Michigan offers various solar incentives to make switching to clean energy affordable, including loans, property tax exemptions, net metering, and more. Our guide highlights these opportunities and recommends top solar companies in the Great Lakes State.
Michigan has ample opportunities for solar energy and offers a range of incentives to encourage its adoption. These include net metering programs, renewable energy certificates, and more. You can tap into federal solar incentives to cut costs further. Our comprehensive guide breaks down Michigan’s top solar rebates and incentives so you can maximize your savings when hiring a top solar company.
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Michigan Solar Tax Credits and Rebates
Solar tax credits and rebates help homeowners by reducing the up-front costs of installing solar panels. The following sections cover Michigan’s available solar programs.
Michigan Saves Home Energy Loan Program
Michigan offers the Michigan Saves Home Energy Loan Program to help homeowners upgrade their home’s energy efficiency. Some loans feature an annual percentage rate (APR) as low as 4.99%. The APR determines your interest rate and your fees to get the loan. The loan time line ranges from 12 months to 10 years with a maximum APR of 7.90%, making this program a great way to receive a more cost-effective solar panel system.
More resources: DSIRE page
Residential Property Tax Exemption
Property taxes go up when you install a solar energy system because your home value increases by an average of $15,000. The Michigan Residential Property Tax Exemption allows homeowners to avoid increasing property taxes when they install a system under 150 kilowatt (kW) in capacity. Michigan homeowners won’t have to worry about that stipulation because the average residential system size is 6 kW.
More resources: DSIRE page
How Does the Federal Solar Tax Credit Work?
The federal solar investment tax credit (ITC) is one of the most valuable incentives for Michigan homeowners considering solar panels. It allows you to deduct 30% of your total solar panel installation costs from your federal taxes. Here’s how it works:
- Eligibility: The ITC is available to homeowners who purchase their solar panels outright or finance them with a loan. It doesn’t apply to solar panel leases or power purchase agreements (PPAs).
- Claiming the credit: You can claim the ITC when you file your federal taxes in the year your solar system is installed and operational. If your tax liability isn’t large enough to claim the full credit in one year, you can roll over the remaining amount to future tax years.
- Cost coverage: The 30% deduction covers not only the solar panels themselves but also associated equipment, labor costs for installation, and even preparation costs like equipment or system permits.
- Expiration and changes: While the ITC is currently set at 30% through 2032, it’s scheduled to decrease soon after. Staying updated on policy changes can help you maximize the credit’s benefits.
Is Net Metering Available in Michigan?
Net-metering is a billing policy that helps homeowners reduce or eliminate their monthly electric bills. This financial agreement lets you pull electricity from the power grid when needed, but you send any excess solar energy into the grid when you don’t. You then receive energy credits from your utility provider and generate energy savings over time.
The Michigan Public Service Commission (PSC) or other regulatory authorities don’t mandate companies to provide net-metering programs, so not all Michigan residents can access a program. Some of the state’s largest utility companies, such as DTE Energy and the Upper Peninsula Power Company, offer net-metering programs, but their credit rates aren’t equal to the retail electricity rate.
How Much Does Solar Cost in Michigan?
A 5-kilowatt solar panel system costs around $15,664 in Michigan before tax incentives and rebates, according to EnergySage. However, the federal solar tax credit can reduce that cost to $10,964, which is a savings of about $4,699. Most solar companies provide quotes based on cost per watt, generally ranging from $3 to $4.
The solar financing option you choose for your system can significantly impact your total savings and return on investment (ROI). Below are the four main payment options to help you decide which is best for you:
- Cash purchase: Paying for your system upfront has the highest ROI because it eliminates interest fees, and you get full system ownership and access to solar incentives. Although expensive, purchasing a system can save you tens of thousands of dollars over the system’s roughly 25-year lifespan.
- Solar loan: A solar loan is the best option for homeowners who can’t afford to pay a large sum upfront. You’ll spread your payments out over time but still receive system ownership and any available solar incentives. However, you’ll pay more in the long run due to interest.
- Solar lease: Solar leasing is better for homeowners who can’t afford a system or don’t qualify for loans. You can switch to solar with little (or no) money upfront and pay fixed monthly payments. However, you’re ineligible for rebates since you don’t own the system, meaning you’ll benefit less financially.
- Power purchase agreement (PPA): With a PPA, you pay only for the solar-generated electricity you use rather than purchasing the system. You may receive a solar bill that’s lower than your traditional bill, but, again, you don’t own the system or qualify for rebates or incentives.
Is Going Solar in Michigan Worth It?
Going solar is worth it in Michigan, even though home solar panels are more expensive. Solar panels are an excellent investment for most Michigan residents because they help save money over time and pay for themselves in about 10 years. The average solar payback period is between 9 and 12 years, and the life span of solar panel systems is usually between 25 and 30 years.
Michiganders are eligible for the Michigan Residential Property Tax Exemption and the federal solar investment tax credit, which help reduce the total long-term cost of a solar energy system. Solar is especially worth it if your local utility company provides a net-metering program, but other Michigan residents without access to a net-metering program may want to weigh all their options.
Solar Installation Process in Michigan
Before you explore solar incentives and financing in Michigan, it’s helpful to understand the solar installation process. Here’s a breakdown of each stage:
1. Consultation
Start by consulting with a handful of solar companies to evaluate your home’s sunlight exposure and determine your system size and requirements. Installers will often use online tools to assess your solar potential, followed by an on-site survey. This step usually takes a few days.
2. System Design
After the survey, the installer will design a custom system tailored to your roof space, energy needs, and budget. You’ll receive a range of options that balance cost and performance, including hardware recommendations for inverters and battery storage. This step takes around 1–2 weeks and involves some back-and-forth communication to finalize your choices.
3. Permitting and Approvals
Following design approval, the company will navigate local zoning laws, HOA guidelines, and utility provider policies before filing necessary applications. This approval process usually takes 1–2 months, but timelines vary based on your location and utility provider.
4. Installation
Once permits are approved, the actual installation can take place. Most companies complete installation in a single day, typically within 1–3 months of your initial consultation.
5. Final Inspection
After installation, your installer will ensure your system is operating correctly and educate you on how to monitor its performance. This could involve using an app or manually checking your inverter box. They’ll also explain how net metering will impact your energy bill. If you’ve installed solar batteries, you’ll need to understand how your system switches from grid power to off-grid power in case of an outage. This last step ensures your system is ready to start saving you money on electricity.
Our Conclusion
Solar panels are a cost-effective way to decrease electricity bills and boost the resale value of homes in Michigan. As electricity prices increase, so will the savings from renewable energy solutions. Thorough research and consultation with a solar expert are vital to grasp your specific incentives and savings potential and obtain the best solar panels for your area.
FAQs About Solar Tax Incentives in Michigan
Does Michigan offer a tax credit on solar panels?
Michigan doesn’t offer a state-level tax credit for solar panels, but all Michigan homeowners can access the federal solar tax credit. The state also allows homeowners to take advantage of a property tax exemption.
Is it legal to live off-grid in Michigan?
In Michigan, you can live off the grid if you have a property to reside in and aren’t squatting in an open lot, open space, or abandoned building.
How many years will a Tesla Powerwall last?
The average life expectancy for a Tesla Powerwall is around 10 years.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
