with solar panels in Michigan?

In Michigan, the average savings is $23,652 over 25 years. Even if you don’t generate 100% of your energy needs, you can still save a lot of money versus paying traditional utility bills.

Does Michigan have any solar incentives for businesses?

The Lean and Green Michigan PACE program is designed to help businesses and other nonresidential properties finance clean energy projects.

Solar photovoltaics (PV panels), solar water heat, solar space heat and other renewable technology are eligible. The program is currently available in Troy, Southfield, Royal Oak, Pleasant Ridge, Ferndale and Rochester, as well as the following counties:

  • Antrim County
  • Bay County
  • Calhoun County
  • Delta County
  • Eaton County
  • Genesee County
  • Grand Traverse County
  • Houghton County
  • Huron County
  • Ingham County
  • Kalamazoo County
  • Leelanau County
  • Macomb County
  • Marquette County
  • Montcalm County
  • Saginaw County
  • Washtenaw County
  • Wayne County

» MORE: Commercial solar panels

Bottom line: How much are solar panels in Michigan?

Going solar is cheaper in Michigan than in many other states. With the help of the federal solar investment tax credit and local solar incentives, it’s even more affordable. Even if you don’t replace all your energy needs with solar, you could still save $23,652 on average over 25 years.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much it costs to go solar in Michigan and the average solar costs in other states.

Solar costs: Michigan vs. nearby states

*Before the federal investment tax credit (ITC); **When you pay in full upfront

Article sources

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

  1. DSIRE, “Michigan Programs.” Accessed Dec. 13, 2023.
  2. EcoWatch, “How Much Do Solar Panels Cost in Michigan?” Accessed Dec. 13, 2023.
  3. United States Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Dec. 13, 2023.
  4. Solar Energy Industries Association, “Michigan Solar.” Accessed Dec. 13, 2023.
  5. Michigan Saves, “Home Improvement Loans for an Energy-modern Home.” Accessed Dec. 13, 2023.
  6. Lansing Board of Water & Light, “Save Money & Energy.” Accessed Dec. 13, 2023.
  7. Lean & Green Michigan, “How PACE Works.” Accessed Dec. 13, 2023.
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