Minnesota homeowners can reduce a typical $22,000 solar installation by more than 46% when they combine state and utility incentives — bringing the net cost for an average 7.6-kilowatt system down to roughly $11,800. That math depends on understanding which programs are still active, which have closed, and how the state’s evolving billing rules affect the money you earn from surplus power. Two programs sit at the centre of this conversation: the now-closed Made in Minnesota Solar Incentive Program, which ran for a decade and left a legacy still paying out to enrolled homeowners, and Xcel Energy’s ongoing Solar*Rewards program paired with the state’s Value-of-Solar rate framework that is reshaping how solar credits are calculated across the state.
Minnesota solar occupies an unusual position nationally. The state gets less peak sun than Arizona or California, yet its combination of a strong net metering law, utility performance payments, and blanket tax exemptions creates economics that regularly beat sunnier states. According to SEIA, Minnesota had only about 3.6% of its retail electricity sales coming from solar as of mid-2022, while state law requires 10% by 2030 — meaning strong policy support is likely to continue for years as utilities work to close that gap.
For homeowners comparing Minnesota to neighbouring states like Wisconsin or Iowa, the key advantage is the depth of stacked incentives. No other Midwestern state pairs utility production payments with a property tax exemption, a full sales tax waiver, and a legislated net metering framework all at once. Understanding how these layers interact is the first step toward calculating whether solar makes sense for your home.
The Made in Minnesota Solar Incentive Program: History and Legacy Payments
The Made in Minnesota (MiM) Solar Incentive Program was established by the Minnesota Legislature in 2013 as a 10-year, $150-million effort to simultaneously grow rooftop solar and build a domestic manufacturing base for solar equipment. To qualify, homeowners and businesses had to install panels physically manufactured inside Minnesota. The program was administered by the Department of Commerce and ran annual lotteries from January to February each year through 2023.
Over its first three years alone, MiM funded 1,048 solar electric (photovoltaic) projects totalling roughly 15 megawatts of capacity — enough electricity to power approximately 1,856 average Minnesota homes. By its fourth year the program was processing nearly 700 applications annually. Selected participants received production-based incentive payments for 10 years calculated on actual kilowatt-hours generated, not a flat rebate, which rewarded systems that performed well in real-world conditions.
The program is now closed to new applications. The Minnesota Department of Commerce stopped accepting MiM applications after the 2023 window closed, and the program is not expected to reopen. However, homeowners who enrolled before that cutoff continue to receive their annual production payments until their individual 10-year term expires. If you purchased a home with an existing solar array installed between 2014 and 2023, you may still have active MiM payments attached to that system — worth checking with the previous owner or the Department of Commerce directly.
The MiM program’s legacy matters beyond individual payments. By linking incentive eligibility to domestically manufactured panels, Minnesota deliberately cultivated in-state solar manufacturing jobs at a time when the industry was still fragile. That policy choice meant Minnesota’s early solar market was somewhat insulated from the import price swings that affected installers in states with no domestic-content rules. For today’s homeowners, the MiM era is relevant context: it demonstrates that Minnesota’s legislature has a history of intervening proactively in the solar market, and the current generation of utility-based incentives carries that same spirit forward.
Xcel Energy’s Solar*Rewards Program: Performance Payments and Eligibility Rules
For the majority of Minnesota homeowners — those in Xcel Energy’s service territory, which covers most of the Twin Cities metro and large stretches of the state — the Solar*Rewards program is the most accessible ongoing utility incentive. It is a performance-based incentive rather than a rebate, meaning you are paid annually for every kilowatt-hour your system actually produces over 10 years.
The current payment rate under Solar*Rewards is $0.03 per kWh of generation. For a typical 7.6-kilowatt system producing around 9,900 kWh per year, that works out to approximately $297 annually, or roughly $2,970 over the full decade. This is not a large number on its own, but it is predictable, locked in at enrollment, and stacks cleanly on top of every other incentive. Income-qualified customers receive a far larger upfront payment of $3.00 per kWh after interconnection — a rate 100 times higher that makes solar dramatically more accessible for lower-income households enrolled in Xcel’s qualifying programs. For a full price breakdown by system size and region, see our guide to How Much Do Solar Panels Cost in 2026? Complete US.
Eligibility requirements are straightforward but worth reviewing before you size your system. Your array must be between 0.5 kW and 20 kW DC, and its expected annual production cannot exceed 120% of the previous 12 months of your home’s electricity consumption. In exchange for the payments, you transfer the Renewable Energy Credits (RECs) your system generates to Xcel Energy, which uses them to meet Minnesota’s Renewable Energy Standard. Applications are accepted on a first-come, first-served basis with limited annual funding, so applying at the start of the calendar year gives you the best chance of securing a spot.
To estimate whether Solar*Rewards meaningfully changes your payback timeline, our solar payback calculator can model the impact of the per-kWh payments alongside your utility rate and installation cost — giving you a single number that accounts for all cash flows over a 25-year system life. For state-by-state payback data, our guide to Solar Panel Payback Period by State is the most complete resource.
How Minnesota’s Value-of-Solar Tariff Works and Who It Affects in 2025
Minnesota’s Value-of-Solar (VOS) tariff is one of the most discussed — and most misunderstood — solar billing policies in the Midwest. Passed as part of a 2013 solar energy law, the VOS framework created a methodology for calculating what solar electricity is truly worth to the grid, factoring in eight variables including avoided fuel costs, transmission and distribution capacity savings, environmental benefits, and long-term generation value. The VOS rate is recalculated annually by the Minnesota Department of Commerce.
As of recent filings, the VOS sits at approximately $0.1909 per kWh for community solar subscribers in Xcel territory. The key nuance is that the VOS is currently mandatory only for community solar garden subscribers. No Minnesota utility has yet chosen to formally apply the VOS tariff to standard residential rooftop solar customers, who continue to receive net metering credits under separate rules.
What changed in spring 2025 is the transition of existing community solar subscribers from the old Applicable Retail Rate (ARR) to the VOS. Under the ARR, subscribers received credits matching whatever Xcel charged retail customers — roughly 13 to 15 cents per kWh. The 2025 transition moved many of those subscribers to a VOS-based rate of approximately 9 to 11 cents per kWh, a reduction that has left some community solar customers with smaller bill credits than their original contracts anticipated. For standard rooftop solar homeowners, the practical takeaway is this: net metering under the residential tariff still credits excess generation at close to the full retail rate, which EIA data shows averages around 13 cents per kWh in Minnesota as of 2025.
Minnesota’s Solar Tax Exemptions and Net Metering Credit Rules
Beyond the Made in Minnesota legacy payments and Solar*Rewards, Minnesota offers two tax exemptions that reduce the effective cost of going solar without requiring any application, lottery, or income qualification. Both are automatic and apply to virtually every residential system in the state.
The sales tax exemption eliminates the state’s 6.875% sales tax on all solar equipment — panels, inverters, racking, and related hardware. On a $22,000 system, that represents an immediate saving of approximately $1,512 at the point of purchase. No paperwork is required on your end; qualified solar installers apply the exemption during the transaction. This is one of the cleanest incentives in the state because it reduces your gross cost before any other credit is applied, meaning the ITC then applies to a slightly smaller number.
The property tax exemption ensures that the added value a solar array brings to your home is excluded from your assessed property value for tax purposes. NREL research has found that solar installations increase home resale values by an average of about $4 per watt of installed capacity, which would add roughly $30,400 to the assessed value of a typical 7.6 kW Minnesota home. Without the exemption, that figure would translate to hundreds of dollars per year in higher property taxes at Minnesota’s median effective rate of around 1.1%.
Net metering in Minnesota requires all utilities to offer the credit, and the formula ties the rate to each utility’s average energy cost rather than a flat avoided-cost rate. That distinction matters: Minnesota’s net metering credits are generally among the more generous in the Midwest, and they roll over month to month, which is valuable given the state’s seasonal production swings between long summer days and short, cloud-heavy winters. You can model how your specific utility’s rate affects annual bill credits using our solar net metering calculator, which handles the Minnesota credit rollover rules accurately.
What Minnesota Homeowners Should Do Before Installing Solar in 2026
The landscape for Minnesota solar incentives in 2026 is more layered than it was five years ago. The Made in Minnesota program is closed, the federal residential ITC expired at the end of 2025 for new homeowner installations (commercial projects retain a 30%–40% credit under the Inflation Reduction Act), and the community solar VOS transition has introduced uncertainty for subscribers. At the same time, Solar*Rewards, net metering, and both tax exemptions remain fully active — and the battery storage incentive program launched in August 2024 adds a meaningful new dimension for homeowners who want backup power alongside their panels.
The battery incentive, administered jointly by Xcel Energy and the Minnesota Department of Commerce for customers outside Xcel territory, pays $175 per kWh of storage capacity for standard customers and up to $250 per kWh for income-qualified households. A 13.5 kWh Tesla Powerwall 3 would therefore earn an Xcel customer approximately $2,362 under this program. Total funding is capped at $3.48 million within Xcel territory, so early applicants each calendar year have the best chance of securing a reservation before funds run out.
Before you sign an installation contract, three steps will help you capture the full Minnesota solar incentive stack. First, confirm whether you are in Xcel Energy’s service territory, since SolarRewards and the battery storage program have different rules and rates for customers served by Minnesota Power, Otter Tail Power, or a cooperative utility. Second, check the remaining SolarRewards funding balance for the current year — your installer can request this from Xcel, and it determines whether a spring application will be approved before the annual pool is exhausted. Third, size your system to no more than 120% of your annual consumption to preserve Solar*Rewards eligibility, even if your roof could physically accommodate more panels.
To get a full picture of the numbers before talking to installers, our solar savings calculator lets you enter your Minnesota utility, annual consumption, and roof characteristics to produce a detailed estimate of lifetime savings, payback period, and return on investment specific to your situation.
Frequently Asked Questions
Is the Made in Minnesota solar program still accepting applications?
No. The Made in Minnesota Solar Incentive Program stopped accepting new applications after the 2023 annual window closed. The program ran for 10 years from 2014 to 2023 and distributed incentives from a $150 million state fund. Homeowners who enrolled before 2023 continue to receive annual production payments until their individual 10-year term expires, but no new enrollments are possible under this program.
What is Xcel Energy’s Solar*Rewards payment rate in 2026?
Xcel Energy’s Solar*Rewards program pays $0.03 per kilowatt-hour of electricity your system generates, locked in at enrollment for 10 years. For an average 7.6 kW system producing around 9,900 kWh annually, that equals roughly $297 per year or approximately $2,970 over the full decade. Income-qualified customers are eligible for an upfront payment of $3.00 per kWh after interconnection — 100 times the standard production rate.
How does Minnesota’s Value-of-Solar rate affect rooftop solar homeowners?
Rooftop solar homeowners with standard net metering are not billed under the Value-of-Solar rate. The VOS of approximately $0.19 per kWh currently applies to community solar garden subscribers in Xcel territory, not to individual rooftop systems. Residential solar owners receive net metering credits based on each utility’s average retail energy rate, which runs around 13 cents per kWh in Minnesota according to EIA data.
What are the sales and property tax exemptions worth for a typical Minnesota solar installation?
The sales tax exemption eliminates Minnesota’s 6.875% state tax on solar equipment — saving approximately $1,512 on a $22,000 system at the point of purchase. The property tax exemption excludes the added home value from your assessed value. NREL research suggests solar adds roughly $4 per watt installed, meaning a 7.6 kW system could otherwise add $30,400 to your taxable home value and cost hundreds of dollars annually in extra property taxes.
What is the typical solar payback period in Minnesota in 2026?
The average solar payback period in Minnesota is approximately 11.5 years before stacking all available incentives. After accounting for net metering credits, Solar*Rewards performance payments, and the sales tax exemption, many Xcel customers see effective payback timelines in the 9 to 11 year range. Over a 25-year panel warranty period, SEIA estimates lifetime savings average between $19,776 and $24,141 depending on system size and local utility rates.
Data sources: SEIA Minnesota Solar Policy overview; NREL Annual Technology Baseline 2024; Minnesota Department of Commerce Made in Minnesota program archive; Xcel Energy SolarRewards program terms; Minnesota Public Utilities Commission VOS docket filings; EIA state electricity price data 2025; IRS Form 5695 guidance.*