Solar incentives are one of those topics where the more you read, the more confused you can get. Different programs, different eligibility rules, different timelines, and a lot of websites that are either oversimplifying or burying you in details you don’t need yet.
This post covers the programs that actually matter for most residential solar customers in the Minneapolis–St. Paul area. What each one is, how it works, what it’s worth, and what to watch out for.
Xcel Energy Solar Rewards
For homeowners in the Xcel Energy service territory, which covers most of the Minneapolis–St. Paul metro including Edina, Woodbury, Wayzata, and the surrounding suburbs, the Solar Rewards program is the most significant local incentive.
Solar Rewards is a performance based incentive. For the first 10 years of your system Xcel energy will pay you $0.03 for every kilowatt-hour of energy your system produces, this will be deducted from your monthly bill in the form of bill credits. For a typical 8 to 10 kilowatt system in Minnesota, that could potentially add up to $300-400 in annual bill credits, or $3,000-4,000 over the life of the program.
There are two important details about Solar Rewards that often get overlooked. First, the program operates on a first-come, first-served basis with annual capacity limits. Enrollment periods open each year and fill up. Homeowners who delay their solar installation sometimes miss the enrollment window and have to wait for the following year’s program, which could potentially affect the financial projections.
Second, the Solar Rewards payment is separate from net metering credits. They work alongside each other. Net metering credits apply to excess power your system exports to the grid. Solar Rewards pays on total system production regardless of whether that power is used in the home or exported back to the grid. Understanding both programs together gives a more complete picture of what the financial return from a Xcel-territory solar installation actually looks like.
Minnesota State Sales Tax Exemption
Minnesota exempts solar energy systems from state sales tax. At a 6.875 percent sales tax rate, this saves a meaningful amount on the purchase of a residential solar system. On a $28,000 system, that’s roughly $1,900 that simply doesn’t get added to the purchase price.
This exemption applies to the solar panels, inverters, and associated equipment. It is not something you need to apply for separately. A licensed Minnesota solar installer handles the tax treatment at the time of sale. It is worth confirming that your installer is applying this correctly, sometimes a lack of knowledge regarding local tax codes can be a disadvantage of working with an out of state company.
Minnesota Property Tax Exemption
Solar installations in Minnesota are also exempt from property tax increases. When you add a solar system to your home, the assessed value of the property for tax purposes does not increase to reflect the value of the system. Given that a solar installation can add up to 6.9% to the value of your home, this exemption is a substantial, and often overlooked benefit of solar.
For homeowners in Edina, Wayzata, Woodbury, and other higher value Twin Cities suburbs where property taxes are already substantial, this exemption is worth understanding. You get the benefit of increased home value and faster resale potential without a corresponding increase in your annual tax bill.
Minnesota Residential Net Metering
Minnesota net metering allows residential solar owners to send excess electricity that their solar system produces back to the local utility grid in exchange for credits on their electric bill. Under state law, systems under 40 kW are generally credited at the full retail rate ($0.14–$0.16 per kWh as of 2026), allowing homeowners to reduce or eliminate electricity costs. For reference the typical size of a residential solar system is between 6-10 kW. Most solar installations are designed to cover 100-120% of your monthly energy usage, so for the overwhelming majority of Minnesota homeowners net metering at retail rates ensures they realize the full benefit of their solar energy investment.
Other Local Utility Programs
Xcel Energy serves the largest portion of the Twin Cities metro, but not all of it. Homeowners in areas served by other utilities should check for programs specific to their provider.
Minnesota Power, Great River Energy cooperatives, and municipal utilities across the state have varying incentive structures. Some offer rebates on solar installation. Others have their own net metering policies that differ slightly from Xcel’s. If you are outside the Xcel service territory, asking your utility directly what programs are available is the right starting point. As a local installer familiar with the Minnesota utility landscape, we can help you navigate this.
A Note on Stacking Incentives
One of the most useful things to understand about Minnesota solar incentives is that many of them stack. The Xcel Solar Rewards program, the state sales tax exemption, net metering and the property tax exemption can all apply to the same installation. They do not cancel each other out or reduce each other’s value.
When you add these programs together and model them against the projected savings from reduced utility bills, the financial picture for a well designed residential solar installation in the Minneapolis–St. Paul area becomes considerably more favorable than any single incentive alone would suggest.
The key word is well designed. A system that is properly sized for your usage, installed by a licensed Minnesota contractor who handles the incentive applications correctly, and paired with the right financing structure captures all of these benefits. A system that is oversized, installed by a company unfamiliar with Xcel’s program, or financed in a way that affects tax credit eligibility leaves money on the table.
Incentives for Batteries, EV Chargers, and Smart Panels
It is worth knowing that the incentive landscape extends beyond solar panels alone. As more homeowners in the Twin Cities build out complete home energy systems, the following are worth asking about:
- Home battery storage Some utility programs also offer separate battery incentives, and Minnesota has been expanding these incentives as grid reliability becomes a more prominent concern.
- EV charger installation may qualify for a federal tax credit of up to 30 percent off the installation cost under the Alternative Fuel Vehicle Refueling Property Credit up till June 30 of 2026 & is subject to income and location eligibility requirements. For homeowners in the Twin Cities who are adding an EV alongside solar, this credit can apply to the Level 2 charger installation at the same time.
Some cities in Minnesota also have individual EV charger incentives so it’s important to work with a provider that is actively looking out for new incentives to help you get the best deals.
- Smart panels and electrical upgrades Xcel energy has their own smart panel incentive of up to $1,500 off when you upgrade. With the growing popularity of smart panels comes more incentives from your city and or utility provider. If you are interested in what you could apply for it would be worth discussing with your installer during the design phase rather than after the fact.
If you are interested in more than just solar it would be beneficial to start with a comprehensive energy assessment rather than just a solar quote. When you are looking at the full picture, the incentives available across solar, storage, EV charging, and electrical upgrades together can significantly change the overall cost and payback timeline for a complete home energy plan.
The Energy incentives page has more detail on current programs and eligibility. The PGS process page covers what a solar installation itself involves. And the Minnesota solar FAQ addresses the questions homeowners ask most often about solar for Minnesota.
Powerfully Green Solar helps homeowners across the greater Minneapolis–St. Paul area take control of their energy use through smarter systems, not just solar alone. If you want to understand exactly which incentives apply to your home and how to make sure you are capturing all of them, schedule a free energy assessment or talk to a specialist who knows the Minnesota incentive landscape well!