Minnesota solar incentives, tax credits and rebates
Resources to make solar panels more affordable in 2025
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There’s no way around it: Installing solar panels is expensive. In Minnesota, a typical residential solar panel system costs $10,815 to $30,900, depending on the size of your system and what financial incentives you qualify for.
On the bright side, federal and state initiatives exist to make solar energy systems more affordable. Here’s everything you need to know about how state and federal solar incentives can make installing panels more affordable in the Land of 10,000 Lakes.
The federal solar investment tax credit (ITC) is the best financial incentive for most Minnesota homeowners to buy solar panels.
Jump to insightA typical installation costs $10,815 to $30,900. Leasing is cheaper, but you won’t be eligible for the federal solar tax credit.
Jump to insightMinnesota residents can earn credits through net metering, which offsets future utility bills.
Jump to insightResidential solar panel incentives in Minnesota
Depending on where you live, you might be able to take advantage of solar rebates and other programs:
- Solar rebates: Minnesota Power’s SolarSense rebate program is good for up to $5,000 (or 60% of installed costs, whichever is less). Austin Utilities, Dakota Electric Association, Rochester Public Utilities and Owatonna Public Utilities offer solar panel rebates of up to $500.
- Sales tax exemption: You don’t have to pay sales tax on solar panels and other renewable energy equipment in Minnesota.
- PACE financing: MinnPACE is available to commercial, industrial, nonprofit and multifamily residential sectors in Wright, Sherburne, Stearns and Becker counties. PACE (Property Assessed Clean Energy) financing allows property owners to fund renewable energy projects through a special assessment on their property tax bill, repaid over time.
- Property tax exemption: A solar property tax exemption means that — for tax purposes — the addition of a solar energy system won’t result in 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.
Federal solar tax credit
The federal solar investment tax credit (ITC) is the most significant financial incentive for many homeowners buying solar panels in Minnesota. 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 $5,000 in taxes, the ITC reduces what you owe to $2,000.
The credit is nonrefundable, meaning any unused portion carries over to the next tax year. However, it is possible to get a refund check if the credit makes it so that you overpaid during the year.
Additional solar incentives in Minnesota
Check DSIRE for the most comprehensive source of information about solar incentives and policies in Minnesota.
| Incentive type | Amount | Eligible solar equipment | Applicable sectors | Administrator | |
|---|---|---|---|---|---|
| Xcel Energy Solar*Rewards program | Performance-based incentive | Varies | Solar panels | Residential, commercial | Xcel Energy |
| Marshall Municipal Utilities Residential Energy Efficiency Rebate Program | Rebate program | Up to $2,000 | Solar water heat | Residential | Marshall Municipal Utilities |
| Value-Added Stock Loan Participation Program | Loan program | Up to $40,000 | Solar panels | Agricultural | Rural Finance Authority |
| Solar for Schools Program | Grant program | Up to 100% of system costs | Solar panels | Schools | Minnesota Department of Commerce |
| Solar on Public Buildings Grant Program | Grant program | Up to 70% of system costs | Solar panels | Local government, state government, institutional | Minnesota Department of Commerce |
What to know about net metering in Minnesota
Net metering is a system of give-and-take between you and your utility company. It lets you access power from the grid when your panels don’t generate enough electricity. It also lets you earn credits for sending excess solar energy to the grid.
In Minnesota, you earn a bill credit for every kilowatt-hour of surplus electricity you contribute. You can apply these credits toward your electricity costs during periods of lower solar production. At the end of each 12-month period, you can roll over any remaining credits to the next year or cash them out. If you cash out the credits, you’ll be compensated at the utility's avoided cost rate, which is typically lower than the retail rate you pay.
» GREENEST STATES: Minnesota ranked 12th in 2024
How much are solar panels in Minnesota?
After considering the federal solar tax credit, solar panel costs in Minnesota typically range from $10,815 to $21,630.
Your system size greatly affects how much you pay overall. The typical system size for solar systems in Minnesota is 10.1 kW (kilowatts). You might need a larger or smaller system, depending on your average household energy usage.
You can pay cash, but most people finance solar panels with a solar loan. Leasing is cheaper up front, but you won’t be eligible for the federal solar tax credit and other financial incentives.
Average solar cost by system size in Minnesota
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $15,450 | $18,540 | $21,630 | $24,720 | $27,810 | $30,900 |
| After federal tax credit | $10,815 | $12,978 | $15,141 | $17,304 | $19,467 | $21,630 |
Solar resources in Minnesota
Below are some additional resources to help guide you through going solar in Minnesota.
| Company | Customer rating | Pro install | Payment options | Year founded | |
|---|---|---|---|---|---|
 | 4.6 |  | Cash, loan, lease, PPA | 2014 | Learn More |
 | 3.2 | | Cash, loan | 2017 | Learn more |
 | 4.8 | | Cash, loan | 2016 | Learn more |
 | 4.8 |  | Cash, loan | 2018 | Learn more |
FAQ
How much can I save with solar panels in Minnesota?
On average, Minnesota homeowners with solar panels avoid $59,279 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 compared with traditional utility bills. In Minnesota, solar panels usually pay for themselves within 11.5 years.
» EXPLORE: Where your solar savings go the furthest
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 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. 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.
What has Minnesota’s investment in solar been so far?
Total solar investments in the state amount to $3.9 billion, according to the Solar Energy Industries Association.
Bottom line
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 in Minnesota.
Solar costs vs. savings: Minnesota 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** | |
|---|---|---|---|---|---|
| Iowa | $18,720 | $31,200 | 10.19 kW | $3.12 | $46,588 |
| Minnesota | $18,540 | $30,900 | 10.1 kW | $3.09 | $59,279 |
| North Dakota | $14,520 | $24,200 | 13.75 kW | $2.42 | $58,265 |
| South Dakota | $14,340 | $23,900 | 10.09 kW | $2.39 | $54,751 |
| 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, "Minnesota Programs.” Accessed March 29, 2024.
- EnergySage, "The cost of solar panels in Minnesota.” Accessed March 29, 2024.
- Solar Energy Industries Association, "Minnesota Solar." Accessed March 29, 2024.
- SolarReviews, "How much do solar panels cost in Minnesota, 2024?" Accessed March 29, 2024.
- Minnesota Public Utilities Commission, “Net metering & compensation.” Accessed Sept. 25, 2024.
- Office of Minnesota Attorney General, “Residential Solar Systems.” Accessed Sept. 25, 2024.
