2022 North Dakota Solar Incentives, Tax Credits, Rebates (And More)

Here’s a quick look at the solar incentives in North Dakota:

  • Federal Solar Tax Credit
  • 5-Year Property Tax Exemption
  • Net Metering
  • Additional City & Utility Rebates
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 5/19/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in North Dakota?

In this article, we’ll discuss the solar incentives and rebates available to North Dakota homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in North Dakota.

Jump to Section:

  1. Solar Rebates, Tax Credits and Incentive Programs in North Dakota
  2. Net Metering in North Dakota
  3. Federal Solar Tax Credit
  4. FAQ: North Dakota Solar Incentives

 

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North Dakota is slowly becoming more and more solar-friendly, but most residents still pay an average of $26,620 for their solar panel system. This total is based on the average cost per watt of $2.42 in ND and the fact that an 11-kilowatt system is required to offset the average monthly electric bill of $113 in the state.1

Given the high cost of going solar in North Dakota, many residents understandably look for ways to save money before committing to this renewable energy source. Thankfully, the state and federal governments provide access to some crucial solar incentives, which we’ll be taking a look at below.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

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Current Solar Rebates, Tax Credits and Incentive Programs in North Dakota

There are only a handful of incentives provided to North Dakotans. The table below provides some basic information for each incentive available, with more in-depth explanations below.

North Dakota Solar Incentive Description
Federal Solar Tax Credit (ITC) The federal solar tax credit offers a massive credit to your federal income taxes in the amount of 26% of your total cost of going solar. In North Dakota, where most systems average around $26,620, the credit sits at approximately $6,921.
Net metering Net metering is a billing policy that allows you to reduce your energy bills by overproducing energy with your solar panel system. North Dakota has a favorable but standard net metering program. We’ll go into specifics below.
North Dakota Solar/Wind Easements and Laws North Dakota reserves the right for all taxpayers to maintain access to solar equipment and sunlight. The easements and laws for solar guarantee that local municipalities, neighbors, homeowners associations and other bodies cannot restrict your access to sunlight or solar panels.
Renewable Energy Property Tax Exemption Provided you purchase or finance your solar panels, the installation will increase your home’s value. Under normal circumstances, this also leads to your property taxes going up, but North Dakota’s Property Tax Exemption prevents this increase from occurring for 5 years after installation.

North Dakota Solar Tax Credit or Rebate

In addition to the federal solar tax credit, many states offer their own state tax credits to further incentivize going solar. Unfortunately, there is no state solar energy tax credit available in North Dakota.

North Dakota’s Renewable Portfolio Standard (RPS) includes a goal of producing 10% of all electricity in the state via renewable energy sources, including wind, geothermal and solar.2 To that end, North Dakota promotes converting to solar with its net metering policy. The push to clean energy doesn’t include a state tax credit, and it’s unclear whether there will be one in the future.

Other North Dakota Solar Incentives

According to the Solar Energy Industries Association (SEIA), North Dakota is ranked 51st in the nation — behind all other states and Washington, D.C. — as far as solar adoption and promotion go.3 Wind is stealing the spotlight currently and is accountable for around 17% of the state’s total energy production. However, crude oil, natural gas and coal still produce far more energy in ND than any renewable source.4

Solar is still gaining popularity, although adoption is relatively slow at this time. As a result, there aren’t any additional solar incentives available to North Dakotans aside from those mentioned in the table above.

North Dakota Solar Property Tax Exemption

One benefit of going solar in North Dakota is the Solar Property Tax Exemption. After most home improvements, the value of your home increases, and your property taxes go up accordingly. Installing solar panels will increase your property value, but the State Property Tax Exemption prevents this bump in value from increasing your taxes for five years.

Note that this is not a rebate of any kind, so the real benefit is a boost to home value without having to pay the corresponding property taxes for a few years.

North Dakota Solar Sales Tax Exemption

Solar equipment falls under the state’s Sales and Use Tax Exemption for Electrical Generating Facilities. This policy prevents sales tax from being applied to equipment that will be used to generate power, but it’s only for commercial and industrial solar.5

Net Metering in North Dakota

Net metering is a policy that is mandated in many states to help incentivize homeowners to convert to clean energy. Through interconnection, electricity can pass from your photovoltaic system to the local power grid. 

When your panels fail to produce enough energy, the grid supplies what is needed for your home. And when your panels produce more energy than you’re using, the excess energy can be sent to the grid in exchange for credits from your utility company. These credits can be used toward your future utility bills. 

While North Dakota might not provide the best solar incentives, it does have a standard net metering policy. It mandates that net metering be made available to all customers of investor-owned electric utilities, although it’s not currently required from electric cooperatives or municipal utility providers. 

The policy states that the excess generation will be credited to your bill at the utility company’s avoided-cost rate. This amount is below the retail value of energy, but it can still help you eliminate your electric bills.

Local Incentives

While it’s not mandatory, some electric companies in North Dakota provide their own incentives and rebates for their customers. Depending on your utility provider, you could be eligible for rebates on energy-efficiency upgrades including solar water heaters, lighting and heat pumps, all of which some solar panel installation companies can provide. We’ll include the available incentives below.

  • Xcel Energy Residential Energy Efficiency Rebate Programs: Customers of Xcel can enjoy some rebates on energy-efficient equipment. If you’re an Xcel customer, you could get money back for upgrading to LED lighting, energy-efficient heating and cooling components and some renewable energy equipment.
  • Otter Tail Power Company Energy Efficiency Rebate Program: If you’re an Otter Tail Power customer, you have access to many different rebates on energy-efficiency upgrades. You could get back between $25 and $1,400 for a number of improvements, including insulation, LED lights, heat pumps and more.
  • Other smaller utility companies provide similar rebates, so you can check with your provider for additional incentives.

Federal Solar Tax Credit

One of the most appealing solar incentives available to North Dakota homeowners is the federal solar investment tax credit (ITC). This credit scales with your system cost and can reduce your federal income taxes owed by 26% of the total price you pay to go solar. In North Dakota, where the average solar PV system totals around $26,620, that’s a standard credit of $6,921, bringing the effective total down to a more manageable $19,699.

The federal tax credit will only be available at 26% until the end of 2022. Installations that are completed in 2023 will only get a 22% credit, and residential installations completed in 2024 or later will receive no credit at all. It’s possible that Congress will renew the bill and extend the deadline for the ITC, but there’s no guarantee, so we don’t recommend waiting to see if the credit will increase.

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Related Topics

FAQ: North Dakota Solar Incentives

Despite solar still getting off the ground in North Dakota, the EcoWatch team gets questions regularly from residents about solar incentives available in the state. Below are some of the questions we see most often, along with our responses.

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Karsten Neumeister

Solar Expert

Karsten Neumeister is a solar energy specialist with a background in writing and the humanities. Before joining EcoWatch, Karsten worked in the renewable energy sector of New Orleans, focusing on solar energy policy and technology. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.