Minnesota's Solar Incentives and Benefits Are Better Than Ever | Solar.com

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Minnesota’s Solar Incentives and Benefits Are Better Than Ever

Minnesota has historically relied on unstable fossil fuels for electricity. However, as concerns over localized pollution and climate change have risen in the land of 1,000 lakes, coupled with rising utility prices for homeowners, Minnesota has aggressively started to pursue widespread solar deployment.

The average price currently in Minnesota is 12 cents per kWh. This falls just under the national average (13 cents per kWh). Though Minnesotans aren’t paying insane rates for their electricity (yet), those energy prices will certainly begin to rise.

To become less dependent on fossil fuels, the state continues to encourage renewable energy adoption through legislation and policies with the electricity companies.

Minnesota has one of the nation’s best Renewable Portfolio Standards. The state not only requires utilities to generate a certain amount of their energy from renewable sources, but it also requires them to do this by a certain date. In order to encourage this adoption so they aren’t penalized with fines by the state, utilities, in turn, will offer generous rebates and incentives for homeowners who switch to renewable energy and help them meet their goal.

Renewable Portfolio Standards

Every utility company in Minnesota is required to have 25% of their generation coming from renewable energy by 2025. The larger utilities in Minnesota are held to even larger standards. These investor-owned utilities are required to have an additional 1.5% of their overall energy generation in solar power alone!

The state’s largest utility, Xcel is required to have 31.5% of its generation from renewable sources by 2025. With a requirement like that – there must be favorable incentives for homeowners.


All utilities in Minnesota are required to have net metering. In the Gopher State, net metering policies allow a homeowner to receive full retail credit for any excess kWh’s produced by their solar system. Projects are capped at 40 kW, but most homeowners will fall way below this system size anyway.

Xcel, the state’s largest utility, has a Solar Rewards program for its customers looking to install a PV system. Homeowners can earn 8 cents welcome to minnesota.jpgper kWh that their system produces through the program.

To participate, they must not receive incentives through the Made in Minnesota program (more on this later) and must assign the renewable energy credits (RECS) their system produces to their utilities for the next 10 years.

Minnesota Power has an incentive program that allows solar customers to get paid out up to 94 cents per kWh their system produces. The SolarSense program is first to come first serve, and can not exceed $20,000 or 60% of the total system cost.

Otter Tail Power offers a solar incentive program to its customers for $1,250 per kilowatt of their system, not exceeding 50% of the system costs. For a 5kW system, that’s $6,250 off the cost of a system for a homeowner!

Beyond the investor-owned utilities, most public utilities in Minnesota have incentive programs for solar customers as well. Below is a list:

  • Owatonna Public Utilities – $.50 per installed watt ($500 per kW) of solar up to 10 kW systems.
  • Rochester Public Utilities – $.50 per installed watt ($500 per kW) of solar up to 10 kW systems.
  • Austin Utilities – $.50 per installed watt ($500 per kW) of solar up to 10 kW systems
  • Brainerd Public Utilities – Rebates at $2/watt installed, up to $4,000; systems limited to <40 kW
  • Moorhead Public Service Utility – Up to $1,500 per kW installed
  • New Ulm Public Utilities – $1 per watt, for new systems up to 40 kW, capped at $2,000 per project.
  • Dakota Electric – Rebate of $.50 per watt for installed capacity, Does not exceed $4,000

Made in Minnesota

If you are a homeowner in one of the big three investor-owned utilities (Xcel, Minnesota Power, and Otter Tail Power) who purchases solar equipment made in Minnesota, you can also qualify for the Made in Minnesota (MiM) solar incentive.

The incentive is performance-based, and the incentive amounts vary based on the type of solar system and size. Applicants are selected through a lottery process, and residential homeowners can earn up to .14 cents to .27 cents per kWh the system produces. They are paid out annually each year for the next 10 years.

The Federal Solar Tax Credit (Federal ITC)

After rebates and incentives are calculated, homeowners can claim the Federal Solar Tax credit on their system. The ITC covers 30% of the overall system cost and includes upgrades needed on their home in order to go solar. Check this video to know more about Federal Solar Tax Credit.

For Minnesotans, now is the perfect time to take advantage of all these incentives and go solar! 

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