Minnesota Solar Rebates and Incentives

Minnesota Rebates and Incentives Summary

MinnesotaIt’s rumored that Babe the Blue Ox and Paul Bunyan created Minnesota’s 1,000 lakes when they were horsing around. Given that one of the state’s most famous icons is a tall-tale lumberjack, and the state’s northern location, it might seem surprising that the state has a strong commitment to developing solar and other renewables within the state, but it does. To help residents and businesses convert to renewable energy the state has enacted numerous incentives, some of which are offered by the state, others through the many utilities in the state.

For starters, Minnesota has a renewable portfolio standard (RPS) requiring most of its utilities to source 25 percent of their electricity from renewable sources by 2025. Xcel Energy, an investor-owned utility that is headquartered in Minnesota and provides about half its energy, has RPS of 30 percent by 2020. The company has been a big supporter of renewable energy in other states where it operates, like Colorado.

Southwestern parts of the state get the most sun, about 4.5 kilowatt hours of sun a day per square meter, while northern parts of the state get about 4.0 kWh of sun per square meter. That’s more than 2 kWs less than other parts of the U.S. like Arizona, but still enough to justify solar power in this cold state.

At present, Minnesota already has wind farms; in fact Minnesota’s St. Olaf College was the first college in the United States to put up a wind turbine on campus. Overall the wind farms provide about 5 percent of Minnesota’s current electric needs. That’s still far below the 60 percent of electricity provided by coal-fired power plants and the 25 percent provided by the state’s two nuclear plants near the twin cities. Other renewables that contribute—minimally—to its energy needs are hydroelectric dams, municipal solid waste, wood waste and landfill gas. Looking forward nuclear power will likely remain mainstay of the state’s energy production, with one plant being approved to run through 2014 and the other licensed through 2030.

When pursuing renewables in Minnesota, it’s wise to consult local utilities to determine what incentive programs they offer in addition to statewide opportunities. It’s also important to properly insulate homes in Minnesota, since it sees lows well below 0 degrees Fahrenheit in the winter. In fact, the coldest temperature ever measured in the state was 60 degrees below 0. As such the state and utilities offer substantial incentives for energy efficiency and insulation as well as for renewable energy use.

NEC Minnesota Energy Loans Program

Program Type Low-interest Loans
Technologies Photovoltaics, Solar Thermal and Energy Efficient projects
Amount $2,000-$35,000 for homes, up to $60,000 for multi-family residences
Required Documentation A lot. Read below
Official Web Site http://www.thenec.org/energy_financing/index.php?strWebAction=article_detail&intArticleID=222

Minnesota’s Neighborhood Energy Connection (NEC) offers low-interest rate loans to homeowners and residential building owners for qualified energy efficiency and renewable energy projects for households with incomes of $96,500 or less and residential buildings with “fair market rent” not exceeding $1,119.

The loans have an interest rate of 5.75 percent, and repayment is set at $1,000 per year for a period of one to 20 years. Under the nonprofit’s program, the loan amounts range from $2,000 to $60,000. Homeowners can qualify for loans of up to $35,000 for approved projects. Most additional loan costs, which include the 1 percent origination fee, a credit report fee, and document preparing fees, can be rolled into the loan.

To be eligible for a loan under the program, home or building owners must first schedule an energy audit to determine what energy efficiency projects a home or building owner can take to reduce their energy use. The auditor may recommend additional insulation, weatherization, renewable energy projects and more. Under the program, at least one of the recommendations made by the auditor must be included in the application to qualify for the loan.

Although DIY jobs can qualify for the loan, NEC can provide assistance in finding a qualified contractor and will perform follow-up inspections at the building owner’s request.

The Loans are funded by Minnesota Housing and Finance Agency and are underwritten by the NEC. The loan is secured against the home or property as a mortgage.

Xcel Energy Solar Rewards Program

Program Type Rebate
Technologies Photovoltaics
Amount Up to $90,000. Paid at $2.25 per installed Watt of DC solar power
Required Documentation

Create a user account with Xcel Energy at xcelenergysolarrewards.com, start the

application process there.

Official Web Site



This is offered as just one example of utility rebate program. Since all utilities in the state are impacted by Minnesota’s RPS, all offer some incentives to help homeowners convert to solar or other renewable energy.

Xcel Energy offers significant financial incentives for grid-connected PV systems for its customers. Rebates can add up to $90,000 for installed systems of up to but not exceeding 40 kW. In exchange for receiving the rebate, the customer must enter into a 20-year contract with Xcel for all RECs generated by the system during the contract’s life. As of November 15, $1.4 million of the $4.6 million Xcel reserved for the program in 2010 was still available.

The up-front rebates are offered at $2.25 per installed DC Watt. However, Minnesota is funding a Minnesota Made program under which additional funds are available for the rebate. Under the Minnesota Made program, Xcel is offering an additional $2.75 per watt DC for systems assembled in Minnesota, bringing the total rebate to $5.00 per watt DC. The Minnesota Made rebates are paid out over a five-year period through Xcel. In addition, Xcel will buy excess generation of the system through its net-metering program.

To qualify for the rebates, the applicant must be an Xcel customer, and the project must be located in Minnesota. New construction is eligible for the rebates, but they must have an Xcel meter onsite and Xcel must be the electric provider. For existing structures Xcel must have performed an energy audit within the last three years and may be required to have implement some of the recommendations identified in the audit before participating in the Solar*Rewards program. Energy Star certified homes and buildings are not required to undergo an audit to participate.

The customer must submit the application and receive approval for the system prior to installing it. And they must pay the $250 application fee, which is refunded is the application is denied or the customer withdraws the application before having an engineering review.

Minnesota Net Metering

Program Type Net Metering
Technologies Photovoltaics and other renewables
Amount Credited at retail rate toward future months                                                                            
Required Documentation Interconnection agreement with utility
Official Web Site https://www.revisor.mn.gov/statutes/?id=216b.164

Minnesota’s net-metering law is intended to “to give the maximum possible encouragement to cogeneration and small power production consistent with protection of the ratepayers and the public.” As such it’s one of the strongest net-metering laws in the country.

Under Minnesota’s net metering law, qualifying power-producing systems, like PV and solar thermal electric, under 40 kWs are eligible to net meter with their utility. This applies to all investor-owned utilities, municipal utilities and electric cooperatives. Net excess generation (NEG) is credited or reimbursed at the customer’s average retail utility electricity rate.

The rate is defined by the state as "the total annual class revenue from sales of electricity minus the annual revenue resulting from fixed charges, divided by the annual class kilowatt-hour sales," which allows for an estimated average retail rate. Customers can choose to receive a check for NEG or have it credited toward future months. Minnesota is one of a few states that require net-metering payments to be made at rates equal to or near retail rates. Most other states that offer net metering with payments only reimburse NEG at avoided-cost rates or less.

Minnesota Solar Power Financial Incentives

Financial Incentives

Production Incentive

Property Tax Exemption

Sales Tax Exemption

State Grant Program

State Loan Program

State Rebate Program

Utility Grant Program

Utility Loan Program

Utility Rebate Program

Rules, Regulations & Policies

Building Energy Code

Energy Standards for Public Buildings

Equipment Certification

Generation Disclosure


Mandatory Utility Green Power Option

Net Metering

Other Policy

Public Benefits Fund

Renewables Portfolio Standard

Renewables Set Aside

Solar and Wind Access Law

Related Programs & Initiatives

Alternative Fuels and Advanced Vehicles Data Center

The U.S. Department of Energy's Alternative Fuels and Advanced Vehicles Data Center (AFDC) provides a wide range of information and resources to enable the use of alternative fuels and other petroleum-reduction options, such as advanced vehicles, fuel blends, idle reduction and fuel economy. The AFDC site offers a database of state and federal laws and incentives related to alternative fuels and vehicles, air quality, fuel efficiency, and other transportation-related topics.

Green Power Network

The U.S. Department of Energy's Green Power Network provides news and information on green power markets and activities, including opportunities to buy green power. This site provides state-by-state information on green power marketing and utility green power programs. In addition, the site lists marketers of renewable energy credits (RECs), also known as green tags or renewable energy certificates, which represent the environmental attributes of the power produced from renewable energy projects.

Weatherization Assistance Program

The U.S. Department of Energy's Weatherization Assistance Program (WAP) enables low-income families to reduce their energy bills by making their homes more energy-efficient. Through this program, weatherization service providers install energy-efficiency measures in the homes of qualifying homeowners free of charge. The WAP program web site offers a state-by-state map of opportunities, projects and activities.

Wind Powering America

The U.S. Department of Energy's Wind Powering America site provides state-by-state information on wind projects and activities, including wind working groups, validated wind maps, anemometer loan programs, small wind guides, state-specific news, wind for schools, workshops and web casts.

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