Minnesota - Energy tax credit, solar rebates and incentives
Minnesota Renewable and Solar Energy Incentives
Solar Choice Program – Austin (Residential/Commercial)
- Participants in this program will have their PV systems connected directly to the public utility’s distributing systems and credited for the energy that the system generates.
- Compensation is dependent upon how much power is generated from the system. The maximum incentive is capped at $1.00/kWh.
- Qualifying systems must be limited to a maximum of 40 kWh.
Wind and Solar Electric Systems Exemption (Residential)
- The additional amended value to a residency due to a solar or wind installation is completely exempt from property taxes.
- Wind systems must not exceed 250 kW in size to be eligible.
- Solar energy sales tax exemption: All solar systems are exempt from state sales tax. Systems include solar space heating, solar water heating and photovoltaics.
- Applicants must fill out a “Certificate of Exemption” form ST3 to be considered for tax exemption. This form can be located at the Minnesota Department of Revenue website or state office.
Minnesota Energy Loan Program – Neighborhood Energy Connection (Residential)
- Homeowners seeking to make energy efficient upgrades to their property are granted secure low-interest loans.
- Quantities of loans span from $2,000 to $35,000 with an interest rate of 6.25%.
- A standard energy audit from Neighborhood Energy Connection must be completed before loans are granted.
Solar Hot Water Rebate Program (Residential)
- The Minnesota Office of Energy Security offers this rebate program to homeowners with solar water systems.
- Rebate awards typically are fixed at $30/square foot of net aperture of a recently installed system.
- Rebate awards will also be offered to assist with system repairs. Rebates will not be given if repairs are needed because of lack of maintenance. Systems are limited to a one-time rebate award.
- Single families typically receive around $1,000 for system repairs and larger families (4+ individuals) are granted roughly $3,000.
Solar Rebate Program (Residential)
Funding for this program comes from Xcel Energy and the Minnesota Office of Energy Security. The program offers homeowners in the state of Minnesota who purchase and install photovoltaic systems a rebate to offset the initial cost of a system.
- For systems installed by licensed installers, rebate awards are fixed at $1.75/watt DC. For systems installed by NABCEP certified installers, rebate awards are fixed at $2.00/watt DC.
- This program is reserved for residential systems that do not exceed 5 kW in size.
Renewable Development Fund Grants (Residential/Commercial)
- Xcel Energy offers this grant designated for conservation energy development projects.
- Qualifying systems are as follows: biomass, hydroelectric, renewable fuels and solar panel PV systems. Grant awards are dependent upon renewable energy type.
Utility Loan and Rebate Programs (Residential)
- Metropolitan cities and utility companies offer various loan and rebate programs to give incentive for residents to utilize energy efficient technologies.
- Program requisites and specifics will vary.
- Rebate and loan programs are offered to homeowners who install renewable energy technologies as well as energy efficient equipment.
Net Metering (Residential/Commercial)
- Subscribers of utilities with net metering benefits are compensated for net excess generation (NEG) their system generates. Standard rates typically reflect the average retail utility rate.
- Compensation is given in the form of credit on customer’s monthly electric bill.
- Systems must not exceed 40 kW to be eligible for net metering.
Federal Tax Credit (Residential/Commercial)
Residential and commercial taxpayers are granted a tax credit of 30% of the total expenses, which include installation of solar panel systems (electricity), solar thermal systems, fuel cells and labor expenses. Wind energy installations and geothermal pumps are also subject to a tax exemption.
- Systems installed after 2008 have no maximum incentive.
- If there is excess federal tax credit, it may be carried over to the subsequent taxable year only if it surpasses tax liability.
- The Federal Energy Tax Credit continues through 2016.
Federal Energy Conservation Subsidy Exclusion (Residential)
- Public utilities provide residential purchasers with an exemption of 100% of energy conservation subsidies.
- The overall worth of an installation or renewable utility regardless of the energy conservation capacity, will be excluded from the buyer’s gross income.
- Customers who participate in a utility company’s energy conservation program may be given a reduced rate of electricity utilized or a nonrefundable credit of the price of electricity on the customer’s monthly electric bill.
Energy-Efficient Mortgages (Residential)
- With this federal loan program, homeowners may utilize energy-efficient mortgages (EEM) to either supplement or completely fund renewable energy systems.
Example: 4KW System – Residential Installation Cost
Average Electric Bill: $250/mo
Projected Annual Bill Escalation: 5%
Cost Per Watt: $6.50
- Estimated System Cost: $26,000
- Federal Tax Credit: $3,000
- State/Utility Rebate: $16,000
- Net Cost: $7,000
- Cumulative Lifetime Savings (25 Years): $36,027
- Investment Return: 19.5%
Savings of 73% on the total cost of your solar system through incentives