Is Solar Worth It in Minnesota in 2026?
Minnesota isn't the first state people picture for solar, but the numbers hold up better than the stereotype suggests. A well-sited Minneapolis roof produces around 1,294 kWh per installed kilowatt per year — less than Florida or Arizona, but cold, dry winter air actually helps panels run efficiently, and long summer days at 45.2°N push a lot of production into the months when your AC bill climbs too. Electricity has also gotten noticeably more expensive here: residential rates are up roughly 91 percent since 2005, so every kWh your roof makes is worth more than it used to be.
2026 is also the year the math changed everywhere, Minnesota included. The 30 percent federal tax credit that used to cut thousands off an install ended for systems completed after December 31, 2025. What's left is a genuinely strong state package — mandatory net metering at full retail rate on Xcel, a full sales tax exemption, a full property tax exemption, and (for Xcel customers) a per-kWh payment through Solar*Rewards. None of that adds up to a 7-year payback anymore, but it adds up to a real decision that depends on your utility, roof, and bill — what the rest of this page helps you work out.
Minnesota Electricity Prices Keep Climbing
Solar is a bet against future electricity prices: every kWh your panels make is one you don't buy from Xcel, Otter Tail, Minnesota Power, or your local co-op. Here's the long-run history from federal EIA data.
Full Minnesota electricity price data (1990–2025)
| Year | Minnesota (¢/kWh) | US avg (¢/kWh) |
|---|---|---|
| 1990 | 6.8 | 7.8 |
| 1991 | 6.9 | 8.0 |
| 1992 | 7.0 | 8.2 |
| 1993 | 7.1 | 8.3 |
| 1994 | 7.2 | 8.4 |
| 1995 | 7.2 | 8.4 |
| 1996 | 7.1 | 8.4 |
| 1997 | 7.2 | 8.4 |
| 1998 | 7.3 | 8.3 |
| 1999 | 7.4 | 8.2 |
| 2000 | 7.5 | 8.2 |
| 2001 | 7.6 | 8.6 |
| 2002 | 7.5 | 8.4 |
| 2003 | 7.7 | 8.7 |
| 2004 | 7.9 | 9.0 |
| 2005 | 8.3 | 9.5 |
| 2006 | 8.7 | 10.4 |
| 2007 | 9.2 | 10.7 |
| 2008 | 9.7 | 11.3 |
| 2009 | 10.0 | 11.5 |
| 2010 | 10.6 | 11.5 |
| 2011 | 11.0 | 11.7 |
| 2012 | 11.4 | 11.9 |
| 2013 | 11.8 | 12.1 |
| 2014 | 12.0 | 12.5 |
| 2015 | 12.1 | 12.7 |
| 2016 | 12.7 | 12.6 |
| 2017 | 13.0 | 12.9 |
| 2018 | 13.1 | 12.9 |
| 2019 | 13.0 | 13.0 |
| 2020 | 13.2 | 13.2 |
| 2021 | 13.5 | 13.7 |
| 2022 | 14.3 | 15.0 |
| 2023 | 14.7 | 16.0 |
| 2024 | 15.5 | 16.5 |
| 2025 * | 15.8 | 17.3 |
Source: US EIA, average residential retail electricity price. Values in cents per kWh. * 2025 is preliminary.
Minnesota residential electricity sits around 15.8¢ per kWh as of the EIA's preliminary 2025 figures — up about 91 percent since 2005, a faster climb than the national average, driven by grid investment and the cost of new generation across a large, cold-weather territory. The last decade alone has averaged about 2.7 percent a year. Nobody can promise that pace continues, but a state investing heavily in its grid — and currently running a rate case that could raise Xcel bills further — isn't a state where power is about to get cheaper.
The Minnesota Sun, Month by Month
Panels respond to how high the sun climbs and how long it stays up, not to air temperature. At 45.2°N, Minnesota sits meaningfully farther north than Florida or the Carolinas, so winter days are short and the sun stays low. Summer more than makes up for it: long days with the sun high overhead, and cold, clear air that's actually good for panel efficiency.
Minnesota monthly solar production data
| Month | kWh per installed kW |
|---|---|
| Jan | 87 |
| Feb | 102 |
| Mar | 117 |
| Apr | 122 |
| May | 120 |
| Jun | 120 |
| Jul | 135 |
| Aug | 130 |
| Sep | 112 |
| Oct | 101 |
| Nov | 82 |
| Dec | 66 |
| Year | 1294 |
Source: NREL PVWatts typical-year estimate (Minneapolis), per installed kW at latitude tilt.
The practical read: May through August is where a Minnesota system does most of its annual work, with June typically the peak. December and January are lean — short days, low sun angle, and snow cover doesn't help. That seasonal swing is exactly why a rolling monthly credit (not a use-it-or-lose-it winter reset) matters so much here — it lets strong summer production carry into the darker months.
What Solar Costs in Minnesota in 2026
Minnesota installs run a bit above the national average — roughly $2.80 to $3.30 per watt as of mid-2026, with $3.00 to $3.20/W most commonly quoted, about 10 percent above the ~$3.00/W national figure. That's a mix of labor costs, permitting across many small jurisdictions, and a shorter install season than sunbelt states get. With the federal credit gone, the number your installer quotes is close to what you actually pay, before the tax exemptions below.
| System Size | Typical 2026 Cost | Roughly Offsets | Fits |
|---|---|---|---|
| 5 kW | $14,000 to $16,500 | ~6,470 kWh/yr (~$85/mo at 15.8¢) | Smaller home, modest usage |
| 8 kW | $22,400 to $26,400 | ~10,350 kWh/yr (~$136/mo) | Average Minnesota home |
| 12 kW | $33,600 to $39,600 | ~15,530 kWh/yr (~$205/mo) | Large home, electric heat or EV charging |
Those figures are before the sales tax exemption (equipment is fully exempt) and before any Solar*Rewards or SolarSense payments, which pay out over the system's life rather than lowering the sticker price. Get at least three quotes and compare price per watt — a $30,000 and a $37,000 quote for the same 12 kW system aren't unusual, and the difference is rarely quality.
Estimate Your Minnesota Payback
The calculator below starts from Minnesota's average residential rate and typical Minneapolis-area production. Enter your own monthly bill for an estimated system size, payback period, and 25-year savings. Rates here have grown about 2.7 percent a year over the last decade — a reasonable default for the inflation field, though you can drag it either direction to stress-test the outcome.
Minnesota Solar Incentives That Still Exist in 2026
Here's what's gone and what's left, in plain terms.
- Gone — the 30 percent federal credit: The federal Residential Clean Energy Credit (25D) was repealed by the One Big Beautiful Bill Act for any system completed after December 31, 2025. No phase-down — it simply doesn't apply to owned systems anymore. If a quote still nets out 30 percent off, ask the installer to show the math; it shouldn't be there.
- Still here — sales tax exemption: Panels, inverters, racking, wiring, and integrated batteries are 100 percent exempt from Minnesota sales tax under state statute, claimed directly on the invoice — you shouldn't see sales tax charged on a qualifying system at all.
- Still here — property tax exemption: The value solar adds to your home is fully excluded from your property tax assessment, automatically, no application needed. Your home is worth more; your tax bill shouldn't reflect it.
- Utility-run, not statewide — Solar*Rewards and SolarSense: Xcel pays roughly $0.03/kWh produced (more for income-qualified households) through Solar*Rewards, for your system's renewable energy credits — on top of net metering. Minnesota Power runs SolarSense, a rebate up to $5,000 or 60 percent of installed cost, whichever is lower. Ask your installer which apply to your utility.
- No standalone state tax credit: Minnesota has no flat state income-tax credit for residential solar — the exemptions above are the core of the state-level stack.
Net Metering in Minnesota
Minnesota is one of the stronger net metering states in the country, and unusually, the strength comes from statute rather than utility goodwill. State law (Minn. Stat. § 216B.164) requires every electric utility in Minnesota — investor-owned, municipal, and cooperative alike — to offer it.
The details vary by utility type. On Xcel Energy, which covers roughly 40 percent of Minnesota's load and is the most common utility for solar installs, the standard residential deal is 1:1 kWh crediting at full retail rate: every kWh you export offsets a kWh you'd otherwise buy, credits roll forward month to month, and unused credits true up once a year at the end of February — anything left over is forfeited, not paid out in cash. Co-ops and municipal utilities can instead pay "average retail rate" or avoided-cost (typically lower), with credits that often zero out at calendar year-end instead of rolling monthly — so the deal is meaningfully better on Xcel than a smaller co-op or muni. Size caps differ too: up to 1,000 kW for investor-owned utilities, 40 kW for co-ops and municipals.
The Minnesota Angle: Community Solar Gardens
Minnesota has something most states don't: a real, working Community Solar Garden program (Minn. Stat. § 216B.1641). Instead of putting panels on your own roof, you subscribe to a share of an off-site array — no subscriber over 40 percent of a garden, at least five subscribers per garden, up to 5 MW total — and get bill credits proportional to your share's output. No roof work, no HOA fight, no north-facing-roof problem, and it works for renters too.
The original Xcel-administered program closed to new signups at the end of 2023. Since 2024, new community solar in Xcel territory runs through the state Department of Commerce's Low- and Moderate-Income Accessible program, which prioritizes income-qualified subscribers. If a shaded lot, a rental, or an HOA rules out rooftop panels, ask an installer whether a garden is subscribing near you — a path to the same bill savings, rarely pitched outside Minnesota.
How to Go Solar in Minnesota
Work through these in order before you sign anything.
- Pull your last 12 power bills and calculate your true average monthly cost — bills swing hard between a mild fall month and a cold, electric-heavy January.
- Confirm your roof faces south, east, or west, has minimal shading, and has at least 10 to 15 years of life left.
- Identify your utility — Xcel, Otter Tail, Minnesota Power, a municipal utility, or a co-op — since net metering terms and rebates depend heavily on which one serves you.
- Get at least three quotes and confirm each reflects 2026 reality: no phantom 30 percent federal credit baked into the "after incentives" price.
- Ask each installer specifically about Solar*Rewards, SolarSense, or any current utility rebate, and get the terms in writing.
- If rooftop solar doesn't fit your home, ask about a community solar garden instead — a legitimate Minnesota-specific alternative, not a consolation prize.
For how panels work, sizing, and buy-versus-lease in more depth, read our main solar panels guide; this page focuses on what's specific to Minnesota. Roof condition is part of this decision either way, so our roofing guide is worth reading first, and our electrical guide covers what an install typically means for your service panel and wiring.
Sources
Figures on this page are 2026-current. Rates: US EIA, Electric Sales, Revenue, and Average Price (2025 preliminary). Production: NREL PVWatts. Net metering: Minn. Stat. § 216B.164 and the Minnesota PUC. Sales tax exemption: Minn. Stat. § 297A.67. Property tax exemption: Minn. Stat. § 272.02. Community Solar Gardens: Minn. Stat. § 216B.1641 and the Minnesota Dept. of Commerce. Rate case: Minnesota PUC Docket 24-320/24-321. Reviewed every six months.