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Solar Panels in South Dakota: Cost, Savings, and Rebates

Solar panels against a blue sky with a picture of the flag State of South Dakota

Solar Panels in South Dakota: Cost, Savings, and Rebates

Key Points

  • South Dakota has only 3MW worth of solar energy installed, making it last in the country despite having good sunlight.
  • Homeowners in South Dakota could save $25,000 or more with solar panels.
  • The average cost of solar panels in South Dakota is around $14,340 before incentives.
  • There are only six solar installers in South Dakota.
  • While solar panels in South Dakota may not be as affordable as in other states, homeowners could still save thousands on utility bills.

With only 3MW worth of solar energy installed, South Dakota is ranked last in the country. This is curious, as the Mount Rushmore State features surprisingly good sunlight, nearly on par with states in the southwest. So even though it’s still a well-kept secret, homeowners could save $25,000 or more with solar panels in South Dakota.

These are huge savings, and you may want to start creating an installation budget. In this article, we give you the numbers you need. From average costs to potential savings and everything in between, here’s what you need to know to get started.

Average Cost of Solar Panels in South Dakota

At first glance, it might seem like solar panels in South Dakota are a good idea. After all, the average equipment rate for panels runs about $2.39 per watt, one of the lowest in the country. Homeowners could expect to spend around $14,340 before incentives, a reasonable equipment price.

However, this value diminishes when compared to the Mount Rushmore State’s standard utility rate. Homeowners pay about average for power, but they use a lot of it. This means that some may need more solar than usual, taking longer to pay off the system. We’ll talk more about this below.

However, if you’re committed to improving your carbon footprint, there’s a decent reprieve. South Dakotans can utilize the federal solar tax credit, which offers a 30% return on all purchases made toward a solar array. When installing a 6kW system, you could watch the price drop from $14,340 to $10,038.

How Much Solar Do South Dakotans Need?

The above example shows the price of solar panels in South Dakota as it relates to the typical system, but does that represent your power needs? Because homeowners in the Mount Rushmore State use more power than usual, some may need a larger system. To properly size your solar array, you’ll have to divide your daily power requirements by the amount of peak sun your area receives.

To show you what this math looks like, we’ll use South Dakota’s state averages in an example.

Homeowners in the Mount Rushmore State use about 34.6kWh a day (taken from 1037kWh a month). When we divide that by South Dakota’s average direct sun of 5.23 hours to learn that a solar panel system needs to produce 6.6kW an hour. Slightly more than average, homeowners could expect to spend $15,774 before incentives for this size array.

Now that you know how to find the right wattage for your system, you can accurately create a budget. Because sunlight varies depending on location, check out this South Dakota sun chart for the average in your nearest city.

South Dakota Solar Cost Factors

As we spoke about in the last section, peak sun has a large influence on solar panels in South Dakota. This is especially true in South Dakota, where its geography stretches wide from west to east. And the further east you go, the lower the sun. For example, those living in Sioux Falls may only receive 4.8 hours of direct sunlight, nearly 30 minutes less than usual each day.

To see further how this aspect can affect solar costs, compare South Dakota to the rates of its neighboring states:

You’ll also see the price fluctuate depending on the type of solar panels you install. A good rule of thumb is that monocrystalline equipment is more efficient, but also more expensive than polycrystalline. 

Because the Mount Rushmore State receives a surprisingly good amount of sun, you may save money going with the latter. However, if you live on the easternmost side of the state or simply don’t have the roof space, you might need mono panels.

Finally, you don’t want to overlook the quality of your installer. The price tag for a good company might seem high, but those undercutting the competition aren’t providing the best equipment or warranties. And because you want your system to last 20 years or more, this isn’t a risk you want to take lightly.

Bright red building with solar panels on the metal rooftop on a mostly sunny summer day in a public park.
Solar panels in South Dakota have an affordable price, potentially saving residents $25,000 or more.

Best Solar Installers in South Dakota

South Dakota has only 6 installers within its boundaries. This means you’ll have limited local options before choosing a larger company. When choosing your installer, take time to review their qualifications, which include:

  • Years of industry experience
  • Quality equipment
  • Length of warranty
  • Contractor transparency
  • Certifications and licenses

Here are two installers that we recommend.

We always like to promote local companies for their in-house team of technicians. That’s why we’re recommending Black Hills Solar as your first choice. Even though they’re new to the industry, they have an important NABCEP certification that backs a wide range of equipment. And their warranties are the best in the state. With 25-year coverage on efficiency and equipment and 10-year coverage on labor, you’ll know that your system will last its lifetime.

Another company worth considering is Midwest Solar. They’re slightly larger than their local competitors, but not too large to subcontract their installations. They also have a larger range than Black Hills Solar. So while they’re a little more expensive, you can trust their high-quality equipment and service.

Can Solar Energy Save South Dakotans Money?

We’ve shown that while solar panels in South Dakota have low equipment costs, they might not be as affordable as you’d hope. Even with excellent sunlight, the affordable price of traditional power means they won’t pay off as well as in other states. Still, those that make the switch could save thousands on utility bills. Here’s what that could look like.

Before you can learn how much you’ll see in net returns, you’ll have to pay off your system. With an average annual electricity bill in South Dakota of $1,638.64, homeowners could cover the price of a 6kW system in 8.8 years. While this is lower than usual, it’s good to remember that some residents might need more wattage than this, resulting in a longer payoff time.

Having covered the purchase of your system, you’ll start to earn back money on utility savings. With solar panels having an average life expectancy of 20 to 25 years, your savings could range from $18,353 to $26,546. That’s not too bad for improving your carbon footprint!

Solar Panels in South Dakota: Rebates, Credits, and Incentives

South Dakotans could see pretty great net returns with a solar array, and they could increase it even more by taking advantage of financial incentives. While South Dakota’s support is lacking, there are still ways to drop the cost of an installation.

At the very least, homeowners can utilize the federal solar tax credit, which offers a 30% return on all solar purchases. Those installing a 6kW system could drop the overall price by nearly $4,500. And with ever-increasing prices on equipment and one of the best tax exemptions in the country, there’s even more to save. To learn about these benefits, check out our South Dakota solar incentives guide.

Frequently Asked Questions

Is solar worth it 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 much does solar 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.

How long does it take for solar panels to pay back 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

Can you get a federal tax credit for solar panels 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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