North Dakota Solar Incentives (Rebates, Tax Credits & More in 2024)

Overall, the solar perks in the state can save you thousands of dollars on your solar panel system prices and help maximize your long-term savings on utility bills. We’ll include all of the statewide perks in the table below, along with a description of each and an estimated savings you’ll see when you take advantage of them.

What Do North Dakotans Need to Know About the Federal Solar Tax Credit?

The federal income tax credit (ITC) is a massive tax credit offered by the federal government to all U.S. taxpayers. It provides a credit of 30% of your entire system cost — including panels, solar batteries, inverters and the labor to install everything — to your income tax burden.

When you go to file your taxes, the credit amount gets deducted from your tax liability, which means if you owe money to the Internal Revenue Service (IRS), your solar conversion costs will reduce the payment you have to make.

This perk has been offered since 2005. The credit rate dropped to 26% in 2022, but the Inflation Reduction Act (IRA) signed in August of that year bumped the credit back up to 30% — including retroactively for systems installed between January and August. It also extended the credit for ten years. The new rate schedule is as follows:

• 30% for systems installed through 2032
• 26% for systems installed in 2033
• 22% for systems installed in 2034
• No credit for systems installed in 2035 or beyond 

Given the average local system price of $34,540, you can expect your credit value to sit around $10,362.

How to Claim the Federal ITC in North Dakota

You can follow the steps below to file for the federal credit. The application process is quick and painless, so you should be able to complete it in under ten minutes.

• Step 1: Complete the solar conversion process
• Step 2: Print out IRS form 5695 when you’re ready to file your taxes
• Step 3: Fill out the form using information about your home — or the site where your panels will be installed — and the contact information for your installer. You’ll also need some basic information about your system, like the total cost and the size.
• Step 4: File the form alongside your taxes

If you use a tax filing software or program to file, you should get prompts automatically about any renewable energy system you have. Just answer the related questions, and you can skip the above steps.

EcoWatch’s Opinion on the Federal ITC in North Dakota

In our opinion, the federal credit is the best solar incentive available in your area. Not only does it take just a few minutes to apply for, but it also provides an average effective savings of nearly $10,400. This perk is especially useful in areas like The Peace Garden State, where statewide incentives aren’t as plentiful as they are in other states and there is no state tax credit.

It’s important to keep in mind that while we think this is the best perk available in the state, it won’t be equally beneficial to all residents. Since this is a tax credit, you’ll only have access to this perk if you owe money on your income taxes. You’ll need to owe around $2,072 per year for five years following your installation to be able to take the full credit.
Watch Below: Learn How You Can Profit Off Of the Extra Energy Your Solar Panels Produce

What You Should Know About the Exemption for Property Tax in North Dakota

Any time you carry out a home improvement that bumps up your property value, you’re signing up for increased property taxes as well. Since installing solar panels boosts home value by an average of 4.1%, conversion would normally mean a bump in taxes alongside home value.²

The tax exemption for property taxes prevents this increase from occurring, which means your taxes won’t be negatively affected by solar adoption.

It’s hard to estimate the exact savings you’ll see from this benefit program, in part because your panels will depreciate over time. Excluding depreciation, though, you’re looking at the state property tax rate of 0.94% on an average solar power system value of $34,540.

That’s an annual savings of approximately $324. This perk only lasts for five years in the state, which leaves a total savings of around $1,623.

How to Claim the Property Tax Exemption in North Dakota

The exemption is claimed by filing the state’s Application of Exemption for Solar, Wind, and Geothermal Devices with the county your home is located in:

Step 1: Download the form here. 

Step 2: Complete the form once your system has been installed.

Step 3: Submit the form to the office of the Director of Tax Equalization in your county.

EcoWatch’s Opinion on the Exemption for Property Taxes in North Dakota

Property tax exemptions for solar energy equipment are a common perk throughout the country, and it’s one we love to see. It’s a great way to reduce the financial burden of converting to solar and incentivize the adoption of clean energy.

We do wish there wasn’t a five-year limit on the exemption. Still, we think this is an excellent perk to have access to, and it provides decent savings.

Net Metering in North Dakota

Net metering — also called net energy metering or NEM — is a policy that tracks the energy your panels generate and send to the electric grid. It also credits you for that excess power production and lets you put those credits toward reducing utility bills and effective electricity rates in the future.

The state mandates net energy metering for all investor-owned utilities (IOUs), including Montana-Dakota Utilities Company, Northern States Power Company and Otter Tail Power Company.

Customers of these providers are guaranteed access to NEM, while customers of municipal utilities and electric cooperatives could but are not guaranteed to have access.

There is no specific credit rate required in the state, so most companies offer an avoided-cost rate, which is below the retail value for electricity. This isn’t ideal, but it’s still helpful for reducing panel payback period, bumping up long-term energy savings and getting the most out of your panels.

We should mention that NEM is decreasing and disappearing in a handful of states as solar becomes more popular and more strain is put on the grid. It’s possible that net energy metering will disappear or get capped in North Dakota in the future.

How to Enroll in Net Metering in North Dakota

There is a simple application process for NEM currently, although most solar customers who choose reliable installers will be able to avoid doing it themselves as many installers will complete the application process. You can follow the steps below to make sure you take advantage of this perk.

• Step 1: Call your electricity provider and ask them to confirm if you have a bidirectional meter installed. Most companies have already upgraded to these meters to allow for interconnection, but you can usually get one installed at no cost to you if you don’t already have one.

• Step 2: Choose a solar installer that services your area. We suggest finding one that will complete the NEM application for you, as this is often one sign of a reputable installation company.

• Step 3: Get your solar PV system installed.

• Step 4: Check your energy bills for a few months following installation. You should see credits accruing as long as your production is outpacing your consumption.

EcoWatch’s Opinion on the Net Metering Program in North Dakota

Net energy metering provides a huge financial benefit to solar customers in your area. There are a few reasons why we believe this perk is one of the best in the state. These include:

• A decreased panel payback period, meaning you get the money you spend on your system back more quickly
• Increased energy savings over time — an average of just over $25,758
• Decreased carbon footprint and reliance on fossil fuels
• Reductions to your effective energy consumption, which is crucial given the above-average energy demands in the area³

Best of all, NEM enrollment is painless for most homeowners, as many installers will handle the application process.

Local Solar Incentives in North Dakota

In some states, there are additional incentives available from local utility companies and individual municipalities for solar conversion. While there aren’t any in your area for solar, specifically, there are perks available for energy efficiency upgrades that you can couple with solar for maximum savings. We’ll list the available incentives below.

• Xcel Energy Residential Energy Efficiency Rebate Program: Customers of Xcel Energy can get rebates for efficiency upgrades, like LED lighting, smart thermostats and efficient heating and cooling systems like geothermal equipment.
• Otter Tail Power Company Energy Efficiency Rebate Program: Customers of Otter Tail can get rebates of between $25 and $1,400 for installing new insulation, heat pumps, efficient lighting options and more.

You can always call your power provider to see if there are rebates available to you as well. You can also check the Database of State Incentives for Renewables & Efficiency (DSIRE) for available incentives.

Which Tax Incentives Are The Best In North Dakota?

Above, we’ve included information on all of the solar perks available to you. Not all of these incentives are equally beneficial, so you may want to choose the ones that provide the most bang for your buck. We’ll include a quick list of what we believe are the best solar benefit programs in ND below.

The Federal Tax Credit

In our opinion, the federal credit is the single most crucial benefit program to take as a North Dakotan. It provides a potential value averaging around $10,400, and it takes just a few minutes to apply. This credit is especially helpful because there are few other state incentives available and because it’s available to all residents without restrictions.

Net Energy Metering

Once you’ve taken advantage of the federal credit, we recommend you focus your efforts on ensuring you get access to net energy metering. This perk is huge for North Dakotans because it helps offset the above-average electricity bills in the area and because it helps bring down the above-average conversion costs.

Not only does it save you more over time and help pay off your system, but it also requires minimal effort on your part — and often no effort at all — to apply.

What’s The Near-Term Outlook For More Incentives In North Dakota?

As of right now, there are no foreseeable changes that will occur to solar perks in your area that will make them more or less valuable or accessible.

If there is a change, we’d expect it to be to the net energy metering policy. Many states are seeing NEM policies decline or be discontinued as more residents adopt solar and put more strain on the power grid. It’s possible that this will happen in The Peace Garden State as well.

However, given the slow rate of solar adoption in the area, we expect NEM to stick around for some time.

The cost information presented in this article is derived from a comprehensive analysis, incorporating data from multiple industry sources. The average cost per watt per state was calculated based on figures from Consumer Affairs, Energy Sage, and Berkeley Lab’s Electricity Markets & Policy Department. Additionally, monthly energy consumption and the average monthly cost of electricity were sourced from the U.S. Energy Information Administration, ensuring a well-rounded and accurate representation of the information presented.