As more Minnesota homeowners look to renewable energy, the benefits of solar energy continue to grow, especially with state and federal incentives that make installations more affordable. With the onset of fall 2024, Minnesota homeowners have access to a variety of programs and rebates designed to reduce the upfront costs of solar energy and enhance the long-term return on investment. In this blog, we’ll cover the top five solar incentives available to Minnesota homeowners this fall and explain how you can take advantage of them.
Federal Investment Tax Credit (ITC)
The Investment Tax Credit (ITC) is one of the most well-known and impactful incentives for homeowners across the United States, including Minnesota. In 2024, the federal ITC offers a 30% tax credit for solar installations, meaning you can deduct 30% of the total cost of your solar system from your federal taxes.
For example, if you install a $20,000 solar energy system, you can claim a tax credit of $6,000, effectively reducing the cost of the system to $14,000. The ITC applies to both residential and commercial solar installations, making it an essential incentive for Minnesota homeowners considering going solar.
How to Qualify for the ITC:
- The solar system must be installed and operational before December 31, 2032, to qualify for the 30% tax credit.
- You must own the system (not lease it) to claim the credit.
- This credit can be used for primary and secondary residences.
With this incentive in place through 2032, homeowners can plan their solar projects with confidence, knowing they will receive a substantial return at tax time.
Xcel Energy Solar*Rewards Program
Xcel Energy’s Solar*Rewards program is a key incentive for Minnesota homeowners, providing ongoing financial benefits for generating solar energy. Through this performance-based program, homeowners who install solar panels receive annual payments for the electricity their system produces over a 10-year period. The Solar*Rewards program is an excellent way for homeowners to not only reduce their energy bills but also generate additional income.
Once your system is installed, Xcel Energy tracks the energy production from your solar panels. Each year, you receive a payment based on the amount of energy your system generates. The incentive is offered on a first-come, first-served basis, with a limited budget that renews at the start of each calendar year. If you’re planning to go solar this fall, now is the time to apply to secure your spot before the budget is exhausted for 2024.
In order to be eligible, your system must be installed and interconnected by an Xcel Energy-approved contractor. Additionally, your solar system should generate less than 40 kW to qualify for residential applications.
With the budget renewal happening annually, securing your spot in the Solar*Rewards program early in the year can ensure you receive maximum financial benefits for the energy your system produces.
Minnesota Solar Energy Sales Tax Exemption
The Minnesota Solar Energy Sales Tax Exemption is another major incentive that significantly reduces the upfront costs of going solar. This exemption eliminates the state’s 6.875% sales tax on all solar energy equipment, including solar panels, inverters, and mounting systems.
For example, if you were to install a $20,000 solar energy system, the sales tax exemption would save you approximately $1,375 in taxes. This is a significant cost reduction, making solar energy more affordable for Minnesota homeowners.
Benefits of the Solar Energy Sales Tax Exemption:
- Available for both residential and commercial solar installations.
- Applies to the cost of equipment and materials needed for your solar energy system, effectively lowering the overall cost of going solar.
This incentive, paired with the federal tax credit, ensures that your upfront investment in solar is much lower than it would be without these programs.
Property Tax Exemption for Solar Installations
Another key benefit for Minnesota homeowners is the Property Tax Exemption for solar energy systems. While installing solar panels can increase the value of your home, Minnesota’s property tax exemption ensures that you won’t be penalized with higher property taxes.
This exemption means that the increased home value from your solar installation is not added to your property tax assessment. Essentially, you get the financial benefit of a higher home value without the burden of increased property taxes. With solar panels lasting up to 25+ years, this exemption provides homeowners with long-term savings on both energy and property taxes.
Net Metering in Minnesota
Net metering is a crucial policy that allows homeowners with solar panels to earn credits for any excess energy their system produces and feeds back into the grid. Minnesota’s net metering policy ensures that homeowners are fairly compensated for this surplus energy at the retail rate (the same rate you pay for electricity).
During the sunnier months, your solar panels may generate more electricity than your home uses. Net metering allows you to send this excess energy to the grid and receive credits that can be applied to your future utility bills—particularly helpful during the winter months when solar production is lower.
Key Benefits of Net Metering:
- Credits from excess energy production are applied to future utility bills, reducing or eliminating energy costs during periods of lower production.
- Minnesota offers net metering for systems up to 40 kW, ensuring that both residential and small commercial systems can take full advantage of this incentive.
Net metering can significantly enhance the financial returns of your solar investment by ensuring that no energy goes to waste.
Maximize Your Solar Investment This Fall
With the range of incentives available to Minnesota homeowners, now is an ideal time to invest in solar energy. By taking advantage of the federal tax credit, Xcel Energy’s Solar*Rewards program, the state’s sales and property tax exemptions, and net metering, homeowners can significantly reduce the cost of solar installations and enjoy long-term financial savings.
At Cedar Creek Energy, we help homeowners navigate the complex landscape of solar incentives and rebates to ensure you get the most value from your solar investment. Contact us today to learn more about how we can help you take advantage of these incentives and make the switch to clean, renewable energy.