Solar Calculator for Minnesota: Costs, Incentives & ROI
Minnesota's residential solar market is anchored by a stable policy framework that combines full retail-rate net metering, a complete property tax exemption for solar energy generating systems, a sales tax exemption on solar equipment, and access to Xcel Energy's Solar*Rewards production-based incentive program for customers in the Twin Cities metro and surrounding service territory. Minnesota was among the earliest states to adopt net metering, with a statutory framework dating to the 1980s that has been periodically reviewed and reaffirmed by the Minnesota Public Utilities Commission through successive rulemaking proceedings — most recently with a reaffirmation of retail-rate compensation through the 2030s. Xcel Energy Minnesota, a subsidiary of Xcel Energy Inc. operating as Northern States Power Company in the Twin Cities metropolitan area and extending north and west into greater Minnesota, serves the majority of residential customers in the state's largest urban corridor. Minnesota Power, an ALLETE subsidiary headquartered in Duluth, serves northern Minnesota including the Iron Range and the Lake Superior shoreline. Otter Tail Power serves western Minnesota communities from its Fergus Falls headquarters. Minnesota's residential electricity rates average approximately fourteen cents per kilowatt-hour on a blended basis, below the national average and consistent with the upper Midwest market, where natural gas generation and transmission infrastructure benefit from relatively competitive wholesale electricity pricing at the Midcontinent Independent System Operator. Minnesota's solar resource, while more modest than Sun Belt states, averages approximately four and a half to five peak sun hours per day across the Twin Cities and southern Minnesota, sufficient to produce economically viable residential solar systems — particularly when the Solar*Rewards production incentive is available to Xcel Energy customers. The federal Investment Tax Credit of thirty percent combines with the Solar*Rewards program, full-retail net metering, and the property and sales tax exemptions to produce payback periods of approximately eight to ten years for a typical six-kilowatt residential system in the Twin Cities metro.
Incentive data updated: May 2026(may be outdated)
Average Solar Cost in Minnesota
Average installed solar costs in Minnesota typically range from $2.90 to $3.20 per watt before incentives, reflecting the upper Midwest labor market and competitive multi-installer environment in the Twin Cities metropolitan area. A standard six-kilowatt residential system costs approximately $17,500 to $19,500 before the federal Investment Tax Credit — near the national average and consistent with neighboring Wisconsin and Iowa. The thirty-percent federal ITC reduces the net installed cost to approximately $12,250 to $13,650 for a six-kilowatt system. Minnesota's property tax exemption under Minn. Stat. § 272.02 subd. 24 exempts the full assessed value of a solar energy generating system from local property tax assessment — meaning the market premium a solar installation adds to a home's value is excluded from property tax calculations for the life of the system. This exemption applies statewide without a local opt-in requirement, providing meaningful cumulative savings over a twenty-five-year system lifespan in jurisdictions with higher property tax mill rates. The sales tax exemption under Minn. Stat. § 297A.67 subd. 29 eliminates Minnesota's state sales tax on solar equipment and installation, saving approximately six to seven percent on the full installed system cost. For Xcel Energy customers eligible for the Solar*Rewards program, a production-based incentive of four cents per kilowatt-hour over a ten-year incentive period — though subject to annual budget capacity limits and lottery-based enrollment when oversubscribed — can meaningfully reduce the effective system payback period. Homeowners considering the Solar*Rewards program should verify current program capacity and enrollment procedures directly with Xcel Energy before purchasing, as annual program budgets are limited and enrollment windows may close early.
- Avg. installed cost
- $3.05/W
- Typical 6 kW system
- $17,500–$19,500
Top Solar Incentives in Minnesota
Live incentive data not currently available for Minnesota. See the federal incentive guidance via our Solar Tax Credit Calculator.
Electricity Rates in Minnesota
Minnesota residential electricity rates average approximately thirteen to fifteen cents per kilowatt-hour on a blended basis, below the national average and consistent with the upper Midwest regional market served by the Midcontinent Independent System Operator. Xcel Energy Minnesota customers — the largest residential utility customer base in the state — typically pay rates in the thirteen to sixteen cent range, with the supply component subject to periodic rate cases before the Minnesota Public Utilities Commission. Xcel Energy's Time-of-Use rates are available for residential customers who choose to shift consumption, offering potential savings for households that can flex appliance and EV charging loads to off-peak periods. Minnesota Power customers in northern Minnesota typically pay slightly lower rates — around eleven to fourteen cents per kilowatt-hour — reflecting the northern utility's historically favorable generation mix, though Minnesota Power's Integrated Resource Plan projects increasing reliance on renewable energy under Minnesota's Next Generation Energy Act. Otter Tail Power customers in western Minnesota pay rates generally in the eleven to thirteen cent range, consistent with other smaller investor-owned utilities in the region. The relatively moderate Minnesota electricity rate environment means that solar return on investment depends more on installation cost efficiency, system production, and incentive programs than on pure rate arbitrage — unlike high-cost states such as Connecticut or Massachusetts where electricity rates alone create very short payback windows.
Peak Sun Hours in Minnesota
Minnesota's solar resource averages approximately four and a half to five peak sun hours per day on a south-facing tilted surface across the Twin Cities and southern Minnesota, declining to approximately four to four and a half peak sun hours per day in northern Minnesota around Duluth and the Boundary Waters region, where cloud cover related to Lake Superior and greater boreal forest precipitation is more frequent. Minneapolis, located in the Minnesota River valley and open plains east of the prairie, averages approximately 4.7 to 5.0 peak sun hours per day — comparable to Chicago and higher than Indianapolis, reflecting the open plains exposure that reduces obstructions to direct beam solar radiation. Rochester, in the southeastern Minnesota agricultural plain, benefits from clear skies similar to Minneapolis at approximately 4.6 to 4.9 peak sun hours per day. Duluth, on the Lake Superior shore, receives approximately 4.0 to 4.4 peak sun hours per day, influenced by lake-effect cloud formation particularly in winter and early spring. Minnesota's peak solar production months are May through August, when day length is long and cloud cover is relatively low across the southern and central regions. Winter production is reduced but not negligible — Minnesota's cold temperatures actually improve panel efficiency relative to summer, partially offsetting the shorter winter day length and lower sun angle. A six-kilowatt system in the Twin Cities typically produces approximately seven thousand to eight thousand kilowatt-hours per year, representing meaningful annual bill savings at the current blended residential electricity rate. For Xcel Energy customers in the Solar*Rewards program, each kilowatt-hour of production also earns the four-cent incentive on top of net metering savings.
Example ROI for a 6 kW System
- Estimated annual savings
- $900
- Payback period
- 9.0 years
- 25-year net savings
- $23,000
Run a personalized estimate with your ZIP code using the Solar ROI Calculator.
Major Cities in Minnesota
- Minneapolis55402
- St. Paul55101
- Rochester55901
- Duluth55802
- Bloomington55420
Common Questions About Solar in Minnesota
What is Minnesota's Solar*Rewards program?
Xcel Energy's Solar*Rewards program provides Xcel Energy Minnesota customers a production-based incentive of four cents per kilowatt-hour generated by their rooftop solar system, paid over a ten-year incentive period. The incentive is paid separately from net metering credits — customers receive retail-rate net metering credits for all export to the grid plus the Solar*Rewards production payment for all kilowatt-hours produced, including self-consumed generation. The Solar*Rewards program operates within an annual budget allocation set by the Minnesota Public Utilities Commission; when annual capacity is fully subscribed, Xcel Energy uses a lottery-based selection process for the waiting list. This means enrollment is not guaranteed, and homeowners should verify current program availability and capacity directly with Xcel Energy or an enrolled installer before making purchasing decisions based on the incentive. The Solar*Rewards Community program is a companion program for renters, apartment residents, and customers who cannot install rooftop solar, offering community solar garden subscriptions — an alternative path to Minnesota solar benefits without a home installation.
Does Minnesota exempt solar from property tax?
Yes. Minnesota Statutes § 272.02 subd. 24 exempts the full assessed value of a solar energy generating system from local real property taxation. This means the increase in your home's assessed value attributable to a solar installation is excluded from property tax calculations — a complete statewide exemption that does not require a local opt-in application. The exemption applies to solar photovoltaic systems and extends to battery storage systems under Phase II rules adopted by the Minnesota PUC, making Minnesota's property tax treatment of solar among the most favorable in the Midwest. Additionally, solar equipment and installation labor are exempt from Minnesota's state sales tax under Minn. Stat. § 297A.67 subd. 29, saving approximately six to seven percent on the full system cost. The combined property tax and sales tax exemptions represent meaningful cumulative savings for Minnesota homeowners over the twenty-five-year operating life of a typical residential solar system.
What's the typical solar payback in Minnesota?
A typical six-kilowatt residential solar system in the Twin Cities metro area has an estimated payback period of approximately eight to ten years, depending on installation cost, the household's electricity consumption pattern, and whether the homeowner qualifies for and is enrolled in the Xcel Energy Solar*Rewards production incentive program. The federal Investment Tax Credit of thirty percent is the primary incentive for most Minnesota homeowners, reducing the net installed cost from approximately seventeen thousand five hundred to nineteen thousand five hundred dollars to roughly twelve thousand two hundred fifty to thirteen thousand six hundred fifty dollars for a six-kilowatt system. Net metering at the full retail rate — approximately fourteen cents per kilowatt-hour — credits all solar generation exported to the grid at the same rate as purchased electricity, maximizing the value of each kilowatt-hour. For Xcel Energy Solar*Rewards participants, the additional four-cent-per-kilowatt-hour production incentive over ten years can reduce the payback period by approximately one to two years compared to net metering alone. Over a twenty-five-year system life, a Twin Cities homeowner can expect approximately twenty thousand to twenty-five thousand dollars of net cumulative savings after system cost and financing.
Do I need a state license for solar installation in Minnesota?
Yes. Minnesota requires solar installation contractors to hold a Residential Building Contractor license issued by the Minnesota Department of Labor and Industry (DLI). Additionally, electrical work associated with the solar installation — including inverter connections and utility interconnection — requires a separate Electrical Contractor license, also administered by the DLI. Minnesota law prohibits unlicensed contractors from performing residential building or electrical work, including solar installations. Before signing a solar contract, verify that your installer holds a current DLI Residential Building Contractor license and that their electricians are licensed as Electrical Contractors under Minnesota Statutes Chapter 326B. You can verify license status using the DLI's online public lookup at the Minnesota Department of Labor and Industry licensing portal. NABCEP certification — the North American Board of Certified Energy Practitioners — is an additional quality indicator that goes beyond state licensing requirements, demonstrating that installers have met national solar industry competency and experience standards. Requesting proof of both the DLI license and NABCEP credentials, along with at least three competitive quotes, is a recommended approach for Minnesota homeowners.
Best Solar Installers in Minnesota
Minnesota requires solar installation contractors to hold a Residential Building Contractor license issued by the Minnesota Department of Labor and Industry (DLI). Electrical work associated with the installation — including inverter connections and utility interconnection — requires a separate Electrical Contractor license also administered by the DLI. Verify your installer's current DLI license status using the public lookup tool before signing any contract. NABCEP certification is an additional quality indicator demonstrating national solar industry competency and experience requirements beyond the state license minimum. Requesting at least three competitive quotes from licensed, NABCEP-credentialed installers is recommended practice in Minnesota.
- 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 Minnesota Department of Labor and Industry (DLI) — Residential Building Contractor license (BC) + separate Electrical Contractor license required for electrical work. Ask for proof of a 20–25 year panel warranty.
Top Utility Companies in Minnesota
Xcel Energy Minnesota (Northern States Power)
Service area: Minneapolis, St. Paul, Twin Cities metro, Bloomington, Brooklyn Park, Plymouth, central Minnesota
Tariff: tier-2, TOU
Residential rate: 13.0–16.0¢/kWh (as of 2026-05)
NEM program: MN PUC Net Metering at Retail; Solar*Rewards production rebate eligible
Minnesota Power (ALLETE)
Service area: Duluth, Iron Range, Brainerd, northern Minnesota
Tariff: flat
Residential rate: 11.0–14.0¢/kWh (as of 2026-05)
NEM program: MN PUC Net Metering at Retail
Otter Tail Power
Service area: Fergus Falls, Wahpeton, Detroit Lakes, western Minnesota
Tariff: flat
Residential rate: 11.0–13.0¢/kWh (as of 2026-05)
NEM program: MN PUC Net Metering at Retail
Net Metering Policy in Minnesota
- Version
- NEM NEM-2.0
- Effective date
- 1983-04-13
- Buyback rate
- retail
- System size cap
- 40 kW
- Grandfathering
- No transition planned; MN PUC reaffirmed retail-rate NEM through 2030+. All current and new residential interconnections receive full retail-rate net metering under the same MN PUC standard.
Full retail-rate net metering for residential systems ≤40 kW; MN PUC has reaffirmed retail-rate compensation through 2030+. Community solar Solar*Rewards Community program available as an alternative for renters and non-roof customers. Xcel Energy Solar*Rewards production-based incentive ($0.04/kWh over 10 years) is separate from net metering and subject to annual program capacity limits.
Property Tax Exemption in Minnesota
- Status
- full
- Exemption
- 100%
- Applies to
- solar-pvstorage
Minn. Stat. § 272.02 subd. 24 — solar energy generating system value is fully exempt from property tax assessment; the market premium added to home value by a solar installation is excluded from local property tax calculations statewide. Storage systems covered under Phase II PUC rules. Solar equipment is also exempt from Minnesota state sales tax under Minn. Stat. § 297A.67 subd. 29.