by Jeff Blyskal

Last updated April 2016

Here are the tax credits and other incentives we could identify in December 2021 for the Twin Cities area. Keep in mind that at that time Congress was considering legislation that would improve the federal tax credit for residential solar projects. Check with your utility company and dsireusa.org for up-to-date info.

Federal tax credit: Uncle Sam will reimburse you 26 percent of what you paid for panels, equipment, storage devices, installation, and permits. The current credit is in place through 2022; in 2023, the credit is scheduled to decline to 22 percent, and then in 2024 it disappears for residential solar projects, if the program isn’t renewed.

Net metering: If your system produces electricity that you don’t use, it’s pushed onto the grid, your meter spins in reverse, and your utility pays or credits you for it, typically at the full retail price you pay when you buy. But if you are signed up on a time-of-use rate plan, you’ll get charged higher rates when you buy during peak times, but solar-energy producers often get paid lower non-peak rates when they sell.

Even if you produce a lot more electricity than you use, you won’t get rich as a solar-electricity generator: With municipal utilities, any credit surplus you build up over a year expire at the end of your annual billing cycle, and you get paid nothing for that; if you’re with investor-owned Xcel, it will pay you at an “avoided cost” rate, which is lower than the retail rate you pay when you buy electricity.

Solar Renewable Energy Certificates (SRECs): Xcel customers with home solar systems up to 40kW can enroll in the utility’s SolarRewards program and receive annual payments of $0.07 per kilowatt-hour of energy they produce. You must sign a 10-year contract and agree to convey all the Solar Renewable Energy Credits created by the system to Xcel. As we went to print, Xcel had proposed to cut this incentive to $0.04/kWh, subject to approval by the state Department of Commerce.

Rebates: For qualifying low-income homeowners, Xcel also offers a rebate of $2 per watt of capacity installed.

Dakota Electric offers a performance-based rebate of $0.50 per watt of installed capacity with a maximum payout of $4,000 for up to 8kW of generating capacity. The rebate gets credited to your monthly bill at the rate of $0.08 per kWh produced by your system for 10 years or the $4,000 maximum, whichever comes first.

Property tax exemption: Any increase in your home’s value as a result of installing solar panels is exempt.

State sales tax exemption: You won’t pay sales tax on your system.