The sun is shining down on Minnesota as the state's solar power capacity continues to grow dramatically. The cost to install a solar energy system has decreased by 50 percent in the past five years, and incentives are still available to help Minnesota residents and businesses go solar.
A 30 percent federal Residential Renewable Energy Tax Credit for solar and other renewable energy systems remains in place through 2019. It was not affected by the new federal tax plan, but the tax credit phases down to 26 percent for solar electric or solar hot water systems placed in service during 2020 and down to 22 percent for systems in place during 2021. A similar Business Energy Investment Tax Credit (ITC) is available for businesses.
A taxpayer may currently claim a federal tax credit for 30 percent of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Businesses are advised to consult with a tax professional about how to calculate this federal tax credit.
Utility solar incentives
Many Minnesota utilities continue to offer incentive programs in support of solar energy.
The 2017 Legislature and Gov. Mark Dayton agreed to extend Xcel Energy’s Solar*Rewards Program for three years and increase its program funding to $15 million in 2018, $10 million in 2019 and 2020, and $5 million in 2021.
The Solar*Rewards Program began taking applications for its 2018 season on Jan. 8. It provides residential and commercial customers with 10 years of annual incentive payments based on the solar energy system’s annual production. Solar*Rewards is available to Xcel customers on a first-come, first-served basis.
Minnesota Power and Otter Tail Power also offer solar incentives. Minnesota Power provides solar rebates to qualified customers (residential and commercial) through its SolarSense program and began taking applications on Jan. 9. Awards are made on a first-come, first-served basis. Otter Tail Power offers a Publicly Owned Property Solar program that provides cash incentives to publicly-owned facilities that install non-residential solar photovoltaic (PV) systems.
Other utilities may offer incentives for new solar energy systems as well, so check with your local utility.
State tax exemptions
Minnesota offers additional tax incentives. It provides a Solar Energy Sales Tax Exemption on residential, commercial and industrial solar energy systems. In addition, personal property consisting of solar electric energy systems is exempt from property taxation.
Other incentives, such as the Fix-Up Fund Loan Program, may help to finance residential solar systems.
To learn of about the range of incentives that are available to Minnesotans for solar and other clean energy improvements, visit the Database of State Incentives for Renewables & Efficiency at www.dsireusa.org and enter your zip code.