South Dakota Solar Incentives, Tax Credits and Rebates

Solar property tax exemption in South Dakota

Installing a qualifying renewable energy system may increase your property’s value, but South Dakota lets you exclude a large portion of that added value when calculating property taxes.

South Dakota exempts the greater of $50,000 or 70% of a qualifying solar system’s assessed value from property taxes. If the system’s assessed value is $50,000 or less, it may be fully exempt. More expensive systems could still add some taxable value.

The following solar technologies are eligible for this property tax exemption incentive:

• Solar panels
• Solar water heating
• Solar space heating
• Solar thermal electric
• Solar thermal process heating
• Solar pool heating

Additional solar incentives in South Dakota

What to know about net metering in South Dakota

In most states, net metering compensates you for sending any extra solar power into the local power grid.

Xcel Energy does not offer net metering in South Dakota.

South Dakota does not require utilities to offer standard net metering. You may still be able to sell excess power, but many utilities compensate customers at a lower avoided-cost rate rather than the full retail electricity rate. Rules, fees and credit policies vary by utility, so check with your electric provider before installing solar.

Pro tip

To save the most, use solar power as you produce it or store extra energy in a battery for later.

» LEARN: How solar energy is stored in a battery

How much are solar panels in South Dakota?

Average solar panel costs in South Dakota typically range from $20,534 to $41,069.

Your system size greatly affects how much you pay overall. The typical system size for solar systems in South Dakota is 8 kW. You might need a larger or smaller system, depending on your average household energy usage.

Overall costs also depend on if you want a battery. Adding a solar battery costs anywhere from $7,000 to $18,000. The table below presents an idea of solar panel costs by system size in South Dakota.

Ways to pay for solar panels

You can pay cash, but most people finance solar panels with a solar loan. It 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). You also have the option of leasing the equipment.

» SOLAR PANELS: Lease vs. buy

Federal mortgage options for solar panels

Some mortgage programs allow eligible borrowers to include the cost of energy-saving improvements in a home purchase or refinance loan. Solar eligibility, borrowing limits and other requirements vary by program and lender.

• FHA Energy Efficient Mortgages: Eligible borrowers may be able to finance cost-effective energy improvements as part of an FHA-insured purchase or refinance mortgage. A home energy assessment is required, and the improvements must be expected to save at least as much as they cost. FHA also has separate provisions for financing eligible solar and wind systems.
• VA Energy Efficient Mortgages: Eligible veterans, service members and certain National Guard and Reserve members may be able to add up to $6,000 in approved energy improvements to a VA-backed purchase or refinance loan. For improvements costing more than $3,000, the lender must verify that the projected monthly energy savings exceed the increase in the mortgage payment.

Find solar companies in South Dakota

A good solar company helps you navigate local incentives and permitting policies. Compare our picks for South Dakota’s top solar companies to learn more.

FAQ

Bottom line

There’s no way around it: Installing solar panels is expensive. South Dakota doesn’t have many solar incentives to lower the slightly higher cost of solar in the state. If you go solar, make sure to take advantage of the property tax exemption.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar. Turns out, it's worth it for many homeowners, particularly in South Dakota. The table below shows solar costs vs. savings in South Dakota and nearby states.