Is Solar Worth It in Michigan? (2024 Homeowner's Guide)

Watch Below: What Should You Expect When Going Solar in Michigan?

How to Figure Out if Solar Panels are Worth It in Michigan

Solar panels are an outstanding investment for most Michiganders, but they aren’t ideal for everyone. Below are some of the metrics you can use to determine your property’s solar viability.

What’s Your Home Electricity Consumption?

Solar panels provide significant savings for most homeowners on energy bills, which means the more electricity you use in a month, the higher your potential savings will be. The baseline for determining if solar panels are worth it is a 500-kWh monthly consumption. Homes that consume less than this might not be best for solar panels, and those that consume more are better suited for this renewable energy source.

The average monthly energy consumption in Michigan is around 676 kWh, which is well below the national average or 881 kWh but quite a bit higher than the cutoff for solar panels to be a good investment. The energy rates are much higher in Michigan than in most other states — an average of 19.32 cents per kWh as opposed to the national average of 16.79 kWh — so solar will likely be a good investment for your home even if you use less power than most homeowners in your area. You can check your average consumption on your past energy bills.

How Much Is It To Go Solar in Michigan?

The price of solar panels in Michigan depends largely on the size of the system you need. Panels are priced based on a per-watt basis, with Michigan residents paying around $3.62 per watt. This is well above the national average of $3.33 per watt. That means you’ll pay an average of $3,200 more in Michigan than you would for a similar size system in most other states.

However, the total expenditure is well below average because of the small 7-kW system required in the area to offset energy bills. The total price averages around $17,738 after the federal tax credit is considered. For comparison, the higher electricity demands in the rest of the country — 881 kWh per month — demand a larger system, usually around 9 kW. Larger systems require more panels, which, even at a lower cost per watt, drives up installation costs.

Solar panels are more valuable in areas where energy rates are high or where consumption is above average. Although Michiganders use less power than most U.S. residents, the electricity rates average around 19.32 cents per kilowatt-hour, which is well above the national average. As such, solar panels are more valuable in Michigan than in most states because the cost they offset is higher per kWh.

What’s the Payback Period for Solar in Michigan?

Most rooftop solar systems pay for themselves over time by providing significant energy savings every month. The timeline for these savings paying off your home solar system is called the solar panel payback period, and this is a great metric for determining solar viability. The payback period considers energy consumption, available sunlight on your property and more. The average payback period in Michigan is just 10 years, which is below the national average of 12 years. The majority of solar customers in Michigan have an estimated payback period between 7 and 13 years. If you use a solar calculator to estimate your payback period or have a solar company calculate it for you and you come out with a timeline over 13 years, solar will be less beneficial for you than many homeowners in your area. You’ll still save a significant amount of money in most cases, but your return on investment (ROI) will be lower than average.

If your solar payback period is estimated at the state average of 10 years or at least comes in at 12 or under, solar is very likely a wise decision for you. With the average prices and payback period in Michigan, you can reasonably expect to save an average of $32,403 over the lifespan of your panels, and that’s net profit after your system pays for itself.

What Are Average Buy-Back Rates in Michigan?

Many states now mandate a net metering program or an energy buy-back program. These programs help offset electric bills by letting you reduce charges for electricity using energy credits you get for producing excess energy with your panels and sending that power to the electric grid. Unfortunately, the Michigan Public Service Commission does not mandate net metering, although some utilities in the Great Lakes State still choose to offer it to customers. If you don’t have a favorable net metering policy available to you, your ROI will very likely be lower than the average in the state because you’ll find it challenging to offset your electric bills.

Even if you don’t have access to net metering, you probably won’t be missing out for long. California — historically one of the most valuable states to go solar and the one with the most impressive incentives — recently downgraded its net metering credit via net metering 3.0. This decreased solar savings and more or less mandates batteries to see high long-term savings. Most states are expected to do something similar in the near future, so even Michiganders with net metering currently probably won’t have it beyond the next few years.

Given the high electricity rates and the lack of a universal net metering program, many Michigan residents add a solar battery to their solar array to help eliminate electricity bills and boost overall savings. Solar batteries add between $10,000 and $20,000 to your installation costs, in most cases, but they give you effective net metering because you can store excess power and call on it for free when your panels aren’t meeting your electricity demands.

How Much Sun Does Your Roof Receive?

Solar panels only provide energy generation and a consequential reduction on your utility bills when they receive sunlight, so they are more valuable and provide a higher ROI in areas where sunlight is abundant.

Michigan receives an average of 170 sunny days annually, which is well below the national average of 205 days of sun. Plus, Michigan is located far north, so the intensity of the sunlight — usually expressed as solar irradiance — is lower, which brings down solar production a bit. The overall lack of sunlight and lower intensity do make photovoltaic (PV) equipment less valuable overall, but the high electric rates still make it a good option in most cases.

There are, however, some individual factors you’ll need to consider as well. First, you should figure out the direction your roof faces. South-facing roofs are best for solar panels in the US, while west-facing roofs can work in some cases. You will also need to consider shading on your roof, especially during peak production hours. Trees and buildings that cast shadows on your panels will reduce energy production and their value overall.

What’s the Outlook on Solar in Michigan?

While solar power is less prevalent in Michigan than in about half the country, it’s still one of the most popular clean energy sources in the Great Lakes State. Residential solar conversions have increased in popularity year over year for the past decade or so, which is, in large part, thanks to the state’s now-expired Renewable Portfolio Standard (RPS) goals that called for 15% of all energy production in the state to be from renewable energy sources by 2021. Michigan has yet to set a new RPS goal, but the effects of the previous one are still noticeable.

Generally speaking, solar power is looked on quite favorably in Michigan, and the industry is expected to continue to grow in the near future. The state has great solar incentives available to help make solar a more accessible and affordable option going forward, so the future of solar in Michigan is bright.

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Benefits of Solar Energy in Michigan

If you determine that solar panels are a good investment for your Michigan home, you’ll open yourself up to numerous benefits if you do decide to convert. We’ll discuss the most significant upsides to installing solar panels in MI below.

Electricity Bill Savings

The most substantial financial benefit to going solar is the savings you’ll enjoy on your electric bills, and this upside is particularly appealing in Michigan, given the above-average electricity rates throughout the state — 19.32 cents per kWh, which is around 20% higher than the national average.

The average Michigan homeowner will experience energy savings that pay off the system in around 10 years, after which the savings enjoyed are expected to total around $32,403 over the lifespan of the equipment. Your actual savings could be even higher, as these averages are based on current electricity prices, which are expected to continue to increase in the future. Going solar helps you avoid future rate spikes and save more in the long run.

Lower Taxes & Access to Other Incentives

The state and federal governments provide several incentives to entice homeowners in Michigan to convert to renewable energy. One of the most appealing tax incentives is the federal solar tax credit, commonly called the ITC. The ITC provides a tax credit to your federal income tax liability that amounts to 30% of your total installation expenses. In Michigan, the average ITC amount is $7,602. Some additional solar incentives available in Michigan are listed below:

• Michigan Saves Home Energy Loan Program: This solar financing program makes solar loans more accessible to homeowners throughout the state. It helps third-party lenders keep expenses and interest rates low for Michiganders.
• Alternative Energy Property Tax Exemption: Solar panels increase your property value, which would normally increase your property taxes and make the home improvement less appealing. This property tax exemption prevents your property taxes from increasing as a result of going solar.
• Michigan Local Property Assessed Clean Energy (PACE) Program: The PACE Program is designed to keep upfront and long-term fees low for energy efficiency upgrades and qualifying solar customers. Those who can take part will enjoy low down payment requirements and more reasonable interest rates.

Home Resale Value Increase

One benefit of solar panels that many customers neglect to consider is the bump in home value that solar equipment provides. Research completed by Zillow suggests that property value increases by an average of 4.1% when you install solar panels.³ Given the average home value of $233,858 in Michigan, the average homeowner can expect their property to increase in value by approximately $9,588.⁴ This benefit is worth more in Michigan than many states because the value increase will not cause property taxes to go up, thanks to the state’s solar property tax exemption. It’s important to note that solar leases and power purchase agreements (PPAs) are not expected to provide this bump in home value.

Clean, Renewable Energy

Solar isn’t just a good investment from a financial perspective, as all solar customers will also enjoy some environmental benefits. Converting to clean energy means you’ll reduce your dependence on fossil fuels, reduce the pollution your home creates and minimize your contribution to global warming and climate change. Improving your energy independence also makes you less reliant on your utility provider, which means you can avoid energy price increases for the 25+ years of panel life.

What to Look Out For When Considering Solar in Michigan

Once you decide that solar panels are right for your home, there are still some things you’ll want to consider as you move toward and through the installation process. We’ll discuss some additional things to think about below.

Upfront Fees

All Michigan solar customers will be concerned with the upfront fees of solar panels. Although the average total installation prices are around $3,000 to $4,000 below the national average, they are still quite expensive. There are a few things you can do to keep your upfront expenditure to a minimum. First, you can choose a solar loan that doesn’t require a large down payment or require one at all. Second, you can avoid add-on products like EV chargers that can add thousands to your installation expenses. Finally, you can opt for a cheaper solar panel brand.

Payback Period

As we mentioned above, the payback period is a useful metric for determining your solar viability. It’s also a great way to estimate your total ROI after your panels pay for themselves. If your payback period is longer than 13 years, which is the upper end of the average payoff range in Michigan, your total ROI will be lower than average. However, provided it’s under 25 years, your solar energy system will still likely save you money.

Net Metering Policies in Michigan

Net metering isn’t mandated in Michigan, but many utility companies in the state choose to provide it privately to customers. The rate at which you’re credited for excess kilowatt-hours sent to the grid varies among electric companies, so you should check with yours to see what net metering policy you have access to. If yours is less than ideal, which is to say below the retail rate per kWh, you can pay extra to have a solar battery installed.

Doing so will bump up your installation expenses by between $10,000 and $20,000 in most cases, but offsetting the high electricity rates in Michigan using the battery typically makes it a worthwhile investment.

Even if you do have access to a solid net metering policy in Michigan right now, you should be aware that it’s likely to get downgraded in the future, much like it has in other states. If net metering 3.0 rolls out in MI, your monthly savings will plummet unless you have a battery. Installing a battery upfront can help future-proof your system. Plus, you can apply the federal credit to all solar equipment you choose during your initial installation. That means you could effectively pay 30% less for a battery now as opposed to installing just panels and then adding a battery if and when the NEM rate drops.

Pending Policies & Changes to Incentives

The solar industry in the nation is still expanding and improving, and areas like Michigan, where adoption has been slower than in most states, still have plenty of room for growth. As such, solar policies and incentives can change for residents, so it’s best to check for updates before you commit. It’s usually not worth it to wait for better incentives to come along, but checking for updated, outdated or new policies and solar rebate programs is a good idea to keep up to date before installing solar panels.

As mentioned above, numerous states are downgrading their net metering policies, so the same could happen on a local basis in Michigan. If there is one incentive that’s likely to take a hit, it’s net metering. You can insulate yourself from that by installing batteries alongside your panels.

Weather & Climate in Michigan

Solar panels are best suited for homes nearer to the equator, where sunlight is most intense and prevalent. Many Michigan homeowners worry about the frequently cloudy weather, the northern location in the country and the long cold winters, as all of these are factors that affect solar viability.

While cloudy days will limit solar efficiency up to 90%, the 170 sunny days in Michigan are often enough to make solar worth the investment, especially because of the high energy rates in the area. The long Michigan winters will also make solar a bit less valuable, although electricity travels more quickly in the cold, so your solar panel system can still maintain decent efficiency. Snowfall is also a concern for some, but precipitation will help keep your panels clean, which can increase efficiency overall. Generally speaking, the weather in Michigan is conducive to benefitting from solar panel installation.

Companies Pushing Solar Leases or PPAs

Solar companies are not all equal, so one of the last major considerations you’ll have to make is the one you choose to complete your solar project installation. Although they seem enticing, it is best to stay away from companies pushing solar leases or power purchase agreements (PPAs), which typically come under the guise of “free panels.”

Solar leases and PPAs are far less beneficial than solar financing or a cash purchase. Leases don’t increase your property value, they don’t let you take the ITC and they provide fewer savings — if any — overtime. Unfortunately, there are reports of solar companies in Michigan that use unrealistic savings claims and aggressive sales tactics to scam unwitting customers into signing a lease agreement.⁵ Local news outlets have also reported on door-to-door sales and print ads for free solar panels that end up losing homeowners money rather than saving anything.⁶ Your best bet to ensure a positive experience and savings overall is to work only with vetted and reputable solar installers in your area.

With that being said, leases and PPAs do have their place in the industry, and they’re likely to become more popular as net metering credit rates dip, batteries become the norm and installation prices rises as a result. They could eventually be some of the only viable options for some homeowners. There’s nothing wrong with leases or PPAs aside from saving you less over time, but we do recommend you steer clear of companies that push them as the be-all-end-all solutions for solar.

Wrap Up: Is Solar Worth it in Michigan?

On average, solar panels are an excellent investment for most Michigan residents, as they save a massive amount of money over time — an average of $32,403 — and pay for themselves in just 10 years, which is below the national average payback period. However, solar isn’t right for every home, so you’ll need to determine if it’s a worthwhile endeavor for you. Some things to consider include your solar panel payback period, your average monthly energy consumption, your home’s energy efficiency, the size and price of the PV system you need, the direction your roof faces, and more. We suggest connecting with a reliable solar installer in your area to help calculate the value of solar panels for your property.

See also: Find out how much solar power your roof can produce with our solar calculator

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Read More About Going Solar

• What Are the Best Solar Installers in Michigan?
• What Solar Incentives Are There in Michigan?
• Find Cost Savings on Solar in Michigan

The cost information presented in this article is derived from a comprehensive analysis, incorporating data from multiple industry sources. The average cost per watt per state was calculated based on figures from Consumer Affairs, Energy Sage, and Berkeley Lab’s Electricity Markets & Policy Department. Additionally, monthly energy consumption and the average monthly cost of electricity were sourced from the U.S. Energy Information Administration, ensuring a well-rounded and accurate representation of the information presented.