Is Solar Worth It in Minnesota? (2022 Homeowner's Guide)

Here’s a quick overview of solar viability in Minnesota:

  • Minnesota ranks 15th in the country for solar installations.*
  • The average electricity rate is 13.17 cents per kilowatt-hour.**
  • The average solar payback period is 13 years.***
  • Homeowners are eligible for net metering and the federal solar tax incentive (ITC).
  • The average homeowner saves $17,546 over the lifetime of their solar system.***

*According to the Solar Energy Industries Association.1
**Data from the Energy Information Administration.2
***Calculated assuming the system is purchased in cash.

Ecowatch Author Dan Simms

By Dan Simms, Solar Expert

Updated 9/18/2022

Why You Can Trust EcoWatch

Our solar experts have conducted hours of research and collected dozens of data points to determine whether solar is a good fit for homeowners 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.

Is Minnesota Good for Solar Energy?

In this article, we’ll discuss whether solar is worth it for the majority of Minnesota homeowners, but whether solar panels are worth it will ultimately depend on your home’s configuration and your energy needs. To speak with an EcoWatch-vetted professional who can help you determine whether solar is worth it for your Minnesota home, follow the links below.

Jump to Section:

  1. Figure Out if Solar Panels are Worth It in Minnesota
  2. Benefits of Solar Energy in Minnesota
  3. What to Look Out For When Considering Solar in Minnesota
  4. Is Solar Worth it in Minnesota?
  5. Frequently Asked Questions

 

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Minnesota ranks 13th in the country for solar adoption, but the majority of solar installations over the past decade have been for utility-scale solar and community solar applications. Understandably, homeowners are left wondering if residential solar panel systems are worth the investment, especially with the above-average price of solar equipment in the North Star State.

Below, you’ll find a handful of factors you’ll need to consider to determine if solar panel installation is right for your home. We’ll also include some information on the benefits of installing solar panels on your home in the area and some things you should consider before you commit to this renewable energy source.

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

Most Minnesota residents will find that installing solar panels is a worthwhile investment that provides promising returns, but solar is certainly not for everyone. Below are some of the factors you’ll need to consider to figure out if solar panels will save you money in the long run.

What’s Your Home Electricity Consumption?

The first thing you’ll need to take into consideration is your home’s monthly energy consumption. Generally speaking, solar panels are good investments for most households that consume more than 500 kilowatt-hours per month. The more electricity you use, the more value you’ll get from your solar panel system.

Homeowners in Minnesota use an average of 775 kWh per month, which means most residents will see a return on investment from going solar. You can check your past utility bills to determine your average monthly consumption. If yours is less than 500 kWh per month, you might want to reconsider going solar.

How Much Is It To Go Solar in Minnesota?

The price to go solar in Minnesota is based primarily on system size, with an average per-watt price in the state of $2.84. This is well above the national average of $2.66 per watt. However, most Minnesotans require a smaller-than-average system of just 8 kilowatts, bringing the total price to around $15,904 after the federal tax credit is considered.

Solar panels are more valuable in areas where energy needs or electricity rates are high. The price of electricity is around average, and the energy consumption is below average. Given these factors, solar will be less valuable in Minnesota than in many other states. However, most residents still see a substantial return on investment from converting to solar power.

What’s the Payback Period for Solar in Minnesota?

close-up shot of solar panel drilled into the roof Most residential solar panel systems provide enough energy savings to offset the expense of the system itself. This timeline is called the solar panel payback period, and it’s one of the best metrics for determining how suitable your property is for solar conversion. In Minnesota, the average payback period is around 13 years, which is just above the national average of 12 years. As such, solar is just a bit less valuable in MN than in most states. You can use a solar calculator to estimate your payback period or have a solar installer estimate it for you. Most Minnesotans find that their payback period is between 10 and 16 years. Anything longer than this will mean you’ll take longer than average to recuperate your initial investment, and your ROI will be lower than average.

What Are Average Buy-Back Rates in Minnesota?

Minnesota is one of many states that have mandated a metering program. Net metering allows energy to flow in both directions between your solar system and the electric grid.

The policy states that you must be compensated — usually via credits to your electric bill — for all excess energy you send to the grid. Essentially, this policy helps solar customers offset and even eliminate their energy bills entirely.

While net metering is mandated in Minnesota, the rate you’re paid for each kWh you send to the grid isn’t set. The electric companies with the best net metering programs will buy back energy at the retail rate, but many will pay you less than you pay for energy coming in from the grid. If you have a suboptimal buy-back rate from your utility provider, you might need a battery package to eliminate your power bills.

How Much Sun Does Your Roof Receive?

Solar panels are most valuable in areas where there is plentiful sunlight, as more sun means more power generation and more potential to reduce your energy bills. Minnesota residents enjoy around 195 sunny days per year, which is just a bit below the national average of 205 sunny days.

Generally speaking, Minnesota isn’t the best place for solar installation in terms of sunlight availability, but it’s about average. However, you need to figure out if your specific property is well-suited for solar panels. Solar is best for US homes that have south-facing roofs, although west-facing roofs can work in some cases. You will also need to assess your property for shading from trees, buildings and other sunlight obstructions. The more shading you have on your roof during peak sunlight hours, the less valuable your solar panels will be overall.

What’s the Outlook on Solar in Minnesota?

Generally speaking, solar power is well-accepted in Minnesota, along with other renewable energy sources. The state is relatively environmentally conscious, with a Renewable Portfolio Standard (RPS) goal of producing around 26% of its energy production via clean energy sources by 2025. The state has implemented some solar incentives to help reach that goal.

With that being said, wind power is still more popular in Minnesota than solar. Minnesota ranks in the top 10 states for wind power generation, and solar adoption has been slower for that reason. Still, residential solar installations have increased in popularity each year over the past decade, and the market for solar is expected to continue to grow.

Benefits of Solar Energy in Minnesota

There are a number of benefits to converting to solar energy in Minnesota. We’ll discuss the most significant upsides below.

Electricity Bill Savings

The most substantial incentive for going solar for most customers is the reduction solar panels provide on energy bills. Minnesotans spend an average of $102.11 per month on electricity, and an appropriately-sized solar power system can eliminate those expenses entirely. The maximum potential annual savings in the area is about $1,225.

After the savings offset the price of your solar system, you’re expected to save an additional $17,546 over the lifespan of your photovoltaic equipment. Your total savings could end up being even higher, as the averages above are based on current electricity rates. The energy rates are expected to rise as it has historically, which would bump up your total energy savings over time.

Lower Taxes & Access to Other Incentives

Minnesota residents can enjoy a number of solar incentives provided by the state and federal governments. Perhaps most importantly, all Minnesotans will have access to the federal solar investment tax credit (ITC). This is a credit to your federal income tax liability for the year your system is installed, and it amounts to 30% of your total installation expense. In Minnesota, the average ITC is around $6,816.

Some other solar incentives available in Minnesota are listed below:

  • Minnesota Property Assessed Clean Energy (PACE) Program: The PACE Program in Minnesota is designed to provide accessible and affordable solar financing options to all homeowners. The solar loans have low interest rates and very low — if any — down payment requirements. This program is currently only available for commercial customers in MI.
  • Net metering: Net metering is mandated in Minnesota, so it’s a benefit all local solar customers can take advantage of. This program helps offset electric rates and even eliminate them entirely. The policy specifics will vary among utility providers.
  • Solar Energy Sales Tax Exemption: This is a sales tax exemption that prevents all MN homeowners from having to pay the state sales tax on solar equipment or installation expenses.
  • Wind and Solar-Electric Systems Exemption: This is a statewide property tax exemption for photovoltaic equipment. Solar panels increase your property value, and normally, all home improvements that make your home more valuable will bump up your property taxes. This exemption prevents that from happening when you install solar panels.
  • Local Rebates: Some local municipalities and utility companies in Minnesota provide additional rebate programs and incentives to make converting to solar or improving your home’s energy efficiency more affordable, accessible and appealing.

Home Resale Value Increase

One of the most significant benefits of going solar that many property owners overlook is the bump in property value solar panels provide. According to data from Zillow, the average home will jump in value by around 4.1% with the addition of a solar panel system.3 Given the average home value of $330,879, most homeowners in the state will see around $13,566 of added value.4

Your jump in value could be even higher if you live in a more pricy area like Minneapolis. This addition to your home’s value is only expected if you purchase your panels with cash or solar financing. This benefit will be forfeited if you choose a solar lease or power purchase agreement (PPA).

Clean, Renewable Energy

Not all solar benefits are financial, and the Minnesota residents who are planning to go solar for the environment will see plenty of upsides as well. Installing solar panels reduces your reliance on your utility company and fossil fuels. Not only will this provide you with energy independence, but it will also reduce your carbon footprint and let you reduce your contribution to global warming and pollution.

What to Look Out For When Considering Solar in Minnesota

Determining if solar panels are a good option for your home and your budget is a great first step to make, but there are some additional things you’ll need to consider before you switch to clean energy. We’ll discuss some other things you should think about when converting to solar below.

Upfront Fees

man drilling into a solar panel Every homeowner will need to consider the upfront fees of their solar power system, and this is especially true in Minnesota, where the average per-watt prices are higher than the national average. There are a few things you can do to keep your upfront investment down. These include limiting your project to solar panels only and avoiding add-on products, choosing a cheap solar panel brand and opting for a financing option with little or no money down required.

Payback Period

Your solar panel payback period is one of the best ways to determine how valuable solar will be for your property. The average solar array in Minnesota pays for itself within 16 years, or between 13 and 19 years in most cases. If your payback timeline is longer than 16 years, your return on investment will be below average for the area, and it will take you longer to recuperate your investment. However, as long as the period is under 25 years, you’re still expected to save money over time.

Net Metering Policies in Minnesota

Net metering is a great option for solar customers to reduce their electric bills significantly or eliminate them altogether. Net metering is mandated in MN, but the policy can vary among electricity providers. You should check with your power company for details and remember that, if your utility company’s buy-back rate is below the retail rate, you might need a solar battery to offset your energy bills entirely. Storage solutions will add thousands to your installation expenses in most cases, but they are generally worth the investment in Minnesota.

Pending Policies & Changes to Incentives

The solar industry is expanding and improving every year, and changes are expected to policies, solar rebates and other incentive programs. This is especially true in Minnesota, where residential solar conversions aren’t as popular as in other states and have plenty of room to grow. The policies mentioned above could be expiring or changing soon, and new programs could be added. You should always check for updates to solar incentives before installing panels on your home.

Weather & Climate in Minnesota

Solar panels are best in areas near the equator, where the sun is most intense and abundant. Naturally, Minnesotans worry that their northern location in the United States makes their state less viable for solar panels. Electricity travels more quickly in the cold, so the long, frigid winters will often provide decent efficiency for solar customers.

Others worry that the abundant snowfall and the frequent cloudy days will limit solar panel efficiency. Cloudy days can drop efficiency to about 10%, but Minnesota receives an average of 195 sunny days per year, which is usually enough to make an investment in solar worth it. Snow coverage will also limit energy production in the winter, but precipitation will naturally keep your panels clean and maximize production when it is sunny.

Companies Pushing Solar Leases or PPAs

Finally, you should be conscious of the solar panel installation company you choose to tackle your home solar project, as not all are equal. Some companies — like those that advertise “free panels” or promote solar leases — are often not the best option and are motivated by profit more than helping you as the homeowner.

Solar leases are worse than other purchase options. They don’t let you take advantage of the ITC, they don’t boost your property value and they provide far fewer savings over the lifespan of the PV system. Unfortunately, there have been instances of overpromising benefits and savings from solar companies in Minnesota that ultimately led to million-dollar lawsuits.5 There have also been reports of companies stating they are affiliated with Minnesota Power or Xcel Energy to get signed solar leases when, in actuality, they have no affiliation.6

Solar scams and disingenuous companies can cause you to lose thousands of dollars, so you should be very careful only to work with vetted, reputable solar installers.

Wrap Up: Is Solar Worth it in Minnesota?

Solar panel installation is a worthwhile investment for most Minnesota homeowners, but it isn’t right for everyone. Before you decide to install solar panels, you should do a careful assessment of your property to make sure that going solar will actually save you money in the long run.

Some things you should think about include your estimated solar panel payback period, your monthly energy consumption, the size and price of the solar system you need, how much sun your roof gets and more. We strongly recommend getting in touch with a reputable solar panel installation company in your area for the most accurate assessment of your home.

See also: Calculate how much you can save by going solar

Read More About Going Solar

Frequently Asked Questions

At EcoWatch, we get lots of questions from homeowners in Minnesota about the potential savings they could enjoy by converting to solar energy. Below are some of the questions we see most often, along with our responses. If you have specific questions that aren’t answered here, reach out to our team of solar experts at solar@ecowatch.com.

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Dan Simms

Solar Expert

Dan Simms is an experienced writer with a passion for renewable energy. As a solar and EV advocate, much of his work has focused on the potential of solar power and deregulated energy, but he also writes on related topics, like real estate and economics. In his free time — when he's not checking his own home's solar production — he enjoys outdoor activities like hiking, mountain biking, skiing and rock climbing.