Are there any solar panel incentives in Minnesota?
You might be eligible for rebates and performance-based incentives. Minnesota also exempts qualifying solar equipment from sales tax and generally excludes a residential solar system’s added value from property tax assessments.
SolarSense rebates
Minnesota Power’s SolarSense program offers rebates to income-qualified customers installing grid-connected solar. Household income must be below 150% of the area median income. The rebate is based on expected production and is capped at $5,000 or 60% of installation costs, whichever is less. Funding is limited, and 2026 awards were selected through a lottery.
Solar*Rewards program
Xcel Energy’s Solar*Rewards program pays you ongoing money for the solar energy your system produces, rather than just a one-time rebate. You earn about $0.03 per kWh each year for 10 years, and you can also get bill credits through net metering when your system produces extra energy.
If you qualify as a lower-income household, you may also get a large upfront incentive to reduce installation costs. However, funding is limited and often fills quickly.
Solar loan programs in Minnesota
The Minnesota Housing Finance Agency and Department of Commerce work with the Center for Energy and Environment to offer loans of up to $60,000 for eligible solar projects. Solar loans have no income limit or prepayment penalty and offer terms of up to 20 years. However, the loan is secured by your home, and closing costs apply.
Property tax exemption
A solar property tax exemption means that, for tax purposes, the addition of a solar energy system won’t cause an increase in your property's assessed value. Essentially, your property tax bill won’t go up because your solar panels increase the market value of your home. It doesn’t actually make going solar cheaper up front.
Additional solar incentives in Minnesota
- Solar for Schools: Minnesota gives funding to schools to install solar panels, helping them save on energy costs while also using solar as a teaching tool for students. Since it started in 2022, the program has helped many schools go solar and expand renewable energy use across the state.
- Property Assessed Clean Energy (PACE) financing: PACE financing through MinnPACE is available for commercial, industrial, nonprofit or multifamily property owners.
Battery storage incentives
Minnesota offers incentives for battery systems of up to 50 kWh when paired with on-site solar. Funding is limited and available on a first-come, first-served basis.
- Outside Xcel Energy territory: The Minnesota Department of Commerce offers $250 per kWh of storage, up to $7,000.
- Xcel Energy customers: Xcel offers $175 per kWh, or $370 per kWh for income-qualified customers, up to $5,000.
Community solar gardens
If rooftop panels aren’t an option (you rent, your roof is shaded or the upfront cost is too high), Minnesota’s community solar garden program lets you subscribe to a share of an offsite solar facility and receive monthly bill credits for the electricity it produces. Minnesota launched the nation’s first program of its kind in 2013; in 2026 it was renamed the Melissa Hortman Community Solar Garden Program to honor the late House Speaker Emerita.
Newer community solar projects in Xcel territory are generally administered through Minnesota Commerce’s LMI-Accessible program, while older projects remain under Xcel’s Solar*Rewards Community program.
Austin Utilities’s community solar program
SOLARCHOICE is Austin Utilities’s community solar program, which means you can benefit from solar energy without installing panels on your roof.
Instead, you buy a share of a larger solar project, and you get monthly bill credits based on how much energy your share produces. You subscribe to the output of panels in a larger solar project and receive monthly bill credits based on their production.
Net metering in Minnesota
Net metering lets Minnesota homeowners receive compensation when their solar panels send more electricity to the grid than they use.
For solar systems smaller than 40 kW, homeowners can generally choose to have their net excess generation compensated at their utility’s average retail energy rate. Payments may come as a bill credit or check, depending on the utility and the customer’s election.
Compensation options vary based on your utility and system size. Some customers may also be able to bank excess credits for future use, so check your utility’s net-metering tariff before installing solar.
Did you know?
As system sizes get larger, compensation rules can change. For systems between 40 kW and 1 MW, some utilities may compensate excess generation at avoided-cost or other nonretail rates.
Solar panel costs in Minnesota
Average solar panel costs in Minnesota generally range from $16,397 to $32,794.
System size is a major cost factor of going solar. A typical Minnesota household needs about a 7.6 kW solar panel system, which costs $24,928 on average. Depending on your energy needs, you might need a smaller or larger system.
Your total price also depends on whether you add battery storage to your system. Solar batteries cost $7,000 to $18,000, which can nearly double the total system price. The table below depicts average solar panel costs by system size in Minnesota and in the city of Minneapolis.
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Statewide | $16,397 | $19,676 | $22,956 | $26,235 | $29,514 | $32,794 |
| Minneapolis | $15,169 | $18,203 | $21,237 | $24,271 | $27,305 | $30,338 |
Federal mortgage options for solar panels
Some federal mortgage programs let eligible borrowers include solar panels or other energy upgrades in a home purchase or refinance loan. Rules vary by lender.
- FHA Energy Efficient Mortgage: Finance cost-effective energy upgrades through an FHA-insured mortgage. A home energy assessment is required, and expected savings must cover the upgrade cost. Separate FHA rules apply to solar and wind systems.
- VA Energy Efficient Mortgage: Eligible VA borrowers can add up to $6,000 for approved energy upgrades. For costs over $3,000, projected monthly savings must exceed the added mortgage payment.
Compare solar companies in Minnesota
Working with a local solar company in Minnesota makes it easier to understand local incentives.
| Company | Customer rating | Pro install | Max. panel efficiency | Panel warranty | Payment options | Year founded | |
|---|---|---|---|---|---|---|---|
 Blue Raven Solar | Learn More | 3.2 |  | Varies | 25 years | Cash, loan, lease, PPA | 2014 |
 Cedar Creek Energy | Learn More | 3.5 | | Varies | 25 years | Cash, loans, leases, PPA | 2018 |
 Project Solar | Learn More | 3.9 | | 20.9% | 25 years | Cash, loan | 2020 |
» RELATED: Top solar companies in Minneapolis
FAQ
Are solar panels worth it in Minnesota?
Going solar is often worth it in Minnesota for the long-term savings on utility bills.
Over 25 years, residents with solar panels avoid $18,463 in utility costs on average.
Your current electric bill is the starting point for assessing the financial benefits of transitioning to solar energy. Your average energy consumption tells you what size solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.
» COMPARE: Best solar companies
Can I get free solar panels in Minnesota?
No, but you can lease a system with minimal upfront costs. Solar leases generally require a flat monthly fee.
» FREE SOLAR PANELS: Are they really free?
How can I pay for solar panels?
Going solar is like buying a car. You could pay cash, but a lot of people finance or lease with minimal upfront costs.
- Solar loans work like any other home improvement loan. You pay it back over time (with interest) each month.
- Leasing solar panels lets you set up a system without high upfront costs. A solar company installs and maintains the panels on your property, and you pay a monthly fee to use them.
» SOLAR PANELS: Lease vs. buy
Is my house a good candidate for solar?
Solar panels work best on large, unshaded roofs that face south or west. 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. This will cost around $5,000 for a 19-panel setup.
What has Minnesota’s investment in solar been so far?
Total solar investments in the state amount to $5.2 billion, according to the Solar Energy Industries Association.
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, "Programs." Accessed July 28, 2026.
- Minnesota Public Utilities Commission, "Net Metering and Compensation." Accessed July 28, 2026.
- Office of Minnesota Attorney General, "Residential Solar Systems." Accessed July 28, 2026.
- Minnesota Power, "SolarSense." Accessed July 28, 2026.
- Center for Energy and Environment, "MHFA Home Energy Loan." Accessed July 28, 2026.
- Minnesota Commerce Department, "Solar for Schools." Accessed July 28, 2026.
- Xcel Energy, "Solar*Rewards." Accessed July 28, 2026.
- Austin Utilities, "SOLARCHOICE." Accessed July 28, 2026.
- Solar Energy Industries Association, "Minnesota." Accessed July 28, 2026.
