South Dakota has no net metering. Not a reduced version, not a successor tariff, not a program that closed to new entrants: the state has never had one, and the Public Utilities Commission says so directly. South Dakota and Tennessee are the only two states in the country in that position. Exports here mostly earn a small wholesale rate, so the economics rest on the power you use yourself, and what that leaves you with.
No Program, and No Plans for One
The Commission’s own solar guidance states plainly that South Dakota does not compensate solar generation at a net metered rate, and the legislature has repeatedly declined to mandate one. There is no closing deadline to beat and no pending proceeding to wait for, which at least makes planning simple: the rules you install under today are the rules that have applied for years.
What does exist is the federal backstop. Under PURPA, Commission-regulated utilities, which here means Xcel (operating as Northern States Power), Black Hills, NorthWestern, Otter Tail and MidAmerican, must interconnect a qualifying facility and buy its output at avoided cost. Rates for systems under 100 kW are filed with the Commission per utility. There is no statewide figure, and we are not going to invent one: ask your utility for its current filed rate before you let any quote assume a number.
What Happens to a Kilowatt-Hour You Do Not Use
Where the kilowatt-hour goes | What it is worth to you | What that implies for design |
|---|---|---|
Consumed in the house as it is generated | Your utility’s full retail rate; the 13.68¢ statewide average is context, and each utility files its own | This is where essentially all the value sits. Design for it. |
Stored in a battery and used that evening | Your utility’s full retail rate minus round-trip losses | Storage does real financial work here, not just backup. |
Exported under a PURPA agreement | Avoided cost, filed per utility, well under retail | Treat as a small consolation, never as the plan. |
Exported with no agreement in place | Nothing | Sort the interconnection paperwork before switch-on. |
Read that table and the design rule writes itself. In a net-metering state you can oversize a little and let the grid act as a free battery. In South Dakota the grid is not a battery, it is a buyer paying wholesale, so the correct system is one closely matched to what the house actually consumes during daylight, and storage earns its keep faster than it does elsewhere.
Enter your ZIP code and we will size a system to your daytime load rather than your annual total.
Size a system to your daytime use
Expensive Hardware Against No Export Value
The cost side does not help. At $3.44 per watt (as of March 1, 2026) South Dakota is the second most expensive install market in the country, second only to Nebraska. The typical system is 8.07 kW at about $27,762 gross, producing roughly 11,927 kWh a year around Sioux Falls on a solid 1,478 kWh per kW.
If every one of those kilowatt-hours displaced a purchase at 13.68¢, the system would return about $1,632 a year, a 17.0-year payback. That model uses the 13.68¢ statewide average; your utility’s filed rate is the number that matters, so rerun the math with the rate on your bill. That is the ceiling rather than the expectation, because no household without storage consumes everything it generates at midday in June. A realistic self-use share of 60% to 70%, with the balance going out at avoided cost, pushes the realistic figure past 20 years. Rates are rising only 2.17% a year here, so time does not close that gap quickly, and the federal residential credit is $0 for owner-purchased systems whose installation is completed after December 31, 2025 under Public Law 119-21.
Who Should Not Install Here
- Anyone shown a quote with a net metering line in it. There is no net metering in South Dakota. A proposal that models one is modeling a different state, and every number downstream of it is wrong.
- Daytime-empty households without storage. This is the profile the state’s rules punish hardest, because the value only exists at the moment of use.
- Anyone counting on a specific export rate. Rates are filed per utility and no statewide figure exists. Get yours from Xcel, Black Hills or NorthWestern in writing.
- Buyers who cannot get three bids. In the second most expensive install market in America, price is the largest single variable you control.
- Cooperative customers assuming the PURPA obligation applies. It binds Commission-regulated utilities. Sioux Valley and the other co-ops are a separate conversation.
None of that makes solar impossible in South Dakota. A high daytime user with a big roof, a battery and a good price can still get there. It does mean this is a state where the design decides the outcome far more than the panels do.
South Dakota Solar Cost FAQs
No. The Public Utilities Commission states directly that South Dakota does not compensate solar generation at a net metered rate, and the legislature has repeatedly declined to mandate one. South Dakota and Tennessee are the only two states with no net-metering-style program at all.
About $3.44 per watt installed, the second most expensive in the country as of March 1, 2026. The typical system is 8.07 kW, roughly $27,762 before incentives, producing around 11,927 kWh a year in Sioux Falls sun.
Through a PURPA qualifying facility agreement. Commission-regulated utilities, including Xcel, Black Hills, NorthWestern, Otter Tail and MidAmerican, must interconnect and purchase your output at avoided cost, with rates for systems under 100 kW filed per utility. There is no statewide figure, so ask your utility for its current filed rate rather than trusting a number from a website.
About 17.0 years if every kilowatt-hour displaces a purchase at 13.68¢, which is the ceiling rather than the expectation. Without storage no household consumes everything it generates at midday, so a realistic self-use share of 60% to 70% pushes the realistic figure past 20 years. Rates rise only 2.17% a year, so time closes that gap slowly.
It does more financial work here than in most states, because value only exists at the moment you use the power. With no net metering, a kilowatt-hour stored and used that evening is worth the full 13.68¢ retail rate, while the same kilowatt-hour exported earns a wholesale-level avoided cost. That is a wider gap than a net-metering state produces.
Self-use is the entire economics here. Enter your ZIP code and we will bring you installers who design for it.
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Methodology: cost figures use the EcoGen Solar Cost Index for South Dakota, $3.44 per watt as of March 1, 2026, with payback modeled with no federal residential credit for owner-purchased systems, no net metering, rate escalation at the state 5-year average of 2.17%, 0.5% annual panel degradation, and a 25-year horizon. The 17.0-year figure assumes complete self-consumption and is presented as a ceiling, with the realistic range stated separately. No export rate is quoted because no statewide figure exists on the public record.
References & Research Sources
EcoGen America reviewed South Dakota Public Utilities Commission guidance, federal electricity price and utility datasets, Census home-value data, and federal tax guidance for this South Dakota solar cost guide. Sources were accessed between June 10 and August 17, 2026, unless another date is listed below.
- South Dakota Public Utilities Commission (PUC). Solar FAQ. Confirmation that South Dakota has no net-metered rate. Accessed June 10, 2026.
- South Dakota Public Utilities Commission (PUC). Compensation Guidance. The PURPA qualifying facility route for customer generation. Accessed June 10, 2026.
- U.S. Energy Information Administration (EIA). Electric Power Monthly, Table 5.6.A. Average residential electricity prices by state, March 2026 edition. Accessed June 10, 2026.
- U.S. Energy Information Administration (EIA). Form EIA-861: Annual Electric Power Industry Report, 2024. Residential customer counts for Northern States Power, Black Hills Power, NorthWestern Energy, and Sioux Valley Southwestern Electric. Accessed June 10, 2026.
- U.S. Census Bureau. American Community Survey, 2024. Median home value data used for cost-to-value context. Accessed June 11, 2026.
- Internal Revenue Service (IRS). One, Big, Beautiful Bill Provisions. Guidance on Public Law 119-21, including termination of the Section 25D residential credit for systems whose installation is completed after December 31, 2025. Accessed August 15, 2026.
