South Dakota has no net metering, so the utility on your bill decides what your extra solar power earns, and every utility pays a low price for it. In our example a typical home system takes about 22.2 years to pay for itself with the best-paying regulated utility and about 24.9 years with the lowest. Solar here pays mostly through power you use at home.
Typical payback, best-paying regulated utilityAbout 22 years
Across the regulated utilitiesAbout 22 to 25 years
Typical owned 7.62 kW system at $21,717 cash (EcoGen Solar Cost Index, September 2026), Otter Tail Power’s 4.871 cents per kWh export price, EIA average price. Our assumptions: 60% used at home, $200 a year in owner costs. See the math.
- Your utility: its price for extra power, 2.48 cents per kWh to 4.871 cents per kWh at regulated utilities.
- Daytime use: a kWh used at home saves about 14.20¢; one sent out earns a few cents.
- Time in home: our example takes longer than many people stay in one home.
2026 rules: new home systems get no federal homeowner credit (IRS) once installed after December 31, 2025. South Dakota has no net metering: each utility buys your extra power at a price it files with the Public Utilities Commission (PUC).
How we checked this guide
Prices for exported power come from each utility’s rate sheet as posted by the South Dakota PUC, the property tax rule from the Department of Revenue, and the electricity price from the U.S. Energy Information Administration. The example system is the EcoGen Solar Cost Index typical South Dakota home. Where we had to assume a number, the page says so.
The writer and checker shown above are EcoGen staff. EcoGen is paid when homeowners request quotes, which is explained beside the quote form. Read our editorial standards.
Start with the name on your electric bill
Most states answer this question with a statewide rule. South Dakota answers it with a utility. The Legislature looked at net metering in 2013, 2015 and 2016 and did not adopt it, the PUC says. So your utility buys exported power at its own filed price, a few cents per kWh. Two things decide your answer: who buys your extra power, and how much of your output you use. Read each row across.
Who bills you
Worth a closer look
A regulated utility with a published export price, such as Otter Tail Power at 4.871 cents per kWh.
Pause and check
A co-op or city utility with no written price for a home-size system.
Check next: the utility on your bill and its current rate sheet.
Daytime use
Worth a closer look
Your home uses a lot of power while the sun is up.
Pause and check
Nobody is home in the day, so most output is sold for a few cents.
Check next: the home-use share the quote assumes.
Winter use
Worth a closer look
Your use is even through the year or peaks in summer.
Pause and check
Electric heat makes winter your biggest season.
Check next: a month-by-month production estimate.
Price
Worth a closer look
A cash price near the Index’s $21,717 for 7.62 kW ($2.85 per watt).
Pause and check
A quote well above that, or a loan with high fees.
Check next: cash price per watt and the financed total.
Time in home
Worth a closer look
You will stay past the payback year, on a roof that will last.
Pause and check
A move or a new roof is likely before then.
Check next: the roof’s age and your moving plans.
The payback math, utility by utility
A kWh (kilowatt-hour) is the unit on your bill. An export credit is what your utility pays for each kWh you send to the grid. Simple payback is net cost divided by yearly savings. Here it is for a typical home system bought with cash in Otter Tail Power territory.
- Cash price
- $21,717
- Confirmed incentives
- $0
- Year-one production
- 11,262 kWh
- Used at home / exported
- 60% / 40%
- Average price (EIA, 12 months)
- $0.142/kWh
- Export credit
- $0.04871/kWh
- Owner-cost allowance
- $200/yr
- Used-at-home value
11,262 × 60% × $0.142$960/yr - Export value
11,262 × 40% × $0.04871$219/yr - Yearly savings after owner costs
$960 + $219 − $200$979/yr - Simple cash payback
$21,717 ÷ $979about 22.2 years
Inputs: the EcoGen Solar Cost Index typical system (7.62 kW, $21,717 cash, September 2026; 1,478 kWh per kW a year, so 11,262 kWh). No incentives: South Dakota has none that lower the price. Exports earn Otter Tail Power’s 4.871 cents per kWh. The 14.20¢ EIA average includes fixed charges, so the rate you avoid is likely a little lower. Our assumptions: 60% of the solar power used at home and 40% sent to the grid, and $200 a year for owner costs. No battery.
Now move the same house to Black Hills Energy, which pays the lowest flat price of the regulated utilities.
| Scenario | Export credit | Export value | Yearly savings | Simple payback |
|---|---|---|---|---|
| Otter Tail Power buys the extra | $0.04871/kWh | $219 | $979 | about 22.2 years |
| Black Hills Energy buys the extra | $0.0248/kWh | $112 | $871 | about 24.9 years |
The gap is small because every regulated utility pays a low price. Here is the same example for each one.
| Utility | Pays for extra power | Monthly charge | Payback in our example |
|---|---|---|---|
| Otter Tail Power | 4.871 cents per kWh | $1.33 a month | about 22.2 years |
| Montana-Dakota Utilities | 3.416 cents per kWh | 7 cents a day | about 23.8 years |
| Xcel Energy | 3.16 cents per kWh, for up to 2,000 kWh a month | $3.75 a month | about 24.1 years |
| NorthWestern Energy | 2.547 cents per kWh | $2.00 a month | about 24.8 years |
| Black Hills Energy | 2.48 cents per kWh | Not on the rate sheet | about 24.9 years |
| MidAmerican Energy | 2.26 cents per kWh to 4.61 cents per kWh, by season and hour | $20.00 a month | Not modeled |
Every row assumes $200 a year for owner costs, including any meter charge. MidAmerican’s charge alone is $240 a year, so expect a longer payback there. None of these prices is fixed for the life of your system; several rate sheets are reviewed each year.
Run your own South Dakota numbers
The tool starts with the Otter Tail Power case. Enter your quote, your utility’s export price and the share you expect to use at home, then press Calculate. Nothing you enter is sent anywhere.
Example result
about 22.2 years
simple cash payback
- Used-at-home value
- $960/yr
- Export value
- $219/yr
- Owner costs
- −$200/yr
- Yearly savings
- $979/yr
- Net cost
- $21,717
Flat first-year values; rates, panel wear and repairs will change the result. No battery.
Power you keep is worth far more than power you sell
A kWh used at home saves about 14.20¢. A kWh sent out earns 2.48 cents per kWh to 4.871 cents per kWh. So the share you use at home moves the answer more than the utility does.
Used at home: 6,757 kWh. Each one replaces power you would have bought, so it saves the full variable rate ($0.142 here).
Sent to the grid: 4,505 kWh. These earn whatever your utility pays for exports ($0.04871 here). That can be far less.
Our cost page puts the best case at about 13.6 years: every kWh valued at the full average price, no owner costs. Few homes without a battery get there.
The winter problem
Panels here make far less in December than in June, and many homes use the most power in heating season. With no net metering, summer surplus is sold at the low price and does not bank against winter bills. Ask for a month-by-month estimate and set it beside your own monthly use.
Find out who buys your extra power
A South Dakota quote should name your utility and its filed price for exported power. Ask installers to show it next to the payback.
Solar providers that serve your area may contact you, and they pay EcoGen for the introduction. How we make money.
If a co-op or a city sends your bill
Co-ops and city utilities set their own solar terms; the PUC lists their filed minimum prices, some from 2019. Sioux Valley Energy credits small renewable generation at 1.61 cents per kWh, below every regulated utility. The city utilities supplied by Missouri River Energy Services filed 3.45 cents per kWh for 2026. Other East River co-ops filed no price for a home-size system. Get its price and monthly charge in writing first.
Buying, leasing, and the one state tax break
Only the utility assigned to your address may sell you electricity at retail, so a company cannot sell you its panels’ power by the kWh (a power purchase agreement, or PPA). A lease is allowed if it leaves all control of the system with you, the PUC says.
| Option | Who owns the panels | Upfront | Ongoing | Check before signing |
|---|---|---|---|---|
| Cash | You | Full price | None to a lender. | The payback uses your utility’s export price. |
| Loan | You | Often $0 | Loan payment, plus your remaining utility bill. | Financed total vs cash price. Over a payback this long, fees weigh heavily. |
| Lease | Solar company | Often $0 | Monthly lease payment, plus your remaining utility bill. | It must give you all rights to operate, maintain and control the system. |
| PPA (power sold by the kWh) | Not allowed | Not offered | None. | Only your assigned utility may sell you power at retail. |
The one state benefit is a property tax exemption under SDCL 10-4-44: the first $50,000 of the system’s assessed value, or 70% if that is more. A typical system costs $21,717, well under that line, so it is likely fully exempt. There is no form. It does not shorten the payback.
For loan terms and a payment calculator, see our solar financing guide.
Six things a South Dakota quote must spell out
A quote that assumes net metering or counts a tax credit shows a payback South Dakota does not offer.
- Your utility by name. And the rate sheet used for exported power.
- Export price and charge. The price per kWh sent out, and any monthly meter charge.
- Home-use share. The share of output the quote assumes you use at home.
- Monthly production. A month-by-month estimate that shows the winter dip.
- Insurance. Xcel and Black Hills Energy ask for liability insurance of at least $300,000 per occurrence.
- Cash and financed prices. Both totals side by side, with any dealer fee shown.
Compare South Dakota solar quotes
Ask each installer to model your utility’s export price. Enter your ZIP code to request quotes from solar providers that serve your area.
How EcoGen is paid
EcoGen America does not sell or install solar. When you request quotes, we pass your request to solar providers serving your area, and they pay us for the introduction. Providers can include installers, solar marketplaces and lead exchanges, and more than one may contact you. You never pay us.
More South Dakota solar guides
- South Dakota solar incentives: utility buyback rates and the property tax break
- What solar costs in South Dakota
- Free solar panels in South Dakota: what is real and what is a sales pitch
- Are solar panels worth it? The national guide and payback calculator
All 51 state guides
South Dakota solar questions
Are solar panels worth it in South Dakota?
For some homes. With no net metering, solar pays mostly through power you use at home. A typical owned system pays back in about 22.2 years in our example with Otter Tail Power and about 24.9 years with Black Hills Energy. Heavy daytime use shortens that; a winter-heavy home waits longer.
Does South Dakota have net metering?
No. The PUC says South Dakota does not pay for solar power at a net metered rate; the Legislature looked at it in 2013, 2015 and 2016 and did not adopt it. Each utility buys extra power at its own filed price, 2.48 cents per kWh to 4.871 cents per kWh at the regulated utilities. Co-ops and cities set their own terms.
What does solar cost in South Dakota?
The EcoGen Solar Cost Index puts a typical 7.62 kW system at about $21,717 in cash, or $2.85 per watt, in its September 2026 edition. No rebate or tax credit lowers that price. Get two or three quotes and compare the cash price per watt before you look at any payback figure.
What South Dakota solar incentives are available?
One: a property tax exemption under SDCL 10-4-44. The first $50,000 of the system’s assessed value, or 70% of it if that is more, is exempt, with no application. There is no state income tax, so no state credit, and no state rebate. The federal homeowner credit ended for systems installed after December 31, 2025.
Do solar panels work in South Dakota winters?
Yes, but they make far less in December than in June. That matters here, because summer surplus is sold at the utility’s low price and does not carry over to cover winter bills. If electric heat makes winter your biggest season, ask for a month-by-month estimate and set it beside your own monthly use.
Can I lease solar panels in South Dakota?
Yes, if the lease gives you all rights to operate, maintain and control the system, the PUC says. A company cannot sell you its panels’ power by the kWh, because only the utility assigned to your address may sell electricity at retail. Read the lease clause before you sign.
Sources, method and corrections
The example uses the EcoGen Solar Cost Index typical South Dakota system (September 2026), the EIA average price and each utility’s filed export price. Our assumptions: 60% of the solar power used at home, 40% sent to the grid, $200 a year in owner costs. Simple payback uses flat first-year values. MidAmerican and the co-ops are not modeled: their prices vary by hour or are not published for a home-size system. The calculator runs in your browser and sends nothing.
Spotted an error? Tell us through our corrections and feedback process.
- South Dakota PUC: Solar Energy FAQ (net metering, leases, retail sales)
- South Dakota PUC: Compensation
- South Dakota PUC: filed small renewable rates
- Otter Tail Power: Section 12.01, Small Power Producer Rider
- Black Hills Power: Schedule 3
- Xcel Energy: Rate Code E50
- NorthWestern Energy: Rate No. 73
- Montana-Dakota Utilities: Rate 95
- MidAmerican Energy: Rate QF
- Sioux Valley Energy: 2026 rate schedule
- South Dakota Department of Revenue: renewable property exemption
- U.S. EIA: average residential electricity price by state (12-month average to July 2026)
- IRS: Residential Clean Energy Credit
- IRS: FAQs on the 2025 changes to Section 25D (an expenditure counts as made when installation is completed)
- EcoGen Solar Cost Index, September 2026: South Dakota
