Solar Panels in Minnesota: Cost, Savings, and Rebates

Minnesota may not seem like an obvious hotspot for solar energy, with its long snowy winters. But the state offers some unique advantages that make going solar an increasingly attractive option for homeowners, especially considering recent cost declines.

This guide provides a comprehensive, up-to-date look at the costs, savings potential, available incentives, top installers, and outlook for residential solar across the North Star State. We‘ll cover everything you need to evaluate whether solar panels make sense for powering your Minnesota home.

Recent Solar Growth and Potential in Minnesota

First, let‘s look at the current state of solar energy in Minnesota. Total installed solar capacity has grown rapidly, from just 8 megawatts (MW) in 2009 to over 846 MW by the end of 2021, according to Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA) [1]. The state currently ranks 17th nationally for cumulative solar capacity.

And Minnesota is just getting started harnessing its solar resource. In the next 5 years alone, Wood Mackenzie forecasts the state will double its current solar generation, adding another 800+ MW [2]. By 2026, Minnesota could have over 1,650 MW of total solar capacity installed, enough to power nearly a quarter million homes [3].

What‘s driving this growth? Declining solar equipment costs, supportive state policies, and increasing numbers of homeowners and businesses choosing to go solar. The economics of solar in Minnesota will only become more compelling as prices continue to fall over the next 5-10 years.

What Does a Residential Solar Panel System Cost in Minnesota?

For interested homeowners, one of the first questions is, what exactly will a solar installation cost me?

As of Q4 2021, the average cost of solar panels in Minnesota is $2.74 per watt installed, according to the latest national report by SEIA and Wood Mackenzie [4].

This means that an average-sized 6-kilowatt (kW) solar system for a Minnesota home would currently cost around $16,440 before any incentives or tax credits, calculated by:

  • 6 kW system size
  • $2.74 per Watt cost
  • 6 * $2.74 = $16,440

Actual solar panel system costs can vary significantly, depending on your specific home‘s power needs, roof type and space, and other local factors. Installing solar on your home requires a customized approach.

On the low end, smaller 2-4 kW systems in Minnesota can cost $5,000 to $10,000 before incentives. On the high end, larger 8-10+ kW installs might run you $20,000-$30,000 or more pre-incentives.

We‘ll break down all the cost factors and variables that influence how much you could pay for residential solar panels in Minnesota a bit later on. First, you might be wondering…

How Much Can You Save by Going Solar in Minnesota?

Solar panels may require a sizable upfront investment, which is why calculating the long-term return is so important.

The payoff for solar comes from lowering and eventually eliminating your monthly electricity bills over decades. Any extra solar power generated can be sold back to the grid for credit too. After paying off your initial system cost, those savings really add up.

To determine payback time and lifetime savings for solar in Minnesota specifically:

  • The average monthly electricity bill for a Minnesota home is $110.13 per month according to the U.S. Energy Information Administration (EIA) [5].
  • Over 12 months, that equals $1,321.56 per year spent on average residential electricity.
  • For a 6 kW solar system costing $16,440 before incentives, if we take 80% of that annual $1,321.56 bill to put towards solarsavings (factoring some grid power may still be used at nighttime etc.), it would take roughly 12.4 years to recoup your initial investment of $16,440.
  • Given most solar panels last 25 years or more, you could then see positive returns on investment for 12-13 years, saving an estimated $16,652 in that time on avoided electricity costs according to EnergySage‘s Solar Calculator [6].

So while solar payback periods are a bit longer in Minnesota compared to leading solar states, you can still save thousands over the system lifetime. And that lifetime savings estimate of over $16,500 is after already paying off your initial hardware investment in 12 years.

Furthermore, with the 30% federal tax credit and additional Minnesota solar incentives covered next, you can sharply reduce that payback period by thousands upfront.

Let‘s dig into the various rebates, tax credits, net metering payments and other solar incentives available to homeowners in Minnesota next.

Minnesota Solar Panel Incentives and Rebates

While upfront solar panel system costs in Minnesota fall close to the national average, the state offers a menu of generous policy incentives to increase affordability and return on investment. These solar incentives can reduce your effective hardware costs by thousands after factoring the savings.

Federal Solar Tax Credit

The biggest savings opportunity is the 26% federal Investment Tax Credit (ITC), which remains in effect for systems installed through the end of 2032 after recent extensions. This tax credit applies directly towards the full purchase and installation costs for new solar panel systems [7].

  • For our example 6 kW solar array costing $16,440, the ITC would save you $4,274 off your Minnesota system cost (0.26 * $16,440).
  • In 2033, the ITC drops to 22% for new residential solar installations. Still a great return.

This 2021-extended solar tax credit has already helped over 3 million homes and businesses across the U.S. go solar over the last 15+ years since its implementation, keeping over 500 million tons of CO2 emissions out of the atmosphere [8].

Net Metering

Once your solar panels are setup, Minnesota‘s net metering policy lets you get paid retail electric rates for any excess power you generate, via bill credits from your utility company. So not only do you reduce bills by self-supplying solar power during sunlit hours, you can sell extra juice back to the grid and build credits for nights and winter months.

This makes perfect sense, as you are generating clean energy the utility would otherwise need to produce itself through costlier means. But it is an added bonus not every state allows.

To qualify for net metering in Minnesota, rooftop solar systems must be under 40 kW in capacity for Xcel Energy customers, or 1 MW for other utilities [9]. For reference, 40 kW is enough to power a very large home, so most residential setups would be under that threshold.

This net metering policy has no aggregate caps and has helped spur solar adoption across Minnesota utilities like Xcel Energy.

Made in Minnesota Program

For homeowners looking to further reduce upfront solar costs, Minnesota offers a Made in Minnesota solar incentive program worth up to $5,000 per residential project [10]. Systems must be purchased from a Minnesota-based solar panel manufacturer to qualify.

While the list of qualifying Minnesota solar module makers is limited, pairing this rebate with federal and utility incentives can lead to substantial savings.

Additional Minnesota Utility Rebates

On top of the above statewide solar policies, many Minnesota utility companies also offer solar panel rebates and production incentives to their customers:

  • For example, Xcel Energy offers a *SolarRewards rebate of $0.06-$0.10 per kWh generated by your new system, paid out annually for 10 years [11]. For an average 6 kW residential setup in their territory, that equates to an extra $630-$1,050 per year**.
  • Duluth-based Minnesota Power provides solar rebates up to $2,500 for home installations [12].
  • The local utility Moorhead Public Service offers similarly sized rebates up to $2,000, plus an extra $0.10 per watt up to $500 for grid-tied solar [13].

Check your local Minnesota utility for any extra rebates or incentives available in your area. Municipal utilities and co-ops sometimes have special solar programs too.

When combined with the 30% federal ITC, net metering bill credits, and other statewide savings, Minnesota homeowners have ample opportunities to reduce the upfront and long term costs associated with investing in solar panels.

Next let‘s examine exactly what factors do influence residential solar pricing in Minnesota, before highlighting top local installation companies.

What Determines Minnesota Solar Panel Costs and Pricing?

As shown in the average costs cited earlier, solar panels in Minnesota fall close to national averages, rather than extremes highs or lows. But within the state, quoted pricing can vary dramatically community to community.

Here are the main variables that influence what Minnesota homeowners ultimately pay:

Installation Company and Equipment

  • Leading Minnesota solar installers generally charge $2.50-3.00 per Watt or more, depending on brand of panels, inverter technology, and other hardware preferences. National companies can offer lower pricing but may lack local team expertise and support.
  • Locally owned installation companies based right in Minnesota often provide the best blend of competitive pricing, system quality and workmanship, and long term service and relations.

System Size and Roof Complexity

  • As with anything, larger solar arrays come at a lower price per Watt. So while your house may perfectly fit a small 3 kW system, you‘d pay over 20% less per Watt on a 6 kW system (if space allows).
  • Simple roof planes that minimize custom angles, climbing and maneuvering also cuts labor costs as compared to complex multi-plane roofs.

Location Within Minnesota

  • While the state is relatively compact geographically, average solar insolation (aka recent sun exposure that generates energy) does vary somewhat by region. According to the NREL solar map, the Twin Cities metro area averages 4.5-4.6 sun hours daily, while northern regions dip closer to 4.3 hours in cities like Duluth [14]. That 6% lower solar resource means panels spread across more roof space to compensate.
  • Demand and installer saturation also impacts market pricing dynamics region to region. With everything else held equal, greater demand generally leads to incrementally lower prices as companies compete. Fortunately Minnesota has a thriving statewide market with options across population centers.

When considering Minnesota solar panel quotes from different installers, be sure to factor in: hardware warranties, estimated production output, company experience levels, and of course customer service reputation.

Now let‘s examine who offers the best overall packages for new residential solar clients in Minnesota.

Top Minnesota Solar Panel Installation Companies

With so many equipment configurations and installer options to choose from, it helps to have an expert guiding your selection process. One fantastic free service for comparing Minnesota solar installers is EnergySage.

EnergySage is an online solar marketplace used by over 2 million consumers leveraging their deep database of hundreds of prescreened installation companies across the country [15].

After you input your address, EnergySage provides custom, apples-to-apples solar quotes from highly-rated local installers for easy comparison, while also providing education and support along your decision journey. No commitment required to receive quotes.

We recommend EnergySage as the best way to ensure you receive optimal pricing from reputable Minnesota solar partners. But regarding the top state installers themselves, here are two excellent options to consider:

All Energy Solar

As the state‘s largest solar provider with over 20 years of experience and over 6,000 installs, All Energy Solar brings tremendous expertise along with quality equipment ranging from premium LG solar panels to Tesla Powerwall battery integrations [16]. While not usually the absolute lowest bid, you trade a bit of savings for remarkable service quality and workmanship.

Solar Connection

Another excellent Minnesota-local company statewide, Solar Connection similarly brings seasoned solar expertise to every installation. Having installed over 3,500 solar arrays in Minnesota since 1984, they offer both lower cost equipment like Hyundai panels along with high efficiency SunPower equipment for premium setups [17]. Great blend of quality, performance, and affordability.

Those two companies genuinely stand out for service and positive working relationships in addition to competitive Minnesota pricing. But do gather multiple quotes including national providers to potentially save some dollars on equipment if service experience is less critical.

The last few sections provide solar shoppers with a complete picture of costs, savings, available rebates, top installers, pricing variables, and growth projections. To wrap up, let‘s recap why more and more Minnesota homeowners are choosing to invest in rooftop solar panels for their home energy needs.

Key Takeaways: Why Go Solar in Minnesota?

  • With the state averaging 4.5 sun hours per day over the sunniest months, Minnesota garners enough daily sunlight exposure to make solar a cost-effective green energy solution, especially as panel efficiency continues improving.

  • Declining solar equipment costs, plus robust rebates and tax credits can effectively cut your out-of-pocket solar panel system costs in half or more in Minnesota. Combined with net metering bill credits, accelerated payback periods provide homeowners thousands in long term electricity savings.

  • Minnesota currently boasts over 800 megawatts of installed solar capacity across over 28,000 solar arrays, providing enough electricity to power 140,000 local homes. And total solar generation will double over the next 5 years showing the state‘s commitment to further solar expansion.

  • As solar panels grow increasingly mainstream, Minnesota homeowners can choose from a diversity of reputable, locally based installer options found nowhere else, blending Midwest sensibilities and values with solar equipment expertise.

While winters in the North Star State pose solar production challenges, the economics of paying the high upfront costs continue trending further in homeowner‘s favor each passing year. Do pursue multiple quotes, but you may be surprised how affordable solar has become in Minnesota.


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