Minnesota is a great location for solar systems, with 196 sunny days on average per year, providing a reasonable amount of sunlight for solar energy initiatives. While it may not have as many sunny days as some other states, Minnesota’s weather conditions still offer opportunities for viable solar power projects. The state actively supports renewable energy through various incentives. Here are some of the solar incentives available to homeowners and businesses in Minnesota:
Table of Contents
Federal Incentives
Federal Investment Tax Credit (ITC)
Commercial solar energy systems can take advantage of the Federal Investment Tax Credit 48E, which provides a tax credit of 30% of the total cost of the system, provided prevailing wage and apprenticeship requirements are met.
Residential systems can no longer claim any federal solar tax credit, as the One Big Beautiful Bill eliminated it for systems installed after January 1st, 2026.
Commercial Depreciation
Commercial asset owners can write off 100% of a project’s value in depreciation in the first year. The One Big Beautiful Bill reinstated the 100% bonus depreciation, while simultaneously eliminating the Modified Accelerated Cost Recovery System (MACRS) that previously depreciated solar energy systems over 5 years.
The depreciable basis of a project is reduced by half of the ITC value when combined with the 30% ITC. Here’s a quick example:
- Project cost = $800,000
- 30% credit = $240,000
- Reduced depreciation basis: $800,000 – ($240,000 / 2) = $680,000
A company’s tax rate is then taken into account to calculate the exact amount they’re able to write off.
Xcel Energy Solar Rewards Program:
This program pays system owners for their systems’ energy production.
State Sales Tax Exemption:
The average cost of a solar panel system in Minnesota ranges from $14,578 to $19,722, according to EnergySage. The state sales tax exemption can help reduce the cost of the system.
Net-Metering:
Solar energy systems in Minnesota are eligible to participate in net metering, which allows you to send your extra electricity back into the grid and get credits on your electric bill. When your panels aren’t producing all the electricity you need, you can use your credits instead of having to pay for electricity from your utility.
Further information and programs can be found at the Programs.Dsireusa.org
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