Michigan solar rebates and incentives: 2024 guide

Solar panel systems in Michigan are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in Michigan.

As a Michigan homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The incentives below are some of the most impactful ways to bring down your solar costs. 

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

Michigan Saves Home Improvement Loan

Michigan Saves Home Improvement Loans offers homeowners the chance to upgrade their home’s energy efficiency with favorable loans. With current rates between 6.90% and 7.69%, Michigan Saves negotiates competitive APR with residential lenders. Eligible loan amounts range from $1,000 to $100,000 with terms up to 15 years.

Bonus: HOAs can no longer stop you from going solar

This one isn't an incentive, but it's worth mentioning. Thanks to a new state law, homeowners' associations (HOA) are prohibitted from banning solar panel installations. This change paves the way for increased solar adoption in the Great Lakes State.

In addition to the great rebates and incentives above, Michigan also offers tax exemptions for solar panel systems. The solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

Utility companies in Michigan—including Xcel Michigan, DTE, Consumer's Energy, Great Lakes Energy Coop, other electric co-ops, and municipal providers—do offer solar buyback programs through the state’s Distributed Generation Program. 

While the sun is shining, your solar panels might produce more electricity than your home needs at any given moment. Under the net billing solar buyback programs in Michigan, you can sell that excess power back to the grid for credits on your electricity bill. 

The catch is that the utility companies only offer partial credit for every kWh—you’re selling the electricity to them at a significant discount, compared to what they’ll charge you to buy that electricity back later. 

The exact rates depend on the utility company, but it’s generally about half of the retail rate. Great Lakes Energy Coop, for example, pays about $0.06 per kwh sent to the grid —less than half of the retail rate. 

If you want to squeeze the most possible value out of your solar panels under net billing, consider installing a solar battery.

(Michigan previously offered a net metering program, which was more consumer-friendly in several important ways. But as of 2016, utility companies in the state are no longer required to offer true net metering for new solar installations.)

Michigan doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh in size are eligible for the 30% federal tax credit. In Michigan, you can also use your battery to use more of your solar production and for backup power during outages.

If you're looking for solar installers in Michigan, here are some popular suggestions: