South Dakota Solar Incentives (2026): One Property Tax Break and Low Prices for Extra Power

Which South Dakota utility buys your extra solar power?

Six utilities are regulated by the Public Utilities Commission (PUC), the state agency that approves their prices. Each files its own price for extra solar power. The name is at the top of your electric bill. If your bill comes from an electric co-op or a city, go to co-ops and city utilities.

The sections below apply across South Dakota.

Black Hills to Otter Tail: what each regulated utility pays for extra solar power

The PUC puts it plainly: South Dakota does not pay for solar power at a net metered rate. Net metering is a rule where each kWh you send to the grid cancels one kWh you buy. The PUC says the Legislature looked at it in 2013, 2015 and 2016 and did not adopt it.

What you get is a purchase price: about what it would cost the utility to make or buy that power itself. The legal name is avoided cost.

A typical South Dakota home system is 8.07 kW. It costs about $27,761 and makes about 11,927 kWh a year. No rebate or tax credit lowers that price: the federal credit ended for systems finished after December 31, 2025. Ask your installer how many kWh your home will use and how many it will sell.

For comparison, the average South Dakota home pays 13.68 cents per kWh to buy power. So 100 kWh bought from the grid cost $13.68.

Watch out: None of these prices is fixed for the life of your system. The Xcel, NorthWestern, Otter Tail and Montana-Dakota rate sheets say the price is reviewed each year.

What if an electric co-op or a city sends your South Dakota bill?

Then your utility sets its own solar terms, and the PUC does not approve its price. State law asks one thing: each utility must file with the PUC its minimum price for power from small renewable systems of 100 kW or less. The PUC lists the filings on one page, and some date from 2019. Ask your co-op or city utility for its current terms in writing.

• Sioux Valley Energy: its rate schedule credits small renewable generation at 1.61 cents per kWh, from February 2026 bills. Example: 100 kWh earn $1.61. It does not say if that covers all your solar power or only the extra.
• Brookings, Pierre, Watertown and other cities: their power supplier, Missouri River Energy Services, filed a minimum price of 3.45 cents per kWh for 2026. The filing gives no metering rules or fees.
• Southeastern Electric and other East River co-ops: the December 22, 2025 filing for these co-ops prices only systems of 50 to 150 kW and larger. It gives no price for a home-size system.

How much of a solar system does South Dakota exempt from property tax?

This is the one solar benefit in South Dakota state law. It is a partial exemption, and it covers the solar equipment only.

Your county assesses your home with the panels on it. Assessed value is the value the county uses to work out your tax. Then the exemption comes off the solar part: the first $50,000 of the system’s assessed value, or 70% of it, whichever is greater. The law is SDCL 10-4-44.

The Department of Revenue gives two examples. A system assessed at $30,000 is fully exempt. A system assessed at $85,000 gets an exemption of $59,500, and $25,500 stays taxable.

For solar the exemption has no end date, and there is no application. Contact your county Director of Equalization, the office that assesses property, to start the process.

Watch out: Some guides say solar never raises a South Dakota assessment. That goes too far. A system assessed above $50,000 leaves part of its value taxable. The state’s guidance says nothing about batteries.

Can a solar company lease you panels or sell you power in South Dakota?

A lease, yes. A sale of power, no. In South Dakota only the utility assigned to your address may sell electricity to you at retail. So a company cannot put panels on your roof and sell you the power by the kWh. That deal is often called a power purchase agreement (PPA).

A lease is allowed, the PUC says, only if it gives you all rights to operate, maintain and control the system. Ask to see that clause before you sign.

Five South Dakota quotes that promise more than the rate sheets pay

• The quote assumes net metering. South Dakota has none. At the regulated utilities, flat prices for extra power run from 2.48 cents per kWh to 4.871 cents per kWh.
• The quote sizes an Xcel system to sell a lot. Xcel pays for at most 2,000 kWh a month of extra power. The rest earns nothing.
• The quote ignores MidAmerican’s monthly charge. The basic service charge is $20.00 a month. A home that sends out little power can earn less than the charge.
• The quote uses a co-op price that nobody has confirmed. Sioux Valley Energy’s schedule shows 1.61 cents per kWh. The East River filing gives no price for a home-size system.
• The quote counts a tax credit. South Dakota has no state solar credit. The federal credit ended for systems finished after December 31, 2025.

South Dakota solar paperwork: the utility first, the county last

1. Before any quote: call your utility. Ask for its price for extra solar power, its monthly charge and its insurance rule, in writing.You.
2. Before installation: apply to connect and sign the agreement. The agreement names the rate, the monthly charge and the term. Xcel and Black Hills Energy also ask for liability insurance of at least $300,000 per occurrence.Your installer, with your signature.
3. After switch-on: contact your county Director of Equalization. There is no form. The office assesses the system and applies the property tax exemption.You.
4. Read your first bills. Check the price per kWh and the monthly charge against your agreement. The price can change each year.You.

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