Solar Calculator for Michigan: Costs, Incentives & ROI
Michigan's solar market operates under a distinctive regulatory structure that sets it apart from most of the Midwest. Unlike neighboring states with traditional full retail-rate net metering, Michigan transitioned its primary compensation framework for new solar installations in 2018, replacing net metering with the Distributed Generation Program under Michigan Public Service Commission Case U-18383. The two dominant investor-owned utilities — DTE Energy, serving the Detroit metropolitan area and southeastern Michigan through DTE Electric Company, and Consumers Energy, serving western Michigan including Grand Rapids, Lansing, and Kalamazoo as a subsidiary of CMS Energy — both administer the Distributed Generation Program, which uses bidirectional billing to separately track electricity imported from and exported to the grid. Under this inflow-outflow structure, electricity a homeowner draws from the grid (inflow) is billed at the standard full retail rate, while electricity a solar system exports to the grid (outflow) earns a utility-specific outflow rate that is typically lower than the retail rate — ranging from approximately five to nine cents per kilowatt-hour depending on the utility and tariff schedule. Homeowners who interconnected under the prior net metering framework before the DGP transition took effect are grandfathered at the original net metering terms for their legacy contract term. Michigan's property tax environment is one of the most favorable for solar in the Great Lakes region: Public Act 92 of 2008 explicitly exempts solar energy systems from property tax assessment, meaning a solar installation does not add to a home's assessed value and property tax bill, regardless of the market premium solar may add to the home's resale value. Michigan's residential electricity rates average approximately sixteen to eighteen cents per kilowatt-hour on a blended basis, above the national average and in the upper tier for the Midwest, which improves the economics of solar self-consumption even under the DGP's export credit structure.
Incentive data updated: May 2026(may be outdated)
Average Solar Cost in Michigan
Average installed solar costs in Michigan typically range from $2.75 to $3.15 per watt before incentives, reflecting Midwest labor market pricing with DTE Energy territory (Detroit, Ann Arbor, Flint corridor) carrying slightly higher electrician rates than rural Consumers Energy service areas in western and central Michigan. A standard six-kilowatt residential system costs approximately $16,500 to $19,000 before the federal Investment Tax Credit, consistent with national Midwest pricing from LBNL Tracking the Sun data. The thirty-percent federal ITC reduces net installed cost to roughly $11,550 to $13,300 for a typical six-kilowatt system after the credit is applied in the first tax year following installation. Michigan does not offer a statewide solar incentive rebate program comparable to Illinois's periodic ComEd rebates or Minnesota's Solar*Rewards program, making the federal ITC the primary financial incentive for Michigan homeowners. However, Public Act 92 of 2008 provides long-term property tax protection: solar energy systems are exempt from property tax assessment in Michigan, preventing the scenario where a successful solar installation increases a homeowner's annual property tax obligation. Over a twenty-five-year system lifespan, this protection represents meaningful savings in counties with higher property tax mill rates. Michigan's competitive solar installation market — with active NABCEP-certified installers serving the Detroit-Ann Arbor corridor, Grand Rapids, Lansing, and Traverse City — tends to produce multiple competitive bids for homeowners who solicit three or more quotes, keeping installed prices near Midwest averages.
- Avg. installed cost
- $2.95/W
- Typical 6 kW system
- $17,000–$19,000
Top Solar Incentives in Michigan
Live incentive data not currently available for Michigan. See the federal incentive guidance via our Solar Tax Credit Calculator.
Electricity Rates in Michigan
Michigan residential electricity rates average approximately sixteen to eighteen cents per kilowatt-hour on a blended basis, positioning the state in the upper-middle tier of US electricity markets — above the national average and significantly above low-cost Midwest states like Indiana and Kansas. DTE Energy customers in the Detroit metropolitan area typically pay blended retail rates in the sixteen-to-eighteen-cent range, with tiered rate structures and optional time-of-use schedules. Consumers Energy customers in western Michigan pay similar blended rates across the utility's large territory. Michigan's electricity rates reflect MISO wholesale power costs, transmission infrastructure investments, and renewable portfolio standard compliance. For solar homeowners under the DGP framework, electricity rate dynamics are most relevant for self-consumed solar output — self-consumed solar avoids grid purchases at the full retail rate of approximately sixteen to eighteen cents. The outflow credit for surplus solar exports is lower — typically five to nine cents per kilowatt-hour — so system sizing relative to household consumption patterns is particularly important in Michigan.
Peak Sun Hours in Michigan
Michigan's solar resource is moderate by national standards, with the Lower Peninsula receiving approximately four to four and a half peak sun hours per day on a south-facing tilted surface. Detroit at approximately forty-two degrees north and Grand Rapids at forty-two and a half degrees north produce solar conditions comparable to central New England states. The Great Lakes' moderating influence produces more overcast days than inland locations at similar latitudes, but Michigan's flat terrain minimizes shading challenges outside urban areas. A six-kilowatt system in Detroit-Ann Arbor typically produces approximately six thousand to six thousand eight hundred kilowatt-hours per year. Michigan winters provide a meaningful counterbalance: cold ambient temperatures keep panels near Standard Test Conditions output, improving efficiency compared to hot-climate states where summer heat derate output significantly. Snow events require occasional panel clearing in January and February. The federal ITC combined with Michigan's property tax exemption substantially reduces effective payback periods despite the state's moderate solar resource.
Example ROI for a 6 kW System
- Estimated annual savings
- $1,050
- Payback period
- 9.0 years
- 25-year net savings
- $24,500
Run a personalized estimate with your ZIP code using the Solar ROI Calculator.
Major Cities in Michigan
- Detroit48226
- Grand Rapids49503
- Warren48089
- Ann Arbor48104
- Lansing48933
Common Questions About Solar in Michigan
What is Michigan's Distributed Generation Program, and how does it differ from net metering?
Michigan's Distributed Generation Program, established by the Michigan Public Service Commission under Case U-18383 and effective April 2018, replaced traditional net metering for new solar customers. Under the original net metering framework, excess solar electricity exported to the grid was credited at the full retail rate, effectively running the meter backward. The Distributed Generation Program instead uses bidirectional billing: electricity imported from the grid (inflow) is billed at the standard retail rate of approximately sixteen to eighteen cents per kilowatt-hour, while electricity exported to the grid (outflow) earns a lower utility-specific outflow credit — typically five to nine cents per kilowatt-hour depending on your utility and tariff. For DTE Energy customers in southeastern Michigan and Consumers Energy customers in western Michigan, this means the economic value of a solar installation under the DGP depends more heavily on self-consumption — solar electricity used directly in the home — than on grid exports. Customers who connected solar systems under the prior net metering framework before April 2018 are grandfathered at the retail-rate net metering terms for their legacy contract term. Homeowners considering a new installation in 2025 or later should confirm the current outflow credit rate with their specific utility before sizing a system, since over-sizing to produce large surpluses generates less revenue per kilowatt-hour than self-consuming that output would save.
Does Michigan exempt solar panels from property tax?
Yes. Michigan Public Act 92 of 2008 explicitly exempts solar energy systems from property tax assessment, making Michigan one of the stronger Midwest states for solar property tax treatment. Under the law, a solar installation does not add to a home's assessed value for property tax purposes, even if the panels increase the home's market resale value. This exemption applies to solar photovoltaic systems and protects Michigan homeowners from a scenario common in states without similar protections: installing solar, seeing the home's market value rise, and then facing a reassessment that increases property tax liability. The property tax exemption is permanent and applies statewide; there is no application requirement or sunset date. Note that Michigan's six-percent sales tax is not exempt for solar equipment purchases — solar panels, inverters, and installation labor are subject to the standard Michigan sales tax, unlike states such as New Mexico or Maine that specifically exempt solar equipment from sales tax. The combination of the federal Investment Tax Credit and Michigan's property tax exemption makes the long-term economics of a Michigan solar installation more favorable than the DGP's lower outflow credit rate might initially suggest.
DTE Energy or Consumers Energy — what's the difference for solar customers in Michigan?
Both DTE Energy and Consumers Energy administer Michigan's Distributed Generation Program, but the specific outflow credit rate and interconnection process differ between the two utilities. DTE Energy, which serves the Detroit metropolitan area, southeastern Michigan, and the Thumb region through DTE Electric Company, has historically offered an outflow credit in the five-to-seven-cent-per-kilowatt-hour range under its DGP tariff schedule. Consumers Energy, serving western Michigan including Grand Rapids, Lansing, Kalamazoo, and the western Lower Peninsula, has offered a slightly different outflow credit rate structure — homeowners in Consumers territory should verify current rates directly with Consumers Energy or a licensed installer before making final system-sizing decisions. Both utilities require interconnection applications that comply with Michigan's electric utility interconnection standards, and installation timelines for DTE and Consumers can vary depending on application backlog. Upper Peninsula Power Company (UPPCO) serves customers in the Upper Peninsula and also participates in Michigan's DGP framework, though the UP's somewhat shorter solar season (fewer peak sun hours) makes system economics there somewhat less favorable than in the Lower Peninsula. Regardless of which utility serves your home, obtaining three quotes from LARA-licensed Michigan solar contractors and confirming the current outflow credit rate with your utility before contract signing is the recommended approach.
Do I need both a Residential Builder license and an Electrical Contractor license to install solar in Michigan?
Michigan requires solar installation contractors to hold appropriate state licenses from the Michigan Department of Licensing and Regulatory Affairs (LARA) Bureau of Construction Codes. Solar installations typically require an Electrical Contractor license for the electrical work — wiring the solar panels to the inverter, connecting the inverter to the home's electrical panel, and installing the disconnect switch required by Michigan's interconnection standards. In some cases, the rooftop mounting and structural work may also require a Residential Builder license depending on the scope of the installation and local building department requirements. The distinction matters for homeowners because some solar companies operate with only one of the two licenses, subcontracting the other work. Homeowners should verify that all work on their installation — both the electrical and the rooftop structural work — is covered by appropriately licensed contractors. LARA license verification is available online at the LARA public lookup portal, and homeowners can confirm contractor license status before signing a contract. In addition to state licensing, local building permits are required for solar installations in Michigan, and some municipalities have additional local electrical inspection requirements beyond the state-level process.
Best Solar Installers in Michigan
Michigan requires solar installation contractors to hold appropriate licenses from the Michigan Department of Licensing and Regulatory Affairs (LARA) Bureau of Construction Codes — typically an Electrical Contractor license for the electrical work and, depending on scope, a Residential Builder license for the rooftop structural work. Verify all contractor licenses at the LARA public lookup portal before signing a contract. Look for NABCEP-certified professionals as an additional quality indicator beyond the state licensing minimum.
- Get at least 3 quotes from different installers to compare pricing and equipment.
- Check installer ratings with the BBB before signing a contract.
- Verify contractor licensing with Michigan Department of Licensing and Regulatory Affairs (LARA) Bureau of Construction Codes — Residential Builder license + Electrical Contractor license. Ask for proof of a 20–25 year panel warranty.
Top Utility Companies in Michigan
DTE Energy (DTE Electric Company)
Service area: Detroit, Ann Arbor, Warren, Flint, southeastern Michigan, Thumb region
Tariff: tier-2, TOU
Residential rate: 16.0–19.0¢/kWh (as of 2026-05)
NEM program: MI Distributed Generation Program (DGP) — inflow/outflow bidirectional billing
Consumers Energy
Service area: Grand Rapids, Lansing, Kalamazoo, Battle Creek, Traverse City, western and central Lower Peninsula
Tariff: tier-2, TOU
Residential rate: 15.0–18.0¢/kWh (as of 2026-05)
NEM program: MI Distributed Generation Program (DGP) — inflow/outflow bidirectional billing
Upper Peninsula Power Company (UPPCO)
Service area: Marquette, Ishpeming, Negaunee, Upper Peninsula of Michigan
Tariff: flat
Residential rate: 14.0–17.0¢/kWh (as of 2026-05)
NEM program: MI Distributed Generation Program (DGP)
Net Metering Policy in Michigan
- Version
- NEM transition
- Effective date
- 2018-04-18
- Buyback rate
- export-credit
- System size cap
- 150 kW
- Grandfathering
- Customers who interconnected under the prior net metering framework before April 2018 retain retail-rate net metering for the duration of their legacy contract term. New interconnection applications after April 2018 enroll in the Distributed Generation Program.
Michigan Public Service Commission Case U-18383 — Distributed Generation Program replaced net metering effective April 2018. Bidirectional billing: inflow (grid import) billed at full retail rate (~16–18¢/kWh); outflow (solar export) credited at lower utility-specific outflow rate (~5–9¢/kWh per IOU). DTE Energy and Consumers Energy outflow rates differ — confirm current rate with your utility. Pre-April-2018 NEM customers grandfathered at retail-rate net metering for their legacy contract term.
Property Tax Exemption in Michigan
- Status
- full
- Exemption
- 100%
- Applies to
- solar-pv
Michigan Public Act 92 of 2008 exempts solar energy systems from property tax assessment statewide. A solar installation does not add to a home's assessed value for property tax purposes. Note: Michigan sales tax (6%) is NOT exempt for solar equipment purchases — panels, inverters, and installation materials are subject to standard Michigan sales tax.