Minnesota solar incentives start with one state law that covers every electric utility. When your panels make more power than your home uses, your utility must pay you for it, even if you are with a co-op (a utility owned by its members) or a city utility. Solar equipment is also free of state sales tax. The cash on top depends on who sends your electric bill. Xcel Energy pays you for each kWh your panels make. Most other utilities pay nothing extra for panels.
Recently changed: Xcel’s Solar*Rewards rate was still $0.03 per kWh on October 1, 2026. Xcel had expected a higher rate in early October 2026, so ask which rate your application gets. Some guides said a 2026 bill would end net metering for co-op and city utility customers. That bill passed the Senate on May 12, 2026, went no further, and is not law.
Which Minnesota solar incentives can a home still get in 2026?
Five matter for most homes, sorted by what a typical household gets.
| Incentive | What you get | Who can get it | Status |
|---|---|---|---|
| Net metering | Pay for extra solar power. Example: 100 extra kWh earn $14.94 at Dakota Electric. | Home systems under 40 kW, at every utility | In force. No end date in the law. |
| Xcel Solar*Rewards | A payment for each kWh your panels make, for 10 years. Ask Xcel for the current rate. | Xcel Energy customers who own their home | Open when Xcel last updated its budget, on September 21, 2026. |
| Battery incentives | Xcel: $175 per kWh, up to $5,000. State: $250 per kWh, up to $7,000. | Homes with solar and a new battery of 50 kWh or less | Open. First come, first served. |
| Sales tax exemption | No 6.875% state sales tax on a solar energy system | Every buyer | In force. No end date. |
| Property tax exemption | The solar system itself is not taxed | Every owner | In force. Nothing to file. |
The federal tax credit for home solar is not available for systems installed after December 31, 2025. Minnesota’s 2025 income tax credit schedules (M1C and M1REF) list no solar income tax credit.
Xcel, Minnesota Power, Otter Tail or a co-op: who sends your bill?
The name is at the top of your electric bill. Open yours to see what you can get.
Xcel EnergyThe Twin Cities and many other parts of Minnesota.Solar*Rewards: a payment for each kWh, for 10 years
What you can get with Xcel Energy
- Solar*Rewards paymentAsk Xcel for the rate
Paid on every kWh your panels make, for 10 years, by check early each year. Xcel expected a new rate in early October 2026. Get the rate your application gets in writing. Rules and money left.
- Battery incentive$175 per kWh
Up to $5,000. Example: a 10 kWh battery gets $1,750. See both battery programs.
- Extra for lower-income homes$3.00 per watt
An upfront Solar*Rewards payment by system size (1 kW is 1,000 watts). 96% of this year’s money was assigned on September 21, 2026, and there is a waitlist.
Your bill credits
Xcel gives you net metering: you pay only for the power you take from the grid minus the power you send to it. For extra power in a month, Xcel pays its average retail energy rate: about what you pay for one kWh, without the fixed monthly charges. Xcel resets it every year. We could not read this year’s number on an Xcel page, so ask for it in writing.
Watch out: Do not let work start before Xcel approves your application. Xcel also asks for a home liability insurance policy of at least $300,000.
Also for you: net metering and the two tax exemptions.
Minnesota PowerDuluth and much of northeastern and central Minnesota.Income-limited rebate for panels. State money for batteries.
What you can get with Minnesota Power
- SolarSense rebateUp to $5,000
Only for households with an income under 150% of area median income: the middle income for your area. The one-time rebate is $0.27 per kWh of the power your system should make in a year, capped at $5,000 or 60% of the installed cost. Minnesota Power’s own example: a system that makes 8,874 kWh a year gets $2,396. You must own the home and the system.
- State battery incentive$250 per kWh
Up to $7,000. Example: a 10 kWh battery gets $2,500. How it works.
Your bill credits
Minnesota Power gives you net metering: you pay only for the power you take from the grid minus the power you send to it. For extra power in a month, it pays its average retail energy rate: about what you pay for one kWh, without the fixed monthly charges. The rate sheet it posts online is dated May 1, 2023, so ask for the current rate in writing.
Watch out: SolarSense money for 2026 was handed out by lottery from applications sent March 1 to March 5, 2026. The funding table showed $80,730 left on March 19, 2026 and has not been updated since. Confirm that money is left. Get approval before the install, and finish within six months.
Also for you: net metering and the two tax exemptions.
Otter Tail PowerFergus Falls and much of western Minnesota.Pays $0.02 per kWh for your clean energy credits
What you can get with Otter Tail Power
- Payment for clean energy credits$0.02 per kWh
Otter Tail buys your renewable energy credits (RECs: the proof that your power is clean). It pays for every kWh your panels make and installs the extra meter for free. A typical system would earn about $171 a year.
- State battery incentive$250 per kWh
Up to $7,000. Example: a 10 kWh battery gets $2,500. How it works.
Your bill credits
Otter Tail gives you net metering: you pay only for the power you take from the grid minus the power you send to it. Since April 1, 2026, it pays homes 9.264 cents per kWh for extra power. Example: 100 extra kWh earn $9.26. Solar homes on this rate also pay $0.85 a month.
Watch out: Otter Tail has no rebate for panels. If you keep your credits, the extra meter is not free.
Also for you: net metering and the two tax exemptions.
An electric co-op or a city utilityDakota Electric, Connexus Energy and all other co-ops and city-owned utilities.Net metering by law. A fee is allowed.
What you can get with An electric co-op or a city utility
- Dakota Electric members$500 rebate
One time per home, for a system you own of no more than 20.01 kW. You need approval before you buy. For extra power, Dakota Electric pays 14.94 cents per kWh since January 1, 2026. Example: 100 extra kWh earn $14.94.
- Connexus Energy members12.4 cents per kWh
Paid for extra power since February 1, 2026. Example: 100 extra kWh earn $12.40. Connexus also bills solar homes a monthly grid access charge of $2.98 per kW of system size above 3.5 kW. Example: a 7 kW system pays $10.43 a month.
- State battery incentive$250 per kWh
Up to $7,000. Example: a 10 kWh battery gets $2,500. How it works.
Your bill credits
Your utility must give you net metering: you pay only for the power you take from the grid minus the power you send to it. For extra power, it pays its average retail energy rate. That is about what you pay for one kWh, without the fixed monthly charges.
You can choose kWh credits instead of money. They roll forward month by month and are wiped out at the end of the calendar year, with no payment.
Watch out: The law lets a co-op or city utility charge solar homes an extra fee. Get the fee and this year’s rate in writing before you pick a system size.
Also for you: net metering and the two tax exemptions.
Not sure? Everything below applies across Minnesota.
How does Minnesota’s net metering law pay you at each utility?
Net metering means your utility bills you only for the power you take from the grid minus the power your panels send to it. Minn. Stat. 216B.164 gives this to every home system under 40 kW, at every utility.
If your panels send out more than you take in a month, you are paid for the difference at the utility’s average retail energy rate: about what you pay for one kWh, without the fixed monthly charges. Each utility resets it every year.
| Utility | Pay for extra power | Example: 100 extra kWh | Extra charge for solar homes |
|---|---|---|---|
| Dakota Electric | 14.94 cents per kWh, since January 1, 2026 | $14.94 | None found |
| Connexus Energy | 12.4 cents per kWh, since February 1, 2026 | $12.40 | $2.98 per kW of system size above 3.5 kW |
| Otter Tail Power | 9.264 cents per kWh, since April 1, 2026 | $9.26 | $0.85 a month |
For Xcel, Minnesota Power and other utilities we could not confirm this year’s rate. Ask your utility for it in writing. Co-ops and city utilities may also charge an extra fee.
Get quotes from installers who know your utility
Your ZIP code starts a quote request. Ask each installer to file the utility application before any work starts.
- Xcel and non-Xcel homes differSolar*Rewards is for Xcel customers. The state battery incentive is for everyone else.
- No cost, no pressureComparing quotes is free, and you never have to sign.
- Shared only with matched installersYour details go to the installers you are matched with.
What does Xcel Solar*Rewards pay, and is there money left?
Solar*Rewards is a yearly payment from Xcel Energy for every kWh your panels make, also the ones you use at home. It is paid for 10 years. A typical 6.12 kW system makes about 8,550 kWh a year. At $0.03 per kWh that is about $256 a year. Xcel had expected to raise the rate in early October 2026; ask which rate your application gets.
Xcel’s page said a new rate per kWh was expected in early October 2026, and that its budget figures would be restated for the new rate. Ask Xcel which rate your application will get, and get it in writing before you sign.
Unused money stays in the program under state law. Xcel last updated its budget figures on September 21, 2026. Ask Xcel how much is left for home systems.
- Size limits: no more than 40 kW, and expected output under 120% of the power you used in the past 12 months.
- What you give up: your renewable energy credits (RECs: the proof that your power is clean) go to Xcel.
Minnesota battery incentives: one program for Xcel homes, one for everyone else
Both pay once, after the battery is running. Both need solar at the same home, or a solar application already filed, and a battery of 50 kWh or less.
| Program | Amount | Example: 10 kWh battery | Who can get it | Money left |
|---|---|---|---|---|
| Xcel Battery Storage Incentive | $175 per kWh, or $370 per kWh for homes that meet Xcel’s income rules. Up to $5,000. | $1,750, or $3,700 | Xcel customers. Paid within 30 business days. | $1,474,512 on August 11, 2026 |
| State Energy Storage Incentive | $250 per kWh, up to $7,000 | $2,500 | Homes outside Xcel territory, with a battery installed on or after August 1, 2024 | $1,422,775 on August 17, 2026 |
The state money is available until June 30, 2027 or until it runs out.
Watch out: The state program is run by the Minnesota Department of Commerce. It says the payment may be taxable, so ask a tax professional.
Minnesota’s two solar tax exemptions: sales tax and property tax
No sales tax on a solar energy system
A solar energy system is exempt from Minnesota sales tax under Minn. Stat. 297A.67, subd. 29. The state rate is 6.875%. Example: on $10,000 of solar equipment, that is $687.50 you do not pay.
The buyer claims it with Form ST3, Certificate of Exemption, exemption number 34. Ask to see that no sales tax is charged on the system in your quote.
Watch out: A battery bought on its own, without solar panels, is not named in the law or the form. Ask your installer whether the quote charges sales tax on it.
Source: Minn. Stat. 297A.67, subd. 29
No property tax on the system itself
Under Minn. Stat. 272.02, subd. 24, a solar energy system is exempt from property tax, and your land is classified without regard to the system. There is no form to file.
The law does not say that the value solar adds to your house is left out of your home’s value. Ask your county assessor how it values a home with solar.
Source: Minn. Stat. 272.02, subd. 24
Community solar gardens and the Minneapolis group buy
- Community solar gardens (Xcel customers, renters too): you subscribe to a shared solar farm and get a bill credit. For most homes it is 85% of Xcel’s average home rate. The subscription may not cost more than the credit, or more than 90% of it for income-eligible homes.
- Minneapolis group buy: the city pays 20 cents per kWh of a system’s expected yearly output to homes that go solar through a partner it funds. On a typical system that is $1,710. The city does not say how much money is left.
You are unlikely to collect a Minnesota incentive if
- Work starts before the approval. Xcel, Minnesota Power and Dakota Electric all want their approval first.
- You were promised Solar*Rewards but Xcel does not send your bill. Co-op, city utility, Minnesota Power and Otter Tail customers cannot get it.
- You take kWh credits at a co-op or city utility and build too big. Unused credits are wiped out at the end of the calendar year, with no payment.
- Your quote still counts the federal tax credit. It is not available for systems installed after December 31, 2025. Ask for a new quote.
Minnesota solar paperwork, from utility application to first check
- Tell your homeowners association. Under Minn. Stat. 500.216, it cannot ban rooftop solar on a single-family home. If it does not say no in writing within 60 days, your application is approved.You, if your home is in an association.
- File the utility application before any work. This is the interconnection application: the request to connect your system to the grid. Xcel customers choose Solar*Rewards and the battery incentive in it. Minnesota Power customers add the SolarSense form.Your installer files. You sign.
- Sign the utility contract and pick how you are paid. At a co-op or city utility, choose between money and kWh credits. Check that your final invoice carries no state sales tax on the system.You.
- After switch-on, send the last papers. Dakota Electric: the rebate form with your invoice. State battery program: reserve the money online, then send the paid invoice and proof of utility approval.You or your installer.
Compare Minnesota quotes that name your utility program
Enter your ZIP code to request quotes from local installers. Ask each one which utility program it will apply for.
The form asks about your home first, then your contact details. EcoGen or its installer partners may contact you.
- Free, no-obligation quotesRequest quotes from local installers. You decide if you go ahead.
- Home questions firstName, email and phone come last.
- Check each quoteIt should show no sales tax on the system and name the program it counts on.
More Minnesota solar guides
Minnesota solar incentive questions
Does Minnesota Have a Solar Tax Credit?
No. Minnesota’s 2025 income tax credit schedules (M1C and M1REF) list no income tax credit for home solar, and the federal credit is not available for systems installed after December 31, 2025. Minnesota does exempt a solar energy system from sales tax and property tax.
Does Minnesota Have Net Metering?
Yes, at every utility. Under Minn. Stat. 216B.164, a home system under 40 kW is billed only for the power it takes from the grid minus the power it sends out. Co-ops and city utilities may charge an extra fee.
How Much Does Xcel Solar*Rewards Pay in Minnesota?
Xcel pays a set amount for each kWh your panels make, for 10 years. Xcel expected a new rate in early October 2026, so ask Xcel for the rate your application gets, in writing. A typical 6.12 kW system makes about 8,550 kWh a year: multiply that by the rate.
Are Solar Panels Tax Exempt in Minnesota?
Yes, twice. A solar energy system is exempt from the 6.875% state sales tax (Minn. Stat. 297A.67, subd. 29) and from property tax (Minn. Stat. 272.02, subd. 24).
Did Minnesota End Net Metering for Co-op Customers?
No. Senate File 4504 passed the Senate on May 12, 2026 and went no further, so it is not law. Co-op and city utility customers are still covered by Minn. Stat. 216B.164.
Sources (22)
- Minnesota Statutes 216B.164 (net metering): revisor.mn.gov
- Xcel Energy, Solar*Rewards program, rates and budget: mn.my.xcelenergy.com
- Minnesota Statutes 116C.7792 (solar energy production incentive): revisor.mn.gov
- Xcel Energy, Battery Storage Incentive Program: mn.my.xcelenergy.com
- Minnesota Statutes 216C.379 (energy storage incentive program): revisor.mn.gov
- Minnesota Department of Commerce, Energy Storage Incentives: mn.gov
- Minnesota Power, SolarSense: mnpower.com
- Minnesota Power, Electric Rate Book (Rider for Parallel Generation): mnpower.com
- Otter Tail Power, Minnesota rate schedule Section 12.01: otpco.com
- Dakota Electric, Schedule 55 parallel generation rate, 2026: dakotaelectric.com
- Dakota Electric, Energy Wise rebates: dakotaelectric.com
- Connexus Energy, Electric Rate Book Section III: connexusenergy.com
- Minnesota Statutes 297A.67, subd. 29 (sales tax exemption): revisor.mn.gov
- Minnesota Statutes 297A.62 (sales tax rate): revisor.mn.gov
- Minnesota Department of Revenue, Form ST3: revenue.state.mn.us
- Minnesota Statutes 272.02, subd. 24 (property tax exemption): revisor.mn.gov
- Minnesota Statutes 216B.1641 (community solar gardens): revisor.mn.gov
- Minnesota Department of Commerce, community solar gardens for consumers: mn.gov
- City of Minneapolis, Green Cost Share solar group buy: minneapolismn.gov
- Minnesota Statutes 500.216 (homeowners associations and solar): revisor.mn.gov
- Minnesota Legislature, Senate File 4504 status: revisor.mn.gov
- IRS, Residential Clean Energy Credit: irs.gov
