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.

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How Does the Federal Solar Tax Credit Work?

All Michigan homeowners can use the federal solar investment tax credit (ITC). This federal incentive provides a deduction on your owed federal taxes that equates to 30% of your solar panel installation costs.

You apply for this credit during tax time to reduce or eliminate your owed federal taxes. The remaining amount can roll over to the next tax period if needed. The ITC is limited to new customers who own their systems through a cash purchase or solar loan.

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Is Net Metering Available in Michigan?

Net-metering is a billing policy that helps homeowners reduce or eliminate their monthly electric bill. 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.

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How Much Does Solar Cost in Michigan?

The national average cost for a 6-kW solar panel system is about $17,640* before tax incentives or rebates are applied. Many solar installation companies provide solar quotes based on wattage, with the average price being $3–$4 per watt. Going solar is expensive in Michigan, with the average price of a 6-kW system being $22,680. However, applying the federal solar tax credit provides $6,858 in savings, making the system $15,822. 

Be aware that your solar power system’s total cost and return on investment (ROI) depend on which solar financing option you use. Below is an explanation of each payment method.

• Cash purchase: An up-front purchase is the most cost-effective option with the best ROI. This payment method eliminates interest rates, credit checks, and loan fees. Additionally, this option provides access to solar incentives because you receive full ownership. 
• Solar loan: This option is the second-best payment option because you still receive system ownership and avoid paying a large sum at once. You also pay for the system monthly over a fixed period, but you’ll pay more due to interest rates.
• Solar lease: You rent the system instead of purchasing it in a solar lease. This option is better for homeowners who don’t qualify for loans or can’t afford a large cash purchase. A solar lease disqualifies you from incentives and doesn’t increase your property’s value because you don’t own the system. 
• Power purchase agreement (PPA): A PPA is a billing arrangement that has you only pay for your monthly energy use. Think of it as if you’re still paying your regular energy bill for solar energy. Some PPAs even include system maintenance and repairs. Again, you don’t own the system with this option, so you’re disqualified from using any solar rebates or tax incentives.

*All cost figures in this article are based on a 2023 report from EcoWatch.

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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.

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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.

The tool below connects you with reputable solar installers that service your ZIP code.

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FAQ About Solar Tax Incentives in Michigan

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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.

To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.