2023 Solar Incentives Guide for Rochester, MN - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Rochester.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated May 04, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Rochester?
Xcel Energy - Solar*Rewards Program
Medium-sized Systems 25.1-500 kW: $0.0375/kWh
Large Systems (>500kW): Determined through competitive bid
Solar Energy Sales Tax Exemption
Wind and Solar-Electric (PV) Systems Exemption
Wind: 100% exemption from real and personal property taxes
Wind Energy Sales Tax Exemption
Xcel Energy (Electric and Gas) - Residential Energy Efficiency Rebate Program
Natural Gas Furnace Existing Home: $200-$400
Natural Gas Furnace New Construction: $100-$200
Natural Gas Hot Water Boiler: $100-$400
ECM Furnace: $100
Central AC: $150-$450
Tank Water Heater: $75-$500
Tankless Water Heater: $250
Attic/Wall Insulation: 30% of project cost
Air Sealing: $150-$200
ECM Motor Furnace Fan: $125
Programmable Thermostat: $10
Heat Pumps: $175-$475
Water Heating: $100-$250
Clothes Washer: $10
Ground Source Heat Pump: $150/ton
Brainerd Public Utilities - Residential Energy Efficiency Rebate Program
Clothes Washer: $35
Electric Clothes Dryer: $35
Room/Window A/C: $35
High Efficiency Electric Water Heater: $35
Central A/C Tune-Up: $35
Central A/C: $200-$350
Mini Split/Ductless A/C: $250
ECM Replacement Motor: $100
Heat Pump Water Heater: $250
Air Source Heat Pump: $250
Geothermal Heat Pump: $100/ton
Xcel Energy - Renewable Development Fund Grants
Connexus Energy - Residential Energy Efficiency Loan Program
Home Energy Loan Program
Renewable Energy Production Incentive
1.0¢/kWh for certain hydro facilities in need of repair
Rochester Public Utilities - Solar Rebate Program
Rochester Public Utilities - Residential Conserve and Save Rebate
Clothes Dryer: $50
Dehumidifier: $15 - $25
Dishwashers: $25 - $40
Refrigerators/Freezers: $25, plus $15 bonus if properly recycled
Room Air Conditioners: $25, plus $15 bonus if properly recycled
LED Bulbs: 50% of cost up to $7 per bulb
LED Fixtures: 50% of cost up to $20
Ceiling Fans with LED Lighting: 50% of cost, up to $15 - $25
Central AC: $100 - $200, plus additional incentives per SEER above 14.5
Furnace Fan Motors: $50
Geothermal Heat Pumps: $200/ton plus $20/ton per EER above minimum efficiency requirement, plus $250 bonus with desuperheater
Heat Pump Water Heaters: $60-$400/heater, not to exceed 50% of cost
Smart Thermostat: $50-$100, not to exceed 50% of cost
Air Source or Mini Split Heat Pumps: $100-$2,200 plus $10/ton per EER above minimum efficiency requirement, not to exceed 50% of cost
Central A/C Tune-Up: $25
Federal Residential Renewable Energy Tax Credit
Solar incentives help mitigate the cost of installing solar panels on your home. This category of financial incentives is intended to encourage more people to switch their home over to renewable energy. The incentives might include upfront discounts, cash back or credit towards your monthly utility bill. Some incentives are handled by the federal government, some by the Minnesota government and some by your utility company, county or municipality. Types of solar incentives might include:
- Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the government. (A tax credit is different from a tax deduction.)
- Rebates: Rebates, or partial refunds after a purchase, are normally given before any solar tax credits are calculated. These rebates can be offered by your local utility company, by your county or by your state.
- Tax Exemptions: Your solar panels could qualify for exemptions on both sales and property tax. Sales tax exemptions are effective at the time of purchase. Property tax exemptions allow you to ignore the value that solar panels add when calculating property taxes on your house.
- Net Metering: Be sure to talk to your Rochester utility company about signing a net metering contract. This will allow you to get a credit towards your monthly utility bill for the value of excess energy your solar panels generate. You may receive either a dollar-for-dollar credit or a percentage of the value.
Federal Solar Incentives
When you hear the term "solar incentives," federal incentives are likely the first thing that comes to mind. The Federal Solar Investment Tax Credit, or ITC, is probably the most commonly known federal solar incentive. The ITC provides a tax credit for a specific percentage of your solar system's cost.
The ITC can be credited towards the value of a solar system installed on your primary or secondary residence in the United States. The solar panels have to have been installed on a property you own after January 1, 2006 for you to claim the credit. The ITC originally paid out 30% of all installation costs (panels, labor, accessories and equipment), although the total amount has fluctuated slightly over the years between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the claim amount.
Your local Rochester solar panel installer can provide more information about the ITC and how it may apply to your situation.
In August 2022, the ITC (now called the Clean Energy Credit) was expanded and extended by the passing of the Inflation Reduction Act. The new Clean Energy Credit extends until 2035. Homeowners can now apply for a 30% credit for solar systems installed between January 1, 2022 and December 31, 2032. This credit will then decrease annually until the date of expiration. Starting in 2023, it will also be easier to claim credits for energy storage systems under this new program.
Click here to learn more about the new Inflation Reduction Act. Your local Rochester solar panel installation experts can answer your questions and explain how the new Clean Energy Credit will apply to you.
State & Local Solar Incentives
Tax credits, rebates and more might be provided at multiple levels. In addition to federal solar incentives, there are often state and local ones as well. Some incentives are offered for only a limited time, while others are ongoing. Your local solar incentives might come from the Minnesota government, or from your specific county or municipality.
Next Steps for Installing Solar in Rochester
You can apply for and receive solar incentives from the federal government and the Minnesota government, as well as from your local utility company. This increase in availability of solar initiatives over the last 15 years has helped increase solar adoption nationwide. Your local Rochester solar panel installer can help you learn more about which incentives you might qualify for, and get you started on the path to switching to renewable energy today.
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EcoWatch's Rochester, MN Solar Incentives FAQs
What if I add solar panels to a rental property, vacation home or commercial property? Will I still qualify for incentives?
Many solar incentives apply to a property you own that is located within the United States, and most secondary residences will fall into this category. Other solar incentives may be available for commercial properties, depending on the details. We recommend getting in touch with your local solar installer and/or tax professional to better understand what incentives may apply to your specific situation.
My home already has solar panels installed. Do I qualify for any incentives?
If your solar system was installed after January 1, 2022, you may qualify for the recently increased 30% tax credit under the Inflation Reduction Act. If your system was installed between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the year it was installed. Talking to the company that installed your system, or any local Rochester solar installer, can help you learn more about what incentives you might want to apply for.
How much will a solar system save me on my electric bill in Rochester annually?
After adding solar panels to your home in Rochester, you can expect to save approximately $1,028.15 per year, or approximately $19,534.82 over the next 20 years.
What are the environmental benefits of switching to solar energy?
You can lower your carbon footprint by 450 pounds of CO2 a year by switching to solar panels. This adds up to roughly 9,000 pounds in 20 years. In addition, solar power is a renewable energy source, which means that making the switch lessens the drain on our planet's resources.
How long until the federal solar tax credit ends?
The Clean Energy Credit (formerly called the federal solar tax credit, or ITC), is slated to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.