Minnesota has no companies offering free solar panels and it has something most of the states in that position do not: actual cash. Xcel Energy pays Solar*Rewards at $0.03 per kilowatt-hour generated for ten years, the state waives sales tax on the equipment, and the added home value is excluded from your property assessment. None of that requires signing your roof over to anybody.
No Lease Market, but Real Money
Free solar means a lease or a power purchase agreement, under which a company owns the system on your roof. Per the Database of State Incentives for Renewables and Efficiency, Minnesota is among the 17 states with no current residential third-party ownership offerings, and at 195.3 MW it is the largest rooftop market in that group, having grown 20.2% in a year.
What Minnesota substitutes for a leasing industry is a set of benefits that reach a homeowner directly. Two of the three come off the invoice or the tax bill rather than arriving as a payment, which is exactly why they are easy to miss when comparing quotes.
- Xcel Solar*Rewards. A performance payment of $0.03 per kilowatt-hour generated, running for ten years. It is first come, first served against an annual budget that does not carry over, so the application date matters more than the install date. Xcel customers only.
- Sales tax exemption. Solar equipment is exempt from Minnesota sales tax, currently 6.875%, which reduces the invoice rather than appearing as a line item.
- Property tax exemption. The value the system adds to the home is excluded from the assessment, so improving the house does not raise the bill.
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See what you qualify for in Minnesota
Solar*Rewards Follows Whoever Owns the System
Worth stating clearly because it is the reason the absence of a leasing market costs Minnesota homeowners less than it costs households elsewhere. A performance payment of $0.03 per kilowatt-hour for ten years accrues to the system owner. Where third-party ownership exists, a company takes it. Here, if you own the system, you take it.
The trap is the budget rather than the eligibility. Funding is first come, first served each year and does not carry over, so a household that installs late in a year when the allocation has run out gets nothing from it. Ask where the current year’s funding stands before you set an installation date, not after.
The sales tax exemption is the other one that gets lost. At 6.875% on a whole system it is a meaningful sum, and because it reduces the price rather than showing as a separate line, two quotes can look different simply because one presented the exempt figure and the other did not. Check that both are quoting the same basis.
Minnesota Covers Co-ops and City Utilities Too
Minnesota Statutes section 216B.164 requires every electric utility in the state, rural cooperatives and municipal systems included, to offer net metering for systems under 40 kW. Balances are reconciled monthly at that utility’s own average retail energy rate, and the customer may take a bill credit or a payment. Across Minnesota, residential rates average about 15.14¢ per kWh, so the credit is effectively one to one on energy.
Covering every utility that way is unusual, and it matters on this page, because in Kansas, Iowa and Alabama the equivalent statutes exclude exactly the households that most often get told a national offer does not apply to them. A Minnesota co-op member is inside the same rule as an Xcel customer in Minneapolis.
There is a live threat to that. Senate File 4504 would remove net metering for systems in cooperative and municipal territories applying to interconnect after December 31, 2026, replacing it with avoided cost. It passed the Senate 35 to 32 on May 12, 2026 and went to the House Energy Finance and Policy Committee the same day. As of August 17, 2026 it has not passed the House and has not been signed.
You Likely Will Not Qualify If
- You are answering a national free solar advertisement. Minnesota is among the 17 states with no current residential third-party ownership providers. If a national pitch does offer you a lease or PPA anyway, read the escalator clause first: these contracts typically raise your monthly payment 2 to 3% every year for 20 to 25 years.
- You are not an Xcel customer but were quoted Solar*Rewards. It is an Xcel Energy program and does not exist on other utilities.
- You install after the year’s Solar*Rewards allocation is exhausted. Funding is first come, first served and does not carry over.
- You are counting on the 30% federal credit. Section 25D is $0 for owned systems whose installation is completed after December 31, 2025, and Section 48E is claimed by a business owner rather than by you.
- You are on a co-op or city utility and plan to apply in 2027 or later. If Senate File 4504 becomes law in its current form, applications after December 31, 2026 would move to avoided cost.
The Sequence That Costs You Nothing
Minnesota rewards doing three things in the right order, and none of them involves a financing product. Check whether Xcel bills you and, if so, where this year’s Solar*Rewards funding stands. Confirm that every quote you hold is presenting the sales-tax-exempt price. And if a cooperative or a city utility bills you, get an interconnection application filed before the end of this year, because that is cheap insurance against a bill that has already passed one chamber.
The absence of a lease market is a genuine gap, and Among the states with no lease market, Minnesota is where that gap costs a homeowner the least, because the money that would otherwise flow to a leasing company is available to you directly. Our Minnesota incentives guide covers the statute and the pending bill, and the Minnesota installer list covers who does the work.
Minnesota Solar FAQs
No company currently offers them. Minnesota is among the 17 states with no current residential third-party ownership providers, though at 195.3 MW it is the largest rooftop market in that group and grew 20.2% in a year. What Minnesota has instead is money that reaches homeowners directly: Xcel’s Solar*Rewards, a sales tax exemption and a property tax exemption.
Xcel Energy pays $0.03 per kilowatt-hour your system generates for ten years, and it accrues to whoever owns the system. Where third-party ownership exists, a leasing company takes it; in Minnesota, if you own the system, you take it. Funding is first come, first served against an annual budget that does not carry over, so ask where the current year stands before setting an installation date.
Solar equipment is exempt from Minnesota sales tax, currently 6.875%, which on a whole system is a meaningful sum. Because it reduces the invoice rather than appearing as a separate line, two quotes can look different simply because one presented the exempt figure and the other did not. Check that both are quoting the same basis before comparing them.
Yes. Minnesota Statutes section 216B.164 requires every electric utility in the state, rural cooperatives and municipal systems included, to offer net metering for systems under 40 kW, reconciled monthly at that utility’s own average retail energy rate (Minnesota residential rates average about 15.14¢ per kWh). That is unusual: the equivalent laws in Kansas, Iowa and Alabama exclude exactly those households.
If a cooperative or city utility bills you, filing an interconnection application before December 31, 2026 is cheap insurance. Senate File 4504 would move co-op and municipal applications after that date to avoided cost instead of net metering. It passed the Senate 35 to 32 on May 12, 2026 and has sat in House committee since; as of August 17, 2026 it has not passed the House and has not been signed. Xcel and Minnesota Power customers are outside the proposal.
The money here reaches you directly, not a leasing company. Enter your ZIP code to see who serves your address.
File before the co-op deadline
References & Research Sources
The program terms and figures above come from the records below. Legislative status is stated as of August 17, 2026 and will change; capacity figures are 2024 data. Sources accessed between June 10 and August 21, 2026.
- pv magazine USA. States without residential solar third-party ownership may become holes in the market after 2025. Analysis drawing on DSIRE and US Energy Information Administration data: the 17-state count including Minnesota, and Minnesota’s 195.3 MW installed residential base at the end of 2024 with 20.2% twelve-month growth. Dated July 22, 2025. Accessed August 17, 2026.
- Minnesota Legislature. Minnesota Statutes section 216B.164. The net metering obligation on every electric utility including cooperatives and municipals, the 40 kW ceiling, monthly reconciliation at the utility’s average retail energy rate, and the customer’s choice of bill credit or payment. Accessed August 17, 2026.
- Minnesota Legislature. Senate File 4504 status record. Senate passage 35 to 32 on May 12, 2026 and referral to the House Energy Finance and Policy Committee the same day, with no House passage and no signature as of August 17, 2026. Legislative status will change. Accessed August 17, 2026.
- Xcel Energy. Solar*Rewards program page. The $0.03 per kilowatt-hour residential performance incentive, paid annually for 10 years, with first come, first served funding and waitlist processing; the 2026 program opened January 7, 2026. Confirmed against the live program page August 21, 2026.
- Minnesota Legislature. Minnesota Statutes 272.02. The property tax exclusion for solar systems, alongside the sales tax exemption on solar energy equipment. Accessed August 17, 2026.
- US Energy Information Administration. Electric Power Monthly, Table 5.6.A: Average Price of Electricity to Ultimate Customers. The Minnesota statewide average residential rate of 15.14¢ per kWh used on this page as labeled context. Accessed August 17, 2026.
- Internal Revenue Service. One, Big, Beautiful Bill provisions. The Public Law 119-21 termination of Section 25D for systems whose installation is completed after December 31, 2025, and the availability of Section 48E to business owners of residential systems under current deadlines. Accessed August 17, 2026.
