South Dakota is the rare case where both halves of the usual answer are missing. No company offers free solar panels here, and the state does not require any utility to offer net metering either. That leaves one question standing on its own, and it is answerable in a single phone call: what does your particular utility choose to do?
Nothing Required, Nothing Leased
Free solar means a lease or a power purchase agreement, under which a company owns the equipment. Per the Database of State Incentives for Renewables and Efficiency, South Dakota is one of 17 states with no current residential third-party ownership offerings, and it holds the smallest installed base in that entire group at 3.9 MW. Third-party power purchase agreements are also legally restricted in South Dakota, so this is not just a market that has not arrived; the contract model itself faces limits here. And if a national ad does put a lease or PPA in front of you, those contracts typically raise your payment 2 to 3% every year, an escalator worth checking on any offer.
It also grew 58.5% in a year, the fastest rate in the group. Both facts are true and neither means much on its own: on a 3.9 MW base, a few hundred households moves the percentage a long way. The realistic read is a very small market that is expanding rather than a market that has solved anything.
The Public Utilities Commission’s own position is unusually direct: South Dakota does not compensate solar generation at a net metered rate. There is no statewide program, no successor tariff and no pending change, because there was never a mandate to close or replace.
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No Utility Is Required to Net Meter, So Ask Yours
The most useful fact on this page is that nothing statewide decides what your exports earn: no South Dakota utility is required to net meter, and no voluntary full-retail program is on the public record. What your own utility actually offers, if anything, is a question only it can answer, which is why the one call below matters more here than in almost any other state.
Provider | Position on net metering | What to do |
|---|---|---|
Xcel Energy, Black Hills Energy, MidAmerican, NorthWestern, Otter Tail | Not required to offer netting; any arrangement is voluntary and its terms are the utility’s own | Ask directly, in writing, before designing a system |
Rural electric cooperatives | Set their own terms entirely | Ask directly, and expect wide variation |
Any netting arrangement a utility volunteers is also revocable in a way a statutory right is not. That is not a reason to avoid solar. It is a reason to get the terms, and any period they are guaranteed for, in writing before you sign an installation contract rather than after.
What Federal Law Guarantees When the State Does Not
If your utility offers nothing, there is still a floor. Under the federal Public Utility Regulatory Policies Act, utilities regulated by the Commission must interconnect with and purchase power from small generating facilities at a minimum of avoided cost, the incremental cost the utility would otherwise incur generating or buying that energy itself.
For facilities under 100 kW those rates have to be filed with and approved by the Commission for regulated investor-owned utilities. So a public, checkable number exists for your utility even where net metering does not. It is a wholesale rate, well below the 13.68¢ statewide average residential rate, but it exists and it is enforceable.
Cooperatives, which are not Commission-regulated in the same way, sit outside that route as well as outside the voluntary one, which is why a co-op member has to ask twice.
You Likely Will Not Qualify If
- You are answering a national free solar advertisement. South Dakota is among the 17 states with no current residential third-party ownership providers.
- You assumed South Dakota has net metering. The state does not require it, no voluntary full-retail program is on the public record, and the enforceable floor is a wholesale avoided-cost sale. Ask your utility what it actually offers.
- You are on a rural electric cooperative. Co-ops sit outside both the voluntary offers and the Commission-regulated federal route, so both paths need checking directly.
- You are expecting a South Dakota state solar tax credit. There is no personal income tax here, so there is no return for a credit to reduce. The property tax exemption at section 10-4-44 is the entire state offer.
- You are counting on the 30% federal credit. Section 25D is $0 for purchased systems from January 1, 2026, and Section 48E is claimed by a business owner through arrangements South Dakota has no providers for.
The Call That Settles It
In most states the advice is to understand a rule and design around it. Here the sequence collapses to one conversation, held before you speak to an installer rather than after. Ask your utility whether it offers net metering, at what rate, up to what system size, and whether those terms are guaranteed for any period. If the answer is no, ask for its filed avoided cost rate for facilities under 100 kW.
A yes to any netting arrangement puts you well ahead of the legal floor here. A no sends you to a much narrower case built almost entirely on self-consumption. Both are workable answers; what does not work is designing a system before you know which one applies. Our South Dakota incentives guide covers the policy detail and the South Dakota installer list covers who does the work.
South Dakota Solar FAQs
No company currently offers them. South Dakota is among the 17 states with no current residential third-party ownership providers, and it holds the smallest installed base in that group at 3.9 MW. It grew 58.5% in a year, the fastest rate in the group, but on a base that small a few hundred households moves the percentage a long way.
No. The Public Utilities Commission does not mandate it and the legislature has repeatedly declined to, so the Commission’s own position is that South Dakota does not compensate solar generation at a net metered rate. There is no statewide program, no successor tariff and no pending change, because there was never a mandate to close or replace.
None is required to, and no voluntary full-retail program is on the public record. Ask your utility directly whether it offers any netting arrangement, and get the terms in writing; the enforceable floor is a federal avoided-cost sale, better than nothing but far below retail. Kansas, Utah, Mississippi or Nevada. Black Hills Energy, MidAmerican Energy, NorthWestern Energy and Otter Tail Power are not required to offer it and their terms vary, and rural electric cooperatives set their own terms entirely.
There is still a floor. Under the federal Public Utility Regulatory Policies Act, Commission-regulated utilities must interconnect with and purchase power from small generating facilities at a minimum of avoided cost, and for facilities under 100 kW those rates are filed with and approved by the Commission. It is a wholesale rate, well below the 13.68¢ statewide average residential rate, but it is public and enforceable. Cooperatives sit outside that route.
One conversation, held before you speak to an installer. Ask your utility whether it offers net metering, at what rate, up to what system size, and whether those terms are guaranteed for any period. If the answer is no, ask for its filed avoided cost rate for facilities under 100 kW. A yes to any netting arrangement puts you well ahead of the legal floor; a no leaves a narrower case built on self-consumption.
One call settles which case you are in. Enter your ZIP code to see who serves your address.
Get the terms and any duration in writing
References & Research Sources
The regime and market figures above come from the records below. Capacity figures are 2024 data. Sources accessed between June 10 and August 17, 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 South Dakota, and South Dakota’s 3.9 MW installed residential base at the end of 2024 with 58.5% twelve-month growth, the smallest base and fastest rate in that group. Dated July 22, 2025. Accessed August 17, 2026.
- South Dakota Public Utilities Commission. Solar energy guidance. The absence of any state net metering requirement. Accessed August 17, 2026.
- South Dakota Public Utilities Commission. Small generator compensation guidance. The obligation on regulated utilities under the federal Public Utility Regulatory Policies Act to interconnect with and purchase power from small generating facilities at avoided cost, with rates for facilities under 100 kW filed with and approved by the Commission. Per-utility filed rates differ by provider; there is no statewide figure, so ask your utility for its own. Accessed August 17, 2026.
- South Dakota Legislature. South Dakota Codified Laws section 10-4-44. The renewable energy property tax exemption. Accessed August 17, 2026.
- US Energy Information Administration. Electric Power Monthly, Table 5.6.A: Average Price of Electricity to Ultimate Customers. The South Dakota statewide average residential rate of 13.68¢ 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 and the availability of Section 48E to business owners of residential systems under current deadlines. Accessed August 17, 2026.
