May 28, 2023

South Dakota is no stranger to renewable energy. It was responsible for about 82% of electricity generated in South Dakota in 2021, with wind power supplying 52% and hydropower 30%. 

What about solar? Currently, the state receives less than 1% of its electricity from solar and is ranked second-lowest in the US for solar energy production, according to the Solar Energy Industries Association. With very few solar incentives, cheaper electricity rates than many other states (11.29 cents per kilowatt-hour) and only 14 solar companies in the entire state, there aren’t many reasons for South Dakotans to go solar. 

However, solar in South Dakota is not dead. It’s just an incredibly slow-to-grow market, likely due to population size and lack of state solar incentives. South Dakota doesn’t have a state net metering policy, meaning any excess energy you sell back to the grid will typically be sold for less than the retail rate from the local utility company. 

For individual homeowners in the Mount Rushmore State, the calculation of whether solar panels are worth it is getting better. After all, prices for solar have seen a 53% decrease over the last 10 years, according to SEIA

“The cost of solar has dropped significantly over the last decade, and it’s now more affordable than it’s ever been to install solar panels,” Heidi Kolbeck-Urlacher, a policy manager with the Center for Rural Affairs, a rural and clean energy advocacy organization, told CNET.

How much money you’ll save with solar depends on your location, energy usage, your roof’s condition and other factors. Here’s what you need to know if you’re looking to go solar in South Dakota.

South Dakota solar panel costs 

The cost of solar panels depends on a wide variety of factors, so everyone’s experience with pricing is usually a little different. The main factors affecting solar panel prices are your location, the size of your solar system, the type of solar panels installed and any add-ons you want, like a solar battery

 “A homeowner would want to take a look at calculating the amount of energy that they could produce from their solar panels and what their average electricity usage is. And also pricing out local costs from solar companies,” Kolbeck-Urlacher said.

The solar industry in South Dakota is quite small, so state-level pricing on solar panels is tricky to gauge. However, Kolbeck-Urlacher said South Dakota solar prices have seen a significant decline over the past decade. 

Here’s a look at the typical system size and prices nationwide, according to 2022 data from consulting firm Wood Mackenzie

Nationwide average solar panel costs

System size (kW) Price per watt Installed cost
Nationwide 8 $2.99 $23,920

How to pay for solar panels in South Dakota

It’s no secret that solar panels are expensive. With such a large investment, it’s important to get a good grasp of your options. Here are a few ways to pay for your panels.

Cash: If you’ve got the money, paying for your solar panels upfront is likely your best option. There are no interest rates or high financing fees you’ll need to worry about, and you’ll always be eligible for tax incentives and rebates. If you’re planning to go solar in the future, you could also consider putting money aside now in a high-yield savings account, which will net you more money over time.

Solar loan: Your solar provider will often offer financing options via a solar loan. These loans are usually through a third party, so keep an eye on the fees and interest rates associated with a solar loan. 

Other loans: If you can’t pay with cash, a solar loan isn’t your only option. You can also take out a personal loan through your bank, or opt for a home equity line of credit (HELOC). Just be aware that if you go with a home equity loan or HELOC, your home becomes collateral — and you could face foreclosure if you can’t pay it back. 

Lease or power purchase agreement: Leasing your solar panels means the solar company owns the solar system, and you pay for the use of the system. There’s also the option of entering a power purchase agreement. This agreement means you’ll pay for the electricity generated by a company’s solar system at a fixed rate that is normally lower than the retail rate offered by your local utility company. Solar power purchase agreements are not available in some states. Ask your installer which options are available to you.

South Dakota solar panel incentives and rebates

Solar incentives can help relieve the financial burden of installing solar panels and encourage homeowners to invest in clean energy. The state only offers one state-level solar incentive: a property tax exemption. 

South Dakotans who choose to install solar panels can also take advantage of the federal residential clean energy credit, which allows you to claim a 30% tax credit of the total cost of your home’s solar system, assuming you meet the requirements

Ask your solar installer for any other programs or incentives offered in your area.

South Dakota solar incentives

Program Description
Residential clean energy credit The residential clean energy credit offers 30% in tax credits of the total cost of your solar system. This credit will drop to 26% in 2033.
South Dakota property tax exemption The state offers a local property tax exemption for renewable energy systems that are 5 megawatts in size or less. This continuous exemption applies to the exemption of real property tax on the first $50,000 or 70% (whichever is greater) of the assessed value of the solar system.
Rural Energy for America Program This program is provided by the US Department of Agriculture, and offers guaranteed loan financing and grants to farmers and rural small businesses toward renewable energy systems.

South Dakota solar panel companies

You don’t have too many solar company options to choose from in South Dakota. There are 14 solar companies in the state, and only six of them are solar installers or developers, according to data from SEIA.

Even though your options are limited, you should still get quotes from multiple solar installers for the best price possible. Make sure you also take customer reviews, solar panel maintenance fees and warranties into consideration when choosing your solar installer. 

Here are a few companies to consider, based on our research and our rankings of the best solar companies nationwide.

Black Hills Solar

Black Hills Solar is a South Dakota-based solar contractor servicing the Black Hills area. The company is North American Board of Certified Energy Practitioners certified and specializes in solar installations, energy storage and electric vehicle (EV) charging. Notably, Black Hills Solar offers upfront pricing. Using its detailed price sheet, you’ll be able to get an estimate of how much your solar installation will cost from start to finish. Black Hills Solar also provides plenty of resources and FAQs on its website to help you decide if going solar is the right move for your home. You’ll need to go through an independent third-party company if you want to lease or finance your solar panels. Black Hills Solar also requires a 50% down payment of the total project cost before work can begin. 

GenPro Energy Solutions 

GenPro Energy Solutions handles large-scale commercial solar farms and residential rooftop solar installations across the northern Midwest. GenPro Energy Solutions installers are board-certified by the NABCEP, and the company guarantees it will install the right technology every time. If not, your solar system will be repaired or replaced, free of charge. You have the option to buy or finance your solar panels with GenPro Energy Solutions. 

SunPower Solar

If you’re looking for a national solar company, consider SunPower Solar. Operating in all 50 states, SunPower Solar offers a competitive 25-year warranty on your entire solar system. The company offers some of the most efficient solar panels on the market, with an efficiency rating of 22.8%. You can buy, lease or enter a power purchase agreement for your solar panels. Just be aware that SunPower Solar does not offer price matching. 

Wegner Roofing & Solar

As suggested in the name, Wegner Roofing & Solar is primarily a local roofing company, but they also offer residential solar installation as well. During your solar consultation meeting with Wegner Roofing & Solar, the company will conduct a detailed inspection of your roof and address any existing and future roofing issues that should be dealt with before solar installation. The company also offers a five-year warranty on the solar panels, which you can choose to buy or finance. 

Installation factors to keep in mind

There are more factors to consider beyond the money to find out if solar is the right choice for you. Here are some things to think about:

  • The condition of your roof: Your roof should be in good condition before installing solar panels. Some roofs may not be suitable for solar due to age, damage, pitch or tree cover. Trustworthy solar installers will conduct a roof inspection before installation. The direction and pitch of your roof play an important role in the efficiency of your solar system. Solar panels perform best on south-facing roofs at an angle between 15 and 40 degrees
  • Homeowners association regulations: Since solar panels impact the look of your home, some homeowners associations may not allow solar installation. Check with your HOA for rules and permissions before installing solar panels.
  • Insurance coverage: Check to see if your homeowner’s insurance agency covers rooftop solar panels. If they do, consider including your solar panels on your insurance policy.
  • Your location: The longer the sun is at its peak, the more electricity your solar panels will generate. For such a cold climate, South Dakota is a surprisingly sunny state, getting an average of 5.23 peak hours of sunshine per day. 
  • Rentals: Renters interested in solar don’t have much authority over changes to the property they are renting. You might not be able to install solar panels, but you may be able to subscribe to a community solar program, which connects your home to power generated from nearby solar farms. 


How long do solar panels last?

On average, a solar panel’s lifespan is 15 to 30 years. Factors affecting the longevity of your solar panels are the quality of the panels, climate and maintenance.

Can I charge an electric car (EV) with solar panels?

Yes, you can use solar power to charge electric vehicles. As long as your EV charger is connected to your solar system or battery, it will receive power just like any other home appliance. 

Does South Dakota offer any state solar incentives?

South Dakota offers a local property tax exemption to homeowners who install solar panels. This tax allows for the exemption of real property tax on the first $50,000 or 70% (whichever is greater) of the assessed value of the solar system. 

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