2024 Minnesota Solar Incentives

Updated Feb. 13th, 2024

Minnesota Solar installations have nearly doubled in recent years. It’s no secret that one of the drivers of the renewable energy boom in Minnesota are various solar incentives offered by the state, IRS, and electrical utilities. Here is a comprehensive list of the solar incentives offered throughout the state in 2024.

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Net Metering (Utility Company Pays You!)

For more than 40 years Minnesota homeowners have benefitted from the best net metering law in the country. The law, passed in 1983, allows Minnesotans to be compensated for their own energy in a regulated market. Net metering is the term for a billing arrangement that allows customers to send excess solar energy back to the grid and get paid by the utility at retail rate. Net metering limits depend upon utility. Publicly traded utilities like Xcel Energy offer full net metering up to 40 kW (AC), or about 100 panels.

Investment Tax Credit (ITC)

The big news recently in solar incentives was the passing of the Inflation Reduction Act. This law provided 10 years of tax incentives for commercial and residential projects. The federal government gives back 30 percent of the total project cost with no limit on the size. If a solar system costs $100,000, the customer would qualify for a $30,000 tax rebate.

Solar for Minnesota Schools

Minnesota passed a bill that allocated money for schools or universities looking to offset energy use with solar. The solar incentive, called Solar for Schools, will pay for a portion of the solar project. The amount each school qualifies for depends on the size of the system and other factors, like attendance and economic conditions.

Dakota Electric

Dakota Electric is an energy cooperative in Dakota County serving cities of Eagan, Apple Valley, Lakeville, Farmington, parts of Rosemount and Hastings. In 2024, Dakota Electric offers its customers a $500 rebate for installing solar energy projects.

Xcel Energy

Xcel Energy is the largest electrical utility in the state of Minnesota serving a large portion of the Twin Cities metro area. The largest portion of residential solar installations in Minnesota fall into Xcel Energy’s service territory. This year, for the first time in a decade, Xcel Energy increased its solar incentive for its customers. Xcel Energy’s solar program is called Solar Rewards. Solar Rewards is a performance-based incentive. Qualified solar installers add a production meter to all Xcel Energy customers who put in a solar system, which tracks energy production. Right now, Xcel’s solar incentive is 3 cents per kilowatt hour of solar production paid out yearly for ten years. If a customer installs a 10 kW system (about 25 panels) on a south-facing roof, they could expect to receive about $360 a year from Solar Rewards. The solar incentive program pays customers for ten years, so the customer would receive a total of about $3,600 from the program.

Commercial Incentives

REAP Grants

For farmers and other businesses in rural areas, the USDA has a grant program that will recover up to 50 percent of the cost of a solar project. The program accepts applicants in all 50 states, including Minnesota and Wisconsin, however the grant must be applied for accepted prior to construction of the project.

Accelerated Depreciation

Commercial solar installations may qualify for additional tax incentives on top of the Investment Tax Credit. Commercial solar projects qualify for accelerated depreciation. The program, called modified accelerated cost recovery system, or MACRS, allows a portion of the cost of the solar project to be recovered over several years via annual deductions.

Changing laws

With all the available incentives there has never been a better time for Minnesotans to purchase a solar energy system. This might not always be the case. A recent change in California’s net metering law no longer requires utilities to buy back electricity at the retail rate. The energy companies in California, the nation’s leader in solar energy, are now paying for excess solar production at a lower rate, called avoided cost. This is a huge win for energy companies who have fought against net metering laws for decades. In Minnesota, several state senators have introduced bills that would change the current law for net metering in Minnesota. If any change in the law were to occur over the next few years, the customers who already have solar would be ‘grandfathered’ into the current net metering rules and continue to receive the retail rate for excess energy over the life of the system. If you have any questions about solar for your home or business, or want more clarification on solar incentives offered in Minnesota, please give us a call and one of our energy consultants would be happy to help.