Minnesota Solar Incentive Programs

10 yr
Avg. payback
$1,100/yr
Avg. annual savings
None
State tax credit
retail
Net metering rate
Federal tax credit update: The 30% residential solar tax credit (Section 25D) ended for systems whose installation was completed after December 31, 2025, under Public Law 119-21. Systems whose installation was completed in 2025 can still claim it on a 2025 return. New 2026 installations do not qualify for homeowners who buy. What changed

Key Incentives at a Glance

Minnesota offers one of the best state-level incentive stacks in the Midwest, even without the expired federal ITC.

Federal ITC expired for 2026 homeowner installs. The Section 25D residential credit expired December 31, 2025. Third-party-owned systems (leases/PPAs) and commercial projects may still qualify under Section 48E through 2027.
Active

Sales Tax Exemption

6.875% Saved

Minnesota fully exempts solar equipment and installation labor from the state sales tax. On a typical 8 kW system (~$24,000 gross), this saves approximately $1,650 automatically, no application required.

Active

Property Tax Exemption

Full Exemption

Under Minnesota Statutes 272.02, subdivision 24, solar energy generating systems are exempt from property tax, so your solar equipment is not taxed as part of your assessment.

Active

Net Metering

Full Retail Rate

Minnesota law requires all electric utilities to offer net metering. Systems under 40 kW may elect to be paid for monthly net excess at the utility's average retail energy rate. Co-op and municipal customers may instead take kWh credits that roll over but expire at the end of the calendar year.

Active (Xcel customers)

Xcel Solar*Rewards

$0.03 to $0.05/kWh

Xcel Energy pays a production-based incentive on top of net metering for 10 years. An 8 kW system producing ~10,000 kWh/year earns $300 to $500/year additionally. Pre-approval required before installation. Subject to annual funding limits.

Lottery / Limited

MN Power SolarSense

$0.27/kWh (est.) up to $5,000

Minnesota Power customers in the Duluth area can apply for the SolarSense rebate, a lottery-based program that typically opens around March 1 each year. Maximum rebate $5,000 or 60% of installed cost. Pre-approval required.

Active

Battery Storage Incentives

$175 to $250/kWh

Xcel Energy offers $175/kWh (up to $5,000) for paired battery storage. Non-Xcel customers may access $250/kWh (up to $7,000) through MN Department of Commerce programs. Income-qualified households receive enhanced rates.

Xcel Solar*Rewards, Full Details

The most impactful utility program for the majority of Minnesota homeowners.

ParameterDetails
Who qualifies Xcel Energy residential customers in Minnesota
Incentive structure Production-based payment per kWh generated, paid monthly on top of net metering credits
Rate range (2026) ~$0.03 to $0.05/kWh, rate is updated periodically by Xcel; verify current rate at Xcel's program portal before signing a contract
Duration 10 years from system activation
Pre-approval required Yes Yes, must receive program approval before installation. Post-installation applications are not accepted.
Annual cap Program has annual funding limits. Apply early in the calendar year.
Income-qualified option Enhanced upfront payment (~$3/watt) available for qualifying households, contact Xcel for current eligibility thresholds
Estimated 10-year value 8 kW system → ~$3,000 to $5,000 total over 10 years at mid-range rates
Always pre-approve. Xcel Solar*Rewards requires application and approval before your system is installed. Skipping this step disqualifies your system from the program permanently. Get pre-approval in writing before any installer begins work.

Net Metering & Community Solar

Two pathways to solar savings in Minnesota, own a system or subscribe to community solar.

Net Metering (Own a System)

Eligible utilities: All electric utilities in Minnesota (required by law)

System cap: 40 kW residential

Monthly credits: Full retail rate

Annual surplus: Paid at average retail energy rate (if elected); co-op/muni kWh credits expire at year end

Applies to: IOUs, electric cooperatives, and municipal utilities

Community Solar Gardens

Minnesota has one of the country's strongest community solar programs. Renters and homeowners who can't install panels subscribe to a share of a larger solar garden and receive bill credits.

Xcel territory: Large, active market with many operators

No roof required, credit applied to monthly bill

Subscription terms vary. Compare operators before signing.

Minnesota Savings Estimator (2026)

$1,144
Est. annual bill savings
$400
Solar*Rewards / yr (Xcel)
10 to 13 yr
Est. payback (no ITC)

Estimates only. Based on avg MN retail rate ~$0.13/kWh, 1,100 kWh/kW/yr, Solar*Rewards at $0.04/kWh mid-range. No federal ITC. Sales tax exemption already reduces system cost.

Major Utilities & Programs by Territory

Your utility determines which programs beyond state-level incentives you can access.

Xcel Energy Twin Cities metro, Rochester, St. Cloud, western MN. Solar*Rewards production incentive + battery rebate ($175/kWh). Largest service territory.
Minnesota Power Duluth and northeastern MN. SolarSense lottery rebate program (opens ~March 1 annually, up to $5,000). Apply early.
Dakota Electric Association South metro (Burnsville, Eagan, Apple Valley, Lakeville). $500 commissioning rebate per premise, systems up to 20 kW.
Great River Energy coops Various rural MN cooperatives. Net metering required by state law. Individual rebate programs vary, contact your coop directly.
Minneapolis residents Minneapolis Green Cost Share program offers up to 25% cost share for qualifying addresses. Verify eligibility at minneapolismn.gov.

Full Incentive Stack Summary

What a typical Xcel Energy customer with an 8 kW system can access in 2026.

IncentiveValue (8 kW system)Status
Sales Tax Exemption (6.875%) ~$1,650 saved at purchase Active
Property Tax Exemption ~$250 to 400/year indefinitely Active
Net Metering Bill Credits ~$1,100 to $1,300/year Active
Xcel Solar*Rewards ~$300 to $500/year for 10 years Active (pre-approval required)
Federal ITC (Section 25D) $0, expired Dec 31, 2025 Expired
CEE Below-Market Financing Reduced interest rate on loan Available (income-qualified)
Yes
Bottom line: Minnesota is one of the Midwest's top solar markets. The sales and property tax exemptions meaningfully reduce both upfront cost and long-term burden. Xcel Solar*Rewards adds $3,000 to $5,000 over 10 years beyond bill savings. Despite no federal ITC, payback for Xcel customers typically runs 10 to 13 years, better than many comparable states.

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SolarPrograms.com, Solar Incentive Information by State

Information current as of October 2026. Verify incentive status with your utility and a licensed installer before purchase. Xcel Solar*Rewards rates change annually, confirm current rate at Xcel's program portal.

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