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Minnesota Solar Rebates and Incentives

Minnesota is known best for its white winters and 10,000 lakes—not so much for its abundant sunshine. Yet Minnesota’s renewable energy incentives are on par with super-sunny states like Florida and Arizona, even offering rebate programs specifically designed for solar space heating, which is very rare. In 2007, the state enacted a renewable portfolio standard (RPS) that requires most utilities in the state to get 25 percent of their energy from renewable resources by 2025. The one exception is Xcel Energy, the multi-state utility that provides nearly half of Minnesota’s electricity, which must get 30 percent of that electricity from renewables by 2020.
85 percent of Minnesota’s energy still comes from coal or nuclear power, according to the Energy Information Administration. While only 5 percent of its energy comes from wind power, that still puts the state in the top ten nationally for that energy source. Things are still getting started for solar power in Minnesota, but the following set of incentives has proven incredibly popular. Their greatest hindrance is a lack of funding due to that popularity.
PACE Financing
Minnesota law allows cities, counties and towns in the state to establish Property Assessed Clean Energy (PACE) programs, known locally as Energy Improvement Financing Programs. PACE financing schemes allow homeowners to borrow the upfront money from their municipality to install a renewable energy system or perform a home efficiency upgrade. The money is then paid back with interest through an assessment on property taxes.
State law dictates that loan terms may not exceed the useful life of the improvements (or more than 20 years), which is more likely for solar installations given the longevity of solar panels. Interest rates are determined locally but must be sufficient enough to cover the costs of the program. Loans may not be greater than 10 percent of the assessed value of the property.
Wind and Solar-Electric (PV) Systems Exemption
Speaking of assessed value, Minnesota law also states that wind and solar electric systems are exempt from property taxes. However, this only goes for real property taxation. The land on which a PV system sits remains taxable, according to DSIRE.org.
Solar Energy Sales Tax Exemption
In Minnesota solar electric, solar water heating and solar space heating systems are exempt from all state sales tax. All components are exempt, including panels, wiring, pipes, pumps and mounting systems. See the Minnesota Office of Energy Security (a division of the Dept. of Commerce) for more information.
Renewable Energy Equipment Grant
Low-income homeowners in Minnesota may be eligible for a grant to install solar space heating systems. If a homeowner meets the requirements for Energy Assistance Program (EAP), then they could be the recipient of up to $4,700 to install a solar heating system. Each project must have a 15-year or less payback period. See the Office of Energy Security for more info.
NEC Minnesota Energy Loan Program
Neighborhood Energy Connection (NEC), a program funded by the Minnesota Housing and Finance Agency, offers loans of up to $35,000 for solar PV and solar water heating systems, geothermal heat pumps and a number of energy efficiency upgrades. In order to qualify, a household must have an annual income of $96,500 or less. Repayment periods are between 1 and 20 years depending, on the size of the loan, and come with a fixed interest rate of 5.75%. Visit NEC for more details.
Residential Solar Space Heating and Solar Water Heating Rebate Programs
The state of Minnesota offers rebates of up to $2,000 for residential solar space heating installations. The rate is $25 per square foot of net aperture, but only as much as 25 percent of total costs or the aforementioned cap. Systems may double as solar water heaters during the summer, but must primarily used for space heating. Those integrated into a solar pool or hot tub heating system are not eligible.
The same rebate at the same rate is also available for solar hot water systems. These rebates are also available for small businesses with 20 or fewer full-time employees. Minnesota is using $500,000 in Recovery Act money to fund all of its solar thermal rebate programs.
Solar-Electric Rebate Program
Minnesota is using $2.5 million of Recovery Act funding to provide rebates for solar electric systems. The base incentive rate is $1.50 per watt DC, but that rate goes up to $1.75/watt DC if the installer is certified by the North American Board of Certified Energy Practitioners (NABCEP). Maximum incentives vary, but for residential systems, they are between $7,500 and $8,750. Systems must be at least 500 kW in size, and all components must be new. See DSIRE.org for more details.
Utility Incentives

A handful of Minnesota utilities offer their own rebates for solar power systems, including Xcel Energy, which had above-average renewable energy requirements put on it by the state’s renewable portfolio standard. See DSIRE.org for information on all the utility solar incentives in Minnesota.

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