Minnesota solar rebates and incentives: 2024 guide

Solar panel systems in Minnesota 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 Minnesota.

As a Minnesota homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The programs 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.

Minnesota Housing Finance Agency (MHFA) Fix-up Loan 

Minnesota Housing's Fix-up Loan offers homeowners the chance to upgrade their home with affordable loans. The Fix-up Loan provides $2,000 to $75,000 with fixed interest rates and repayment terms up to 20 years.

In addition to the great rebates and incentives above, Minnesota also offers tax exemptions for solar panel systems. The solar sales tax exemption ensures that you won't have to pay a sales tax on your system.

If you connect your solar panel system to the grid, you can benefit from net metering, one of the best solar panel incentives available in Minnesota. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

Minnesota's net metering program is solid. Here are a few nuances to keep in mind:

• Compensation rates vary from utility to utility. Excess solar generation is credited to customers at the average utility energy rate, which is slightly less than what you pay per kWh. All utilities use the same formula to calculate this rate (total revenue minutes fixed charges, then divided by annual kWh sales), but the numbers vary. 

• You can request to be credited at the Simultaneous Purchase and Sale Billing Rate. This is a flat rate or a Time-of-Day rate. The average utility energy rate is usually more favorable.  

• Credits can be rolled over month-to-month. But you might lose them at the end of the year. Public utility customers are paid at the avoided cost rate for any leftover credits at the end of the year, whereas cooperative and municipal utility customers will lose unused credits.

Learn more about Minnesota's net metering programs:

Minnesota 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 Minnesota, you can also use your battery to boost your energy independence and provide backup power during an outage.

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