Minnesota Solar Incentive Programs
Key Incentives at a Glance
Minnesota offers one of the best state-level incentive stacks in the Midwest, even without the expired federal ITC.
Sales Tax Exemption
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.
Property Tax 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.
Net Metering
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.
Xcel Solar*Rewards
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.
MN Power SolarSense
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.
Battery Storage Incentives
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.
| Parameter | Details |
|---|---|
| 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 |
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)
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.
Full Incentive Stack Summary
What a typical Xcel Energy customer with an 8 kW system can access in 2026.
| Incentive | Value (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) |
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