As a 20-year veteran of the solar industry, I need to level with you – North Dakota offers virtually no incentives for generating your own solar power. In 2021, North Dakota ranked dead last in total solar production nationwide. Just 0.2% of the state‘s renewable portfolio comes from solar, compared to 26% from wind and 25% from biomass. I‘ll examine why ND has lagged behind in supporting solar later on. First, let‘s focus on what little financial benefits are available for homeowners wanting to go solar despite the state‘s indifference.
Leveraging the Federal Solar Tax Credit
The lack of state support places even more importance on the 26% federal Investment Tax Credit (ITC) while it lasts. For homeowners purchasing a new solar array, this tax credit currently offsets 26% of total system costs. That credit value will drop to 22% next year before expiring in 2034. So time is of the essence.
For you as a homeowner, the ITC could shave $3,775 off the average cost of installing a 6 kW system in North Dakota. Given the average pre-incentive cost of $14,520 for a 6 kW array based on current $2.42/Watt installation pricing, that‘s a sizable chunk of change. Just note that for now, the ITC only applies if you purchase rather than lease a solar system.
Limited Net Metering Policies Provide Minimal Value
North Dakota does have a statewide net metering policy requiring utility companies to purchase any excess solar energy you feed back into the grid. But here‘s the catch – only three investor-owned utilities operating in more populous areas actually have to abide by net metering rules:
- Montana-Dakota Utilities Co.
- Northern States Power Company
- Otter Tail Power Company
If you receive power from a rural electric cooperative or municipal utility, net metering won‘t be an option where you live. And the three covered utility companies only compensate net excess generation at the avoided cost rate of 2.6 cents per kWh, far below the statewide average retail rate of 12.8 cents per kWh. So while better than nothing, don‘t expect net metering to move the needle too much on long-term savings.
Property Tax Exemptions Provide Minor Long-Term Savings
North Dakota does offer a 100% property tax exemption on the value added by a solar installation for 15 years after going solar. Given the state‘s average home value of $181,300 and effective tax rate of 1.32%, this could save the average homeowner around $360 over the 15-year exemption period. Hardly a windfall, but a nice bonus on top of energy bill reductions.
Even without state backing, solar power can still provide positive returns in North Dakota. Electricity rates currently average $0.128 per kWh statewide, and are projected to rise at 1% per year.
As a solar expert, I‘ve run the numbers and found that North Dakotans installing a properly-sized solar array can realistically achieve a:
- 13-15 year payback on a 3 kW system
- 12-13 year payback on a 5 kW system
- 8-10 year payback on a 6-8 kW system
This table summarizes the economic potential of home solar panels in North Dakota given the realities of no state incentives outside of the federal tax credit and minimal net metering pay rates:
| Technology | North Dakota | National Average |
|---|---|---|
| Solar LCOE | $0.098/kWh | $0.084/kWh |
| Coventional Electricty Rate | $0.128/kWh | $0.137/kWh |
So while solar may cost slightly more upfront per kWh generated compared to leading solar states, conventional power rates are cheap enough in North Dakota that you can still recoup your investment in a reasonable timeframe.
As renewable energy expert Dr. James Lyons, professor at NDSU, told me: "Lack of support mechanisms will dampen demand somewhat, but there‘s still financial incentive for North Dakota homeowners to install solar panels based purely on the cost savings."
I couldn‘t agree more, James. Don‘t let the lack of state support completely deter you. Take advantage of the federal tax credit while you can, and go solar in North Dakota for considerable long-term energy savings.
