Michigan solar incentives, tax credits and rebates
Resources to make solar panels more affordable in 2024
After using the full federal solar investment tax credit (ITC), average solar panel installation costs range from $11,025 to $22,050 in Michigan. You may be eligible for additional incentives, like Michigan Saves, which offers low-interest loans for homeowners to pay for solar panels and other energy efficiency improvements, and Lansing Board of Water & Light (BWL) rebates.
Here’s everything you need to know about how state and federal solar incentives can make installing panels more affordable in the Great Lakes State.
In Michigan, a typical residential solar panel system costs $11,025 to $31,500, depending on the size of your system and what financial incentives you qualify for.
Jump to insightThe federal solar investment tax credit (ITC) is the best financial incentive for most Michigan homeowners going solar.
Jump to insightNet metering buyback rates are shifting from retail to potentially lower rates, with complete retail rate phase-out by July 2022.
Jump to insightResidential solar panel incentives in Michigan
The federal solar investment tax credit (ITC) is the most significant financial incentive for most homeowners buying solar panels in Michigan. It reduces your federal tax liability by 30% of how much it costs to install solar panels.
The ITC drops to 26% in 2033 and then 22% in 2034.
The ITC is a credit, meaning it directly decreases the amount of taxes you owe. For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If in the year your system becomes operational you owe $15,000 in taxes, the ITC reduces what you owe to $12,000.
Lansing Board of Water and Light rebates
This residential energy efficiency rebate covers a variety of renewable technologies, including solar photovoltaics (panels). The maximum incentive for solar panels is $2,000 for a 4-kW system. Equipment must meet all the program standards specified by BWL to qualify.
Lansing Board of Water and Light rebates are available to both homeowners and renters.
These rebate programs are available only to BWL's residential customers within its service territory in the Lansing, Michigan, area. There is no expiration date for these incentives. Customers can find application forms and more details on the program website or by contacting BWL directly.
Additional solar incentives in Michigan
A law signed in November 2023 will further expand the state’s cap on rooftop solar installations as part of a statewide push to generate all of Michigan’s electricity from clean sources by 2040. Check the DSIRE for the most comprehensive source of information about solar incentives and policies in Michigan.
| Incentive type | Amount | Eligible solar equipment | Applicable sectors | Administrator | |
|---|---|---|---|---|---|
| Nonrefundable Business Activity Tax Credit | Industry recruitment/support | Varies | Solar water heat, solar space heat, solar thermal electric, solar thermal process heat, solar photovoltaics, solar pool heating, fuel cells using renewable fuels | Commercial, industrial | Michigan Economic Development Corporation |
| Alternative-Energy Personal Property Tax Exemption | Industry recruitment/support | 100% | Solar water heat, solar space heat, solar thermal process heat, solar photovoltaics, fuel cells using renewable fuels | Commercial, industrial, federal government | State of Michigan |
| Refundable Payroll Tax Credit | Industry recruitment/support | No maximum | Solar water heat, solar space heat, solar thermal electric, solar thermal process heat, solar photovoltaics, fuel cells using renewable fuels | Commercial, industrial | Michigan Economic Development Corporation |
| Renewable Energy Renaissance Zones | Industry recruitment/support | 100% exemption on state business, education, personal and real property taxes plus local income taxes | Solar water heat, solar space heat, solar thermal electric, solar thermal process heat, solar photovoltaics, solar pool heating | Commercial, industrial, local government | Michigan Economic Development Corporation |
| Michigan Local PACE Program | PACE financing | Varies | Solar water heat, solar space heat, solar photovoltaics | Commercial, industrial, agricultural | State of Michigan |
| Lean and Green Michigan PACE | PACE financing | Varies | Solar water heat, solar space heat, solar photovoltaics | Commercial, industrial, nonprofit, multifamily residential, institutional | Levin Energy Partners |
How much can I save with solar panels in Michigan?
On average, Michigan homeowners with solar panels avoid $53,663 in utility costs 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. In Michigan, solar panels usually pay for themselves within 11 years.
» EXPLORE: Where solar savings go the furthest
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).
Leasing or entering a power purchase agreement (PPA) is often cheaper upfront, but you won’t be eligible for the federal solar tax credit and other financial incentives. You also might qualify for the Michigan Saves or PACE financing programs.
Michigan Saves program
Michigan Saves is a nonprofit that provides loans up to $50,000 for residents to finance energy efficiency upgrades and renewable energy installations. Interest rates typically range from 4.44% to 7.90% APR, though most customers finance at 5.50% APR. Terms are available up to 15 years, with amounts ranging from $1,000 to $50,000. There is no expiration date for this incentive program.
Lean and Green Michigan PACE
Lean and Green Michigan has a property-assessed clean energy (PACE) program that allows commercial, industrial and multifamily property owners to finance energy improvements with no upfront costs. The funded amount covers up to 100% of the project's hard and soft costs, and it’s available to about half the state’s population.
PACE loans are repaid through a special assessment on your property over up to 25 years. The assessment transfers to the new owner if the property is sold.
To qualify, you need a property valued at at least $400,000 with high utility costs (more than $2,000 per month). The funded solar project has to cost at least $100,000. An energy audit is required and your property taxes must be current.
» SOLAR PANELS: Lease vs. buy
What to know about net metering in Michigan
Michigan has transitioned from traditional net metering to a Distributed Generation Program for solar energy. Under this program, implemented in May 2019, solar panel owners receive credit for excess energy sent to the grid. The program applies to all utility customers, but there's a 1% capacity limit based on the utility's peak load.
Buyback rates have shifted from retail rates 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. It’s best to contact your local utility for specific information on participating in the program and installing solar panels.
» GREENEST STATES: Michigan ranked 44th in 2024
How much are solar panels in Michigan?
After considering the federal solar tax credit, solar panel costs in Michigan typically range from $11,025 to $22,050.
Your system size greatly affects how much you pay overall. The typical system size for solar systems in Michigan is 9.81 kW (kilowatts). You might need a larger or smaller system, depending on your average household energy usage.
Average solar cost by system size in Michigan
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $15,750 | $18,900 | $22,050 | $25,200 | $28,350 | $31,500 |
| After federal tax credit | $11,025 | $13,230 | $15,435 | $17,640 | $19,845 | $22,050 |
Solar resources in Michigan
Below are additional resources that can guide you through transitioning to solar in Michigan.
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.
| Companies | Customer rating | Pro install | Payment options | Year founded |
|---|---|---|---|---|
| Blue Raven Solar | 4.7 | Cash, loan, lease, PPA | 2014 | |
| Project Solar | 4.6 | Optional | Cash, loan | 2016 |
| SunPower | 3.4 | Cash, loan, lease | 1985 | |
| ShopSolar | 4.7 | Cash, loan | 2018 |
FAQ
Can I get free solar panels 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 completely free.
» FREE SOLAR PANELS: Are they really free?
How do I know if my house is a good candidate for solar?
It’s best to have plenty of unshaded roof space that faces south or west for optimal sun exposure. It’s also smart to upgrade any old, inefficient appliances first. Reducing your electrical loads now means you can get a smaller system, which will be cheaper.
The condition of your roof matters too — if it needs replacement soon, do that before installing solar panels. Installing solar panels on an old roof might mean you have to remove the panels, replace your roof and then reinstall the panels again. This will cost around $5,000 for a 19-panel setup.
Solar photovoltaic (PV) technologies, more commonly known as solar panels, absorb sunlight and convert it into usable electricity. If you have a lot of shading around your house, they might not get enough sun to power your home.
Is my HOA allowed to restrict solar panels?
No, your homeowners association is not allowed to stop you from putting up solar panels.
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
What has Michigan’s investment in solar been so far?
Total solar investments in the state amount to $1.9 billion, according to the Solar Energy Industries Association.
Bottom line
There’s no way around it: Installing solar panels is expensive. On the bright side, Michigan residents can take advantage of federal tax breaks, rebate programs and subsidized loans to make it more affordable.
Although there aren’t as many incentives as in some other states, appealing tax breaks, low interest loans and other initiatives make going solar worthwhile for many Michigan homeowners.
The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar and incentives in other states. Turns out, it’s worth it for many homeowners, particularly for homeowners in Michigan.
Solar costs vs. savings: Michigan and nearby states
| 6-kW system cost (before incentives) | 10-kW system cost (before incentives) | Typical system size needed* | Average cost per watt | Total utility power cost savings** | |
|---|---|---|---|---|---|
| Illinois | $18,420 | $30,700 | 10.12 kW | $3.07 | $48,565 |
| Indiana | $18,600 | $31,000 | 11.01 kW | $3.10 | $56,472 |
| Michigan | $18,900 | $31,500 | 9.81 kW | $3.15 | $53,663 |
| Ohio | $15,960 | $26,600 | 10.95 kW | $2.66 | $52,568 |
| Wisconsin | $18,600 | $31,000 | 10.26 kW | $3.10 | $54,553 |
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:
- DSIRE, “Michigan Programs.” Accessed March 29, 2024.
- EnergySage, “The cost of solar panels in Michigan.” Accessed March 29, 2024.
- Solar Energy Industries Association, “Michigan Solar.” Accessed March 29, 2024.
- SolarReviews, “How much do solar panels cost in Michigan?” Accessed March 29, 2024.
- The Associated Press, “Michigan will implement ambitious clean energy mandates with goal of carbon-free electricity by 2040.” Accessed July 26, 2024.
- Planet Detroit, “Legislators introduce bills to lift solar cap, restore net metering and establish ‘fair value tariff’ for distributed generation.” Accessed July 26, 2024.
- Grist, “Homeowners associations in Michigan now have to allow rooftop solar.” Accessed July 26, 2024.
- Lean & Green Michigan, “How PACE Works.” Accessed July 26, 2024.
- DSIRE, “Michigan Saves - Home Energy Loan Program.” Accessed June 18, 2024.
