Minnesota Solar Incentives, Policies & Utility Rates (2026)
Written by Aditya Patil · Last updated 2026-09-24
Going solar in the Land of 10,000 Lakes is supported by strong state-level property and sales tax exemptions. While Minnesota gets plenty of sun in the summer, your exact return on investment depends heavily on whether you are served by an investor-owned utility like Xcel Energy or a local electric cooperative.
$124
Avg. monthly bill
17.52¢/kWh
Avg. rate
Varies by utility
Net metering
Retail rate for <40kW in IOUs
0%
Sales tax on solar
Fully exempt
Top MN Solar Incentives at a Glance (2026)
- ✓100% Sales Tax Exemption: Solar equipment and installation labor are 100% exempt from Minnesota's 6.875% state sales tax (Minn. Stat. § 297A.67, Subd. 29).
- ✓100% Property Tax Exemption: Installing solar increases your home's resale value, but Minnesota law exempts photovoltaic systems from real property tax assessments (Minn. Stat. § 272.02, Subd. 24).
- ✓1:1 Net Metering for Systems <40 kW: Investor-owned utilities (Xcel Energy, Minnesota Power, Otter Tail Power) must credit excess generation at the average retail electricity rate.
- ✓Xcel Energy Solar*Rewards: An annual performance-based payment for participating residential systems in Xcel's service territory.
Cost of solar in Minnesota
While the Lawrence Berkeley National Laboratory's Tracking the Sun dataset doesn't have a reliable median installed residential cost specifically for Minnesota, you can still estimate your costs and savings based on your energy usage.
For a Minnesota household using the state average of 8,526 kWh/year, you would need a solar array sized to meet that demand. Your actual cost will depend heavily on your roof's orientation, shading, and the specific quotes you receive from local installers.
Since the federal residential clean energy credit (§25D) doesn't apply to systems completed after 2025-12-31, you won't be able to claim a 2026 tax credit for a cash or loan purchase. Be sure to consider state-level exemptions to understand your final net cost.
Incentives & rebates
Minnesota offers robust state-level exemptions that help lower the upfront and long-term costs of going solar. While the state doesn't have a direct income tax credit for solar, it removes two major tax burdens.
| Program | Details | Status |
|---|---|---|
| Solar Energy System Sales and Use Tax Exemption | Full exemption from Minnesota state sales and use tax (6.875% state rate, plus any applicable local sales tax) on the purchase of a qualifying solar energy system. | open |
| Solar Energy System Property Tax Exemption | Exempts the personal-property value of a solar energy generating system (as defined in Minn. Stat. 272.0295) from Minnesota property tax. The underlying real property is taxed at its normal classification unless the property is used primarily for solar energy production (which is instead classified as class 3a and subject to the separate solar production tax), or the site's aggregate solar capacity exceeds 1 megawatt. | open |
Closed Programs
- Made in Minnesota Solar Incentive Program: A per-kWh production incentive paid annually over 10 years to owners of previously approved, Minnesota-manufactured solar PV systems. The program is closed to new applicants and payments are scheduled to end for electricity generated after October 31, 2028; this research pass did not find the original per-kWh payment schedule published in the current statute text. (Closed)
Net metering / export rules
Minnesota's net metering rules are established by state law and apply to all electric utilities, including investor-owned (like Xcel Energy), municipal, and cooperative utilities. However, the exact rate you get for excess power depends on your provider.
Minnesota's net metering and interconnection rules are set in state law (Minn. Stat. 216B.164) and apply to every Minnesota electric utility — investor-owned utilities, municipal utilities, and electric cooperatives. The Minnesota Public Utilities Commission (PUC) regulates net metering for investor-owned utilities such as Xcel Energy. Systems smaller than 40 kW receive bill credits for net excess generation at the 'average retail utility energy rate' (cooperatives and municipal utilities may instead negotiate an avoided-cost rate). Public utilities must also offer net metering for systems up to 1,000 kW, with unused kWh credits carried forward annually. As an alternative to net metering, a utility may instead offer a 'Value of Solar' tariff that compensates solar output based on its energy, capacity, and environmental value rather than the retail rate. The PUC may also cap cumulative net metering participation once it reaches 4% of a utility's annual retail electricity sales.
Export Rates
For most residential systems (under 40 kW), exported energy is credited at the utility's average retail rate. Cooperative and municipal utilities may instead use a negotiated avoided-cost rate, which is typically lower. Where a utility has adopted the alternative Value of Solar tariff instead of net metering, the export rate follows that separate formula rather than the retail rate — the mechanism that applies depends on the customer's specific utility, not a single statewide rate.
Top utilities
Minnesota electricity rates average 17.52¢/kWh, which is a 10.6% increase from 12 months ago. Your savings from solar depend heavily on what you currently pay. Here are some of the state's largest providers:
| Utility | Residential rate | Customers |
|---|---|---|
| Northern States Power Co - Minnesota | 16.98¢/kWh | 1,230,057 |
| Adjustment 2024 | 14.19¢/kWh | 243,873 |
| Connexus Energy | 13.66¢/kWh | 134,095 |
Residential rate and customer counts are from EIA-861.
Batteries & VPP programs
Currently, there are no active statewide battery rebate programs or Virtual Power Plant (VPP) initiatives listed in our database for Minnesota. However, pairing your solar system with a battery can still be beneficial for backup power during outages or maximizing self-consumption.
Lease vs. buy in Minnesota
The 0% federal credit in 2026 applies only if you own the system. A lease or PPA company still owns the panels, so it can still claim its own separate federal credit (§48E) as a business — and some of that savings gets passed through to you as a lower monthly lease payment. See our full lease vs. buy vs. PPA guide for the full comparison.
Estimate your own numbers
Use the solar calculator with your own usage and any quote you've received.
FAQ
What are the main MN solar incentives available in 2026?
Key Minnesota solar incentives in 2026 include: (1) 100% State Sales Tax Exemption (saving 6.875% upfront on all solar equipment), (2) 100% Property Tax Exemption (added home value from solar is excluded from property tax assessments), (3) Net Metering for systems up to 40 kW at full average retail rates with investor-owned utilities like Xcel Energy, and (4) Utility production incentives like Xcel Energy’s Solar*Rewards program.
Does Minnesota have a solar tax credit?
Minnesota does not have a state-level income tax credit for solar, but it does offer a full exemption from the 6.875% state sales tax on solar energy systems, as well as a property tax exemption so your property taxes won't go up when you install solar.
Does Xcel Energy offer net metering in Minnesota?
Yes, Xcel Energy and other investor-owned utilities in Minnesota offer net metering. For residential systems under 40 kW, you generally receive bill credits for excess energy at the average retail rate, though alternative Value of Solar tariffs may apply depending on your specific utility and setup.
Data sources
Last updated 2026-09-24
- U.S. Energy Information Administration — Electricity Data Browser — accessed 2026-09-24
- NREL PVWatts — accessed 2026-09-24
- NREL Solar Resource Data — accessed 2026-09-24
- LBNL Tracking the Sun (public data file, host-owned residential systems) — accessed 2026-09-24
Written by Aditya Patil