Solar Incentives
Discover all the ways Minnesota offers incentives and savings to make solar energy more affordable for homeowners and businesses.
Xcel Energy Solar Rewards Program
Xcel Energy’s Solar Rewards is a 10-year incentivized program that provides annual payments based on your energy system’s production. If you take part in this opportunity you will receive Renewable Energy Credits (RECs) in exchange for the excess power your system generates and sends back to the grid.
Incentive Information For 2025
Standard Residential Systems
- Customer receives $0.03 per kilowatt-hour (kWh) of energy produced
Income Qualified Residential Systems
- Upfront Payment: $3.00 per Watt installed, paid within 60 days post-installation.
- Production Incentive: $0.03 per kWh produced.
Income-Qualified Non-Profit & Government Systems
- Upfront Payment: $1.00 per Watt installed, paid within 60 days post-installation.
- Production Incentive: $0.02 per kWh produced.
Income-Qualified For-Profit Systems
- Upfront Payment: $0.50 per Watt installed, paid within 60 days post-installation.
- Production Incentive: $0.02 per kWh produced.
Eligibility Criteria
- Must be an Xcel Energy customer.
- The system should generate no more than 120% of your historical energy usage when under ideal test conditions.
- Property ownership where the solar system is installed.
- Meet Xcel’s personal liability insurance requirement of $300,000.
It's advisable to apply for the Solar*Rewards program before installing a new solar energy system, as funds are limited and allocated on a first-come, first-served basis.
Net Metering In Minnesota With Xcel Energy
Net metering allows solar customers to send excess electricity back to the grid in exchange for energy credits. These credits can be used to offset future electricity bills. This applies for systems up to 40kW in size!
If your system generates more power than you use, Xcel Energy credits your account.
Xcel customers receive full retail value for energy sent to the grid which is same rate as you pay for electricity!
If you produce more energy than you use in a month, credits roll over to the next billing cycle.
At the end of the year, excess credits may be paid out at a lower “avoided cost” rate.
Federal Solar
Tax Credit
In addition to Xcel Energy’s incentives, the federal government offers a 30% tax credit on the total cost of installing a solar energy system.
This credit applies to both equipment and installation costs and is available through 2032.
State Sales
Tax Exemption
Minnesota exempts solar energy systems from state sales tax, providing an additional 6.875% savings on the total system cost.
For the average homeowner, this could result in savings of $1,000 or more.
Commercial Solar Incentives & Rebates
Federal Investment Tax Credit (ITC)
- Commercial solar projects in Minnesota are eligible for the 30% Federal Solar Investment Tax Credit (ITC).
- This allows businesses to deduct 30% of the total solar installation cost from their federal taxes, significantly reducing upfront expenses.
- The ITC is available for systems installed through 2032, with the credit gradually decreasing after that.
- Commercial solar installations qualify for Modified Accelerated Cost Recovery System (MACRS) depreciation.
- This allows businesses to depreciate the cost of the system over five years, reducing taxable income and providing significant tax savings.
- Thanks to bonus depreciation, businesses can also deduct 100% of the system’s cost in the first year (through 2026), providing an even greater tax benefit.
Xcel Energy Solar Rewards Business
- Xcel Energy offers a Solar*Rewards program for commercial systems, providing production-based incentives(PBI).
- Businesses can earn $0.06 per kWh of solar energy generated for the first 10 years.
- This creates ongoing savings and a faster return on investment.
Net Metering
- Commercial solar systems in Minnesota can participate in net metering, which credits businesses for excess electricity sent back to the grid.
- This helps offset electricity bills and reduces overall energy costs.
- Systems up to 1 MW(MegaWatt) qualify for net metering.
Minnesota PACE Financing
- Minnesota offers Property Assessed Clean Energy (PACE) financing, which helps businesses finance solar installations with low-interest, long-term loans.
- Re-payments are made through property tax assessments, making it a flexible and affordable financing option.
Sales & Property Tax Exemption
- Commercial solar systems in Minnesota are exempt from state sales tax, which reduces the overall installation cost.
- This exemption applies to the equipment, labor, and installation services.
- Although solar panels increase a property’s value, they are exempt from property tax assessments in Minnesota, meaning businesses can enjoy the added value without higher property taxes.