How to Save Money on Solar Panels in South Dakota

Solar panels on the background of the image of the flag of State of South Dakota

How to Save Money on Solar Panels in South Dakota

Key Points

  • South Dakota has only 3MW worth of solar energy installed, despite having excellent equipment rates and sunlight.
  • The state does not offer many incentives for solar panel installation, but homeowners can still take advantage of the federal solar tax credit.
  • South Dakota does not have net metering mandates, so homeowners must accurately size their systems.
  • The state’s renewable portfolio standards have expired, indicating a lack of support for clean energy.
  • Homeowners in South Dakota cannot lease solar panels, they must either purchase them or get a loan.

It’s hard to believe that one of the sunniest states in the country only has 3MW worth of solar energy installed. However, this seems to be the case in the Mount Rushmore State. With hardly any incentives available, you might wonder how to save money on solar panels in South Dakota.

Fortunately, benefits exist if you know where to look for them. In this article, we break down every incentive, from the federal tax credit to an unprecedented property tax exemption. Keep reading to learn more.

How to Save Money on Solar Panels in South Dakota: Overview

Looking at the numbers alone, you’d expect solar panels in South Dakota to have value. The Mount Rushmore State has excellent equipment rates and sunlight that rivals Southwestern states. Even with larger systems than in other states, homeowners could earn back as much as $26,000 through utility offsets in 25 years.

All that said, it’s astonishing that the legislature in South Dakota has not yet acknowledged that. It’s one of the last places in the United States to adopt solar, with its renewable standards expiring nearly a decade ago.

Still, there are ways for residents to save a little extra on their installation. Let’s take a closer look at the available solar incentives in South Dakota.

Solar Panels in South Dakota: Federal Incentive

Even though the Mount Rushmore State doesn’t have many incentives of its own, homeowners can still take advantage of the federal solar tax credit. This program offers a 30% return on all installation costs, including equipment, labor, and even sales tax. Those buying a 6kW system could save nearly $4,500 right off the bat.

However, it’s essential to meet a few prerequisites to utilize this return. First, you need to own your solar panel system, either through a loan or purchase outright. Additionally, all the equipment must be new and installed at the house of residence.

Solar panels on the roof
There’s little state-level support for solar panels in South Dakota.


South Dakota’s State Credits and Rebates

In many states, an effective method of supporting solar installations is through offering tax credits. These save homeowners money without costing the government a penny. However, South Dakota doesn’t offer this type of incentive. 

Homeowners also won’t find solar rebates in the Mount Rushmore State either. Instead, they’ll have to rely on equipment returns, so long as their installer has them available. Talk to your installation company about equipment rebates before making a purchase.

Even more surprising, South Dakota does not have net metering mandates. Normally, states require investor-owned utility companies to purchase excess solar energy produced by customers. However, this program does not exist here. Therefore, it’s critical that homeowners accurately size their systems.

Solar Panels in South Dakota: Government Regulations

The lack of support in South Dakota comes from its expired renewable portfolio standards (RPS). We use a state’s RPS to determine its willingness to invest in future clean energy. 

South Dakota had a renewable goal of 10% by 2015, but the number has since been reached. With no updates to the RPS, it’s hard to expect any new incentives for homeowners in the near future.

However, South Dakotans can take advantage of an excellent property tax exemption. Those that install a system won’t pay extra for the added value of their home. But this regulation doesn’t stop here. If you install a solar panel system and connect it to the grid, you’re eligible to have up to $50,000 or 70% of your property’s value (whichever is higher) exempt from taxes. So not only the new value, but a large portion of your home’s worth, becomes exempt. That’s huge savings for the life of your solar array.

Should South Dakotans Lease Solar?

In some states around the country, homeowners have the option to lease a solar panel system. This is worth it to some that can’t afford an array outright or rent their home. It disqualifies them from incentives (such as the federal solar tax credit), but it’s a great way to save some money on electricity while also improving their carbon footprint.

Unfortunately, homeowners in South Dakota cannot lease solar panels. This means you’ll either have to purchase your system in full or get a loan. And those that can’t do either won’t have access to solar at all. 

Solar Panels in South Dakota: Incentive Summary

Federal Tax Incentive30% credit
South Dakota Tax Credits / RebatesNone / none
Net MeteringNone 
Renewable Portfolio Standard10% by 2015 (expired)
Property Tax Exemption$50,000 or 70% of the property’s value is exempt
Sales Tax ExemptionNone 
Performance Payment ProgramNone 

Frequently Asked Questions

Do you actually save money going solar in South Dakota?

South Dakota has low equipment costs and excellent sunlight, making it ideal for solar energy. Despite decent traditional power rates, high power requirements, and a lack of state-level support, homeowners could save as much as $25,000 or more by making the switch.

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

With an average annual utility bill of $1,638.64, homeowners in South Dakota could cover the price of a 6kW system in 8.8 years

How much do solar panels cost in South Dakota?

South Dakotans can expect to pay about $2.39 per watt for solar energy. This equals around $14,340 for a 6kW system. Factors that can affect this price include wattage, sunlight, location, equipment type, and installation quality.

Can I use the federal tax incentive in South Dakota?

South Dakotans can utilize the federal solar tax credit, a program that offers 30% back on solar purchases. Those installing a 6kW system could cut the price by nearly $4,500

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