How to Save Money on Solar Panels in Michigan

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How to Save Money on Solar Panels in Michigan

Michigan has over 200 companies in the solar energy market. With the industry in the Great Lakes State massively expanding, it’s a wonder that homeowners have little access to benefits. 

Still, there are ways to save money on solar panels in Michigan if you know where to look. Read on for a detailed breakdown of the state’s existing opportunities.

How to Save Money on Solar Panels in Michigan: Overview

Homeowners in Michigan benefit from a decent price on solar equipment and adequate sunlight. Because of high electricity rates, homeowners can discover savings of as much as $20,000 or more. However, this is where the benefits end; the Great Lakes State offers few renewable incentives, and those that exist are diminishing.

However, there are still ways to save money on solar panels in Michigan. By looking for incentives in the form of federal returns, state rebates, and government regulations, homeowners can lower the cost of an installation. Let’s go into further detail below.

Solar Panels in Michigan: Federal Incentive

The most influential benefit available to Michiganders is the federal solar tax credit. This program offers a 30% return on all solar purchases including equipment, labor, and taxes. Those using this benefit can see returns of more than $5,000.

The program has a few prerequisites. Of these, it’s most important to know that the resident must own their array. This means that leasing programs disqualify solar panel systems from the federal return. Additionally, homeowners must live at the place where the array is installed, and all equipment must be new.

To qualify for the federal solar tax credit, residents must own their systems outright.

Michigan’s State Credits and Rebates

Some of the best incentives that states can offer come in the form of financial incentives. Whether it’s tax credits or equipment rebates, homeowners can find benefits to help pay off their new system. Unfortunately, Michigan does not offer these incentives.

However, some cities in the Great Lakes State have their own agendas. For example, residents of Lansing can receive a $500/kW rebate for their solar array up to 4kW. This could reduce the cost of a solar panel system by up to $2,000 in addition to the federal credit.

Generally, states have a form of net metering and interconnectivity. These mandates require utility companies to pay homeowners for excess solar energy when connected to the grid. Michigan has net metering laws, but they’ve recently been altered. In 2019, the Michigan Public Service Commission opted to reduce the retail rate by the amount of transmission costs. This lowers the average payout by about half the original retail rate. 

Solar Panels in Michigan: Government Regulations

One of the primary reasons Michigan has few state-level benefits is that it lets its renewable portfolio standards (RPS) expire. These regulations help us determine how dedicated the state is to the infrastructure of renewable energy. Because Michigan hasn’t updated its RPS since 2015, there’s little chance that the legislature will enact new incentives.

Unique to the Great Lakes State, however, many cities have their own RPS, and they’re pretty aggressive. For example, Grand Rapids has a renewable goal of 100% energy production by 2025. Therefore, homeowners in this city might find more benefits in the coming years. Other cities in Michigan with an RPS include Ann Arbor and Lansing.

As a small victory for Michiganders, the Great Lakes State does offer a property tax exemption. In 2019, the state’s governor reinstated the old policy, ensuring that an increased value on homes with solar panels won’t incur a raise in taxes. This will save homeowners thousands of dollars over the course of 20 to 25 years.

Solar panels in Michigan
Michigan electricity rates rank in the top 10 for the U.S., making solar a great option to offset utility bills.

Should Michiganders Lease Solar?

In some states, residents can choose to lease a solar panel system from an installation company. While this disqualifies them from many incentives, including the federal return, it does act as an affordable choice to help improve carbon footprints. 

Michigan is one state that allows for solar leasing, although it’s not recommended to those hoping to save money on utilities. After paying the monthly lease, homeowners end up paying about the same amount as they would for traditional electricity.

Solar Panels in Michigan: Incentive Summary

Federal Tax Incentive30% credit
Michigan Tax Credits / RebatesNone / city-level rebates
Net MeteringRetail rate minus transmission fees
Renewable Portfolio Standard15% by 2020 (expired)
Property Tax Exemption100%
Sales Tax ExemptionNone
Performance Payment ProgramNone

How to Save Money on Solar Panels in Michigan: Further Reading

While the Great Lakes State doesn’t offer many benefits for renewable energy, homeowners can still find incentives in some cities. Even with just the federal return, residents can save money with solar panels in Michigan. For more information on the state’s views on emerging technology, check out these articles below.

How to Save Money on Solar Panels in Massachusetts – Here’s how Michigan’s solar benefits compare to one of the best states for renewable energy.

Owning an EV in Michigan: Charging Cost, Incentives, and More – Although the Great Lakes State doesn’t offer much for solar, there’s much more available for those with electric vehicles.

Top 10 Internet Providers in Michigan – Wherever you are in Michigan, these internet providers can make sure you stay connected when you need it.

Frequently Asked Questions

Do you actually save money going solar in Michigan?

Cost-wise, Michigan has decent equipment rates that substantially offset high electricity bills. Coupled with decent sunlight, homeowners in the Great Lakes State can save upwards of $20,000 or more.

How long does it take for solar panels to pay for themselves in Michigan?

With an average annual electricity bill of 1,630.16, Michiganders could pay off a 6kW system in 11.2 years. This number drops for those with smaller panels, which is possible considering the low average power usage.

How much do solar panels cost in Michigan?

In Michigan, homeowners can expect to pay about $2.66 a watt for solar energy. That equals about $15,960 for a 6kW system.

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