Michigan Solar Incentives: Michigan Solar Rebates, Tax Credits, Net Metering

Georgette Kilgore headshot, wearing 8 Billion Trees shirt with forest in the background.Written by Georgette Kilgore

Solar Panels | March 18, 2024

Man with a solar panel collect cash from Michigan solar incentives to reduce the cost of solar panels in Michigan using Michigan distributed generation program, Michigan REAP and solar tax credits.

Installing solar panels to save on your utility bills with Michigan solar incentives can reduce the cost of solar panels in Michigan.

With solar rebates, tax credits, and net metering programs, both residents and businesses in the state can not only reduce their energy costs, but can also lower their carbon footprint using solar energy.

This guide explains the Michigan solar incentives available to lower the cost of solar panels in Michigan and outlines the steps you need to take in order to take advantage of these offers while they exist.

The problem is the longer you wait, the longer your bills stay the same, and the more clean energy you’re missing out on.

Michigan Solar: Are Solar Panels Worth It in Michigan? (Peak Sun Hours)

Michigan is not known for having 300 days of sunshine like some states, with most Michiganders having to settle for less than half of the year being overcast and gray, and just a little chilly.

In this not-so-sunshine state, you would think that solar panels would not be worth having, that there wouldn’t be enough solar irradiation to even light up a low-wattage bulb.

Map of the state of Michigan with each county colored to show the daily peak sun hours in each Michigan county ranging from 3.72 to 4.08 daily hours of sunlight.

Surprisingly, though, solar absorption can be just as effective as in states where most of the year is hot. That’s because it’s not the heat from the sun that improves the efficiency of solar arrays, but the light from it and in some cases a cooler climate that experiences a good level of sunshine can be even more beneficial during the solar conversion process.

The peak sun hours a day across Michigan vary from 2.7 hours in the winter up to 4.71 in the summer.

Perhaps a couple of decades ago that would not have been nearly sufficient enough to produce valuable household electricity from solar panels. Technology and improved materials have improved to such a degree that even a minimal amount of sunlight makes a big difference and can be successfully absorbed.

The previous conventional solar methodology across the industry was to install more panels to make up for the shortfall in the technology at the time to grab as much light as possible.

The drawback with that method in those early days was that it was very expensive to have solar arrays installed, and the amount of space needed to hold enough of them to make a difference on utility bills was not worth the effort for many budget-conscious homeowners, only those wealthy Americans who could afford it.1

Year after year, the panels became more efficient, more compact, and more cost-effective.

And as a result, the cost of solar panels in Michigan came tumbling down, were deemed to be worth investing in, and more homeowners came to view them as a viable energy-producing source that could save them money in the long term.

Is Solar Renewable? The Efficiency of Solar Panels

The sun is an inexhaustible energy source that is freely available for all of mankind to access, even when it is obscured by clouds. It is classed as a renewable resource because it doesn’t require any form of regeneration to provide its life-giving rays at any stage.

What is incredible is that the Earth absorbs solar energy at around 10,000 times higher than the rate at which it can be used by every single person on the planet.

That basically means that just solar energy by itself, irrespective of any other source of clean energy, has the capacity to provide energy for the entire planet.

But how to capture all that power so it can be affordable for the many, and not just the few?

Photovoltaic panels are composed of several substances but glass is primarily the main component at 76%. The percentage of other materials are:

  • Polymer at 10%
  • Aluminum at 8%
  • Silicon at 5%
  • Copper at 1%
  • Silver at 0.1%
  • Other trace materials at less than 0.1%

It would be normal to assume that silicon would be the main ingredient as crystalline silicon is used to create the most popular type of PV panel in the U.S., accounting for more than an 84% market dominance.

Many people wonder why are solar panels so expensive, not fully understanding the energy-intensive process involved in forming solar panels in the first place.

The entire process starts with separating silica from normal beach sand and turning it into silicon which involves high-temperature furnaces to extract the silica and turn it into its purest form of silicon.

A substance called Boron is added as the silicon is formed into ingots to give it a positive electrical charge, and then they are finely sliced with a wire saw to the thickness of a strand of hair. These wafer-thin slices are polished to a sheen and layered to make photovoltaic cells whose basic function is to capture solar radiation.2

Each individual wafer is infused with metal conductor strips and then, in an enormous oven, phosphorous is diffused into them to create a negative electrical charge. It is this positive and negative reaction within the cells that is critical to the efficiency of the solar array.

This entire mining, manufacturing and disposal process is what is responsible for the carbon footprint solar panels are associated with initially, but fortunately, this carbon pollution can be offset after a many years of being installed and in use and then the PV system will be producing clean energy.

After that rather expensive production stage is completed, they are then inserted within a metal frame, encased in glass that has a specific coating, and a lot of copper wiring is used to connect each cell and each individual panel to form an array.

These arrays are then securely bolted onto rooftops or in outdoor locations where the sun will be at its strongest for most of the day for optimum absorption. During daylight hours, the solar cells, which are also known as photovoltaic cells, soak up sunlight like a sponge and begin to start the conversion from light to electricity.

As the sunlight hits the surface of the cell, the two positive and negative layers within the wafer-thin cells react against each other, causing a chain reaction. The electrons ‘come loose’ from the atoms, and vibrate within the thin semiconductor wafers, resulting in an electrical current being generated.

This electricity cannot be immediately used and has to be converted from its direct current status into alternating current so it can be which is used to power appliances in your home.

A device called an inverter is fitted between the junction box and the battery storage system or to the national grid if no batteries are installed,3 to enable all that converted electricity to be usable.

Refined technologies, improvements in the materials, and a better manufacturing process have taken the early solar modules from an efficiency rating of 1% to a more impressive 25%.

But, these batteries also have a high mining and manufacturing carbon footprint.

And as the panels have become more productive and streamlined, the prices have dropped to where they are more attractive and affordable to a wider consumer base rather than just those few who had bigger budgets to play with.

So not only is solar power infinitely renewable, it’s also getting cheaper to access for an expanding client base in need of a clean energy source.

How Much Are Solar Panels in Michigan Compared to Other States? (Cost of Solar Panels in Michigan)

As you are now aware, making solar panels is an arduous lengthy process where many different components and materials have to be melded together to form the finished product.

Even so, there are hidden expenses, called soft costs, that are related to the installer in the form of permits, licenses, advertising, and business expenses that influence the ultimate pricing structure for your state.

Graphics of cost of solar panel installation in Michigan showing technicians installing a solar panel system on a house atop a cutout map of the state of Michigan and the average cost at the bottom.

In Michigan, you can expect to pay between $14,875 to $20,125 before any of the Michigan solar incentives discounts are applied so those figures can go up or down depending on the type of property you live in and the appliances within it.

If you have an electric vehicle, swimming pool, and jacuzzi then more panels would be needed and the end price would go up accordingly, sometimes by a significant amount.

Conversely, if your abode is a tiny 1 bed/1 bath, then you can expect to pay a lot less to get on the solar ladder.

For an average 3-bed household, a price of $17,500 can be expected across Michigan.

How does that stack up against the lowest and highest 10 prices in states across the country?

Graphics of the top 10 states with highest average PV systems costs showing on the right a map of the United States (U.S) with 10 state territories highlighted and at the bottom solar panels along with prices on each state.

State Top 10 Average PV Systems Costs
1. Hawaii $19,560
2. Wisconsin $17,580
3. Michigan $17,500
4. New Hampshire $17,460
5. Idaho $17,100
6. Colorado $17,100
7. New Mexico $16,680
8. Montana $16,560
9. South Carolina $16,500
10. Massachusetts $16,440

Graphics of the top 10 states with lowest average PV systems costs showing on the left a map of the United States (U.S) with 10 state territories highlighted and at the bottom solar panels along with prices on each state.

State Lowest 10 Average PV Systems Costs
1. Kentucky $13,101
2. Kansas $13,353
3. Alaska $13,454
4. North Dakota $13,555
5. Arizona $13,680
6. Alabama $13,706
7. Tennessee $13,909
8. Washington $14,040
9. Iowa $14,160
10. Wyoming $14,360

For a wide range of applications, solar systems can provide heat, cooling, natural lighting, power, energy to make EVs work effectively over longer ranges,4 and potentially enough electricity to run everything in your house if that is your ultimate goal.

Price alone should not be a deterring factor in whether to transition to solar energy as any solar project regardless of size has to be viewed as a long-term project.

What should be considered are the savings that will be noticeable immediately on your utility bills from month one.

This will be especially true if your area has high electricity rates.

Another consequence of adopting solar energy is that if you are aware of the damage being done to the climate, there will be a reduction in your carbon footprint at the same time.

Not many people in Michigan are aware that the electricity wired into their homes is generated by natural gas, nuclear power, and the burning of coal, all forms that are negatively affecting the planet with greenhouse gas emissions and carbon dioxide pollution.

Renewable Energy Consumption in Michigan

Carbon dioxide emissions are a major concern across the United States and Michigan emits over 152 million metric tons of carbon a year, making it the 10th worst culprit for CO2 emissions out of all the 50 states.

Pie chart showing Michigan renewable energy consumption including Michigan wind energy, biomass energy, geothermal energy, hydroelectric energy and solar energy in the state of Michigan for 2022.

The reliance on coal is decreasing slightly, overtaken by natural gas and nuclear power, but neither can claim to be as clean a power source as solar power.

Natural gas is renowned as a prolific emitter of greenhouse gasses because of the methane it contains, and the more of it is burned unnecessarily the more it is only serving to accelerate global warming.

It is not a long-term solution to an energy crisis, whereas solar energy has the potential to be a limitless, renewable resource that is beneficial for the future of the planet.

In Michigan, it barely accounts for 1% of the overall energy production but thanks to the rising awareness of climate change and the tax breaks, rebates, and incentives available in the state, that is slowly changing.

Solar Panel Cost After Federal Solar Tax Credit (Cost of Solar Panels in Michigan)

Around 20 years ago, the federal government made a monumental tax incentive accessible to any tax-paying household who wanted to buy a photovoltaic system. It proved to be a game-changer.

But what propelled them to embark on such an ambitious project that was going to have to be funded to the tune of billions of dollars?

Formerly known as the Solar Investment Tax Credit (ITC),5 the name was changed to the Residential Clean Energy Credit in 2022 and is one of the most significant government solar incentives to convince Americans that integrating solar power into their lives was the right move.

The modern form of the program came about due to the Inflation Reduction Act signed into law by President Biden in 2022.

One of the first improvements of the IRA was the extension of the tax credit that was due to decrease from 30% to 26%. It was a popular extension as the adoption of solar power was gradually gathering pace in multiple states and it was feared that dropping the tax break at that particular moment would be counterproductive to the advancements that had been made.

Maintaining the 30% tax credit level helped to stimulate solar energy investment for homeowners in every state across the country even more, and the timing for promoting renewable energy couldn’t have been better.

There are restrictions and eligibility criteria that need to be met, and it won’t apply to everyone.

For instance,

  • You cannot apply if you do not own the property where you live. It has to be your primary residence within the United States, but that residence can be a houseboat, a condo, or even a mobile home.
  • You cannot rent or lease the PV system. It either has to be purchased upfront in cash or being purchased by a loan agreement where you will be the owner at the end of the term of the financing.
  • You cannot participate in the plan if you do not pay any taxes as the 30% tax break is offset against the taxes you are due to pay.
  • If you are a partial investor in a community solar farm,6 you can be eligible as long as the credited electricity to your property does not exceed the amount that it consumes.

These federal energy credits can only be claimed once, but you are not restricted to having to claim the entire amount at one time.

For example, if your taxes are just $2,000 in the year of installation, but the 30% valuation from the $18,000 PV system you just built is $5,400, your tax payment will be zero for that year.

Screenshot of Michigan government website for Department of Environment, Great Lakes, and Energy with yellow arrows pointed at the title Energy for Low-Income Accelerator (CELICA and on information about Community Shared Solar.

(Image: Department of Environment, Great Lakes, and Energy20)

The remaining $3,400 would be deducted from taxes the following year, and the year after that if necessary, for a total of five years.

This is a significant sum of money, and there is no maximum. If you decided to invest $50,000 in a solar array system, your savings will still be 30%, giving you a tax break of $15,000.

Not only does this Federal Energy Credit include the panels themselves, but also installation costs, racking equipment, permits, inverters, and also the battery storage kit.

It is an excellent program, and it is very easy to apply for when filing your federal tax returns.

However, consult a tax professional when filling in Form 5695 as you have to ensure that you enter the correct details such as the wattage,19 the number of solar panels installed, location, whether roof or ground-mounted, and, of course, the price.

This has to be included in the form so that the tax credits can be automatically calculated and offset against your taxes either for that year or for the next 5. The tax credit relief will continue to roll over until the complete credit has been allocated to allow ample time and flexibility for low to medium-level taxpayers.

The program will be phased down in 2035, so if you’re on the fence about going solar, get off now and get it done.

Before that final expiration date, the federal solar tax credit allowance will be lowered first from 30% to 26% in 2033, then to 22% in 2034, and then in 2035, it will be gone, down to zero, no longer available.

It would be a pity to pass up on this opportunity because you’re not sure if going solar in Michigan is worth it.7

Michigan Solar Tax Credit and Michigan Solar Incentives

So how do the Michigan solar incentives and programs hold up against what the federal government is offering?

Many states have a solar energy tax credit that can save a few thousand on purchasing a PV system, or a solar sales tax exemption that eliminates the sales tax applied to these projects, or a solar property tax exemption that nullifies any additional property taxes levied against your property because of the solar-induced additional value gained from its installation.

Michigan only has one of these.

Enacted in 2019, the Alternative Energy Property Tax Exemption program is designed to protect homeowners so they do not get punished for improving their property with a photovoltaic system.

Typically, across the nation, property values increase by an average of 4.1%, which is a good thing. Everyone wants to increase the value of their home, but no one wants to pay extra taxes when that happens.

Realizing that extra taxes are a deterrent rather than an enticement, the state has waived that increase so the taxes owed on the property will not be bumped up and based on the previous valuation.

Aerial view of a housed-in community with solar panel system installed on each houses' roof, harnessing sunlight that provide clean and sustainable energy.

(Image: U.S. Department of Energy21)

Although not a huge saving, it can add up to a tidy amount over the lifespan of the PV system, and it’s better to have that as a saving in your bank rather than as an expense in the hands of the state.

Another program created to help Michiganders in purchasing a solar system is the Michigan Saves Home Energy Loan Program.

It is open to all homeowners from Michigan’s own first green nonprofit bank and has a maximum repayment term of 10 years. As long as you qualify, you can borrow from as little as $1,000 to finance a small home improvement or apply for a loan up to $50,000 for a much larger solar installation or green energy project to your property as long as it improves energy efficiency.

It can include the items below which may also improve house values:8

  • Battery storage equipment
  • Electric vehicle charging points
  • Water heaters
  • Heating and air conditioning
  • New energy-saving windows
  • Low-flow toilets to save water
  • Wall, roof, and crawl space insulations
  • Roof replacement

And this last one can be particularly important.

Michigan Solar and Roofing (Solar Panel Installation Cost Michigan)

There are times when an installer will arrive at your property for a final inspection to confirm the location of your solar array, the angles to set the array at, and how it is all going to be bolted to your rooftop.

You have already accepted the quote, chosen all the right panels to cover all the appliance energy requirements in your household, and your savings will just stretch to cover the $17,500 for the installation. All systems are good to go.

And then you get the bad news.

Your roof will not support the weight of the system and will need to be substantially repaired because of weather damage. A quick calculation reveals that the remaining balance in your bank account is not going to stretch to a further $9,000 to get the job done.

This is where the Michigan Saves Home Energy Loan Program will come in handy.

With it, you have the option of financing the roof repair on its own or rolling the full PV system into the contract as well and have just one monthly payment, leaving your savings untouched in your account.

Monocrystalline solar panels installed on a grassy, level surface using ground mounted racking system with a huge tree behind it.

(Image: U.S. Department of Energy22)

Having a loan will not affect the 30% tax credit you have been accepted for nor really reduce the cost of solar panels in Michigan, but it will enable the project to go ahead smoothly with no delay.

But the Michigan Saves Home Energy Loan Program doesn’t just stop there.

The Green Bank and the Commercial Michigan Solar Incentives

Just as with residential properties, the Michigan Saves Bank has made its green loan available for businesses to cover the following improvements, and it will also not disqualify the applicants from enjoying the tax credit of 30% and covers the following items:

  • Battery storage equipment
  • Electric vehicle charging points
  • Indoor and outdoor LED lighting
  • Heating and air conditioning
  • Commercial kitchen equipment
  • Indoor sensors
  • Boiler system
  • Roof replacement

Other solar rebates from the government also support companies will to invest in renewable energy sources.9 The Payroll Tax Credit is a worthwhile program for a company with a large workforce as long as certain alternative energy requirements are met.

You would need the services of an experienced accountant who fully understands the ins and outs of this refundable payroll tax credit as it is slightly complicated to set up.

Once set up, it will save your business thousands of dollars a year just by making your business more energy efficient and greener.

What’s not to like about it?

Government Solar Programs and Michigan Solar Rebates for Agricultural Enterprises (REAP)

Not to omit farmers and agricultural businesses from going green and clean, the United States Department of Agriculture launched an incentive to assist agricultural producers in obtaining loans and grant assistance through what is called the Rural Energy for America Program (REAP).

Farmers and small rural enterprises who apply and are eligible, are awarded loans and grants of up to 75% of the cost of renewable energy systems or energy efficiency upgrades.

Under this scheme, REAP was awarded nearly $2 billion in financing from the USDA up to 2031, and grants ranging from $500,000 to $1 million are now available from the organization, which, on top of all this aid, assists its clients in finding and applying for funding through other sources.

REAP fills up reams of documentation based on the information you submit and the type of funding you want to launch, and search through their extensive database of revenue streams to find the perfect partner for your enterprise.

It costs nothing to contact them, and they can make the difference between giving up on a green project that could change the trajectory of your business or continuing to struggle to make ends meet.

Michigan Solar Incentives: Net Metering

Although solar panels can be installed by homeowners, it’s wise to use a certified contractor. Moreover, and electrician will be required to complete the solar energy hook up.

After your roof has had its upgrades,10 is now structurally sound, and is now capable of supporting the combined weight of 20 solar panels as well as a heavy racking system.

Solar panel installers are installing a floating solar panel on a pond.

(Image: U.S. Department of Energy23)

Even better, the repairs were cheaper than you had expected and you managed to finance the entire project off your own back, no loan, no financing, just about managing to stretch those hard-earned cents just that little bit further.

However, when paying for the system, if you can’t afford to install a storage system, there are options.

The suggested alternative to storing excess energy in a bunch of expensive batteries, and to save money, was to enroll in net metering.

Now, when the sun is shining for hours on end during the day, your solar panels absorb every last ray of light to produce energy for your home. It doesn’t have an off switch and will continue to do so even when the electricity requirements are met.

In a PV system array where batteries are connected, that excess energy is stored either for a rainy day or for when the sun ducks down on the horizon.

And then when energy is needed, it is provided by the batteries.

When that battery storage system is taken out of the equation, and is no longer in the configuration, all that extra energy has to go somewhere. And that’s back into the local electricity grid.

Michigan Distributed Generation Program

Net metering Michigan is probably the most influential reason why residents of the state flocked to solar energy between 2011 to 2018, signing up for the program that is now called the “Distributed Generation Program.”

The introduction of net metering back in 2008 took a few years to gather pace,11 but when it did the level of solar installations went from just 100 rooftop arrays in place to over 5,000 within 7 years.

How it works is that you, as a homeowner, sign up as a Distributed Generation customer. The extra power that your system produces is fed to the grid and recorded by a smart meter called a bidirectional meter.

This records all the energy supplied by your utility company, all the power produced by the array that you consume, and all the energy transferred into the grid, and everything is recorded as kilowatt-hours (kWh) of electricity by the utility company.

You are credited for every kWh transferred out against the kWh that your household consumes from your utility supplier. The smart meter automatically balances this ebb and flow, recording all the movements on your electricity bill for your reference at a later date.

If your PV array transfers more energy to the utility provider than you use, the excess credits are rolled over to the following month and your bill will be reduced considerably.

Wide shot of solar panel system installed in the middle of a farm using pole mounted racking system, used to power the irrigation system in the farm.

(Image: Shailsh Telang24)

If two identical households regularly had a $125-a-month utility bill, the one with the PV system would save between $50 – $100 a month.

In Michigan, there are 2 major utility providers that serve 90% of the households in the state, with smaller utility companies under them in your area.

Confirm with your local company about the terms of their net metering, also called grid-tied, and exactly what the agreement covers. Some contracts will have limits on how many households can participate and fluctuations between seasonal and off-peak rates, so best to read the small print to avoid any shocks to the system.

Off-Grid Solar Energy Michigan (Solar Panel Cost Calculator Michigan)

One aspect of solar PV systems that are gaining in popularity is off-grid living. The clean energy and the way that solar panels produce electricity appeal to residents in Northern Lower Michigan who live hand in hand with nature.12

Home to about 500,000 people, they are accustomed to living an outdoor lifestyle that includes horseback riding, fishing, deer hunting, and living off the land.

With an average of 4 hours of peak sun a day, it is possible to have a fully independent stand-alone solar system as long as the calculations are accurate to determine how many solar panels will be needed for your property.

Before racing off to buy 40 solar panels and bolting them onto your rooftop, first verify what the zoning laws specify for off-grid installations and also what permits if any are needed.

Your last electricity bills should be referred to for an estimation of the kWh usage as this will determine how many panels you will need, so you will know how much it’s going to cost you.

The most widely used solar panel for residential properties across the country at the moment is 400 kW, with the monthly consumption being 900 kWh, 10,800 kWh a year.

Michigan homeowners consume 850 kWh a month, 10,200 kWh a year and from those figures, it’s possible to calculate how many panels will be needed by using his formula.

If your utility bill has different readings, estimate the average, and input them in the formula to reveal the number of panels. And then to allow for any low-level sun days that are overcast, add 25% to the number of panels.

10,200 ÷ 400 = 26 panels

26 + 25% = 33 Panels

From this equation, it is safe to assume that your property would need 33 panels to be able to be fully energized and go off-grid.

The next stage would be a consultation with a solar company which would then complete the assessment by accounting for a full battery pack to store the energy, the racking system, installation costs, inverters, and charge controllers as well as soft costs to arrive at a final price.

At this stage, you can expect a figure running north of $50,000.

A scary figure but that’s without any Michigan solar incentives or the federal tax credit applied. With just the 30% ITC tax credit alone, $15,000 would be discounted from the price by your taxes due in the next 5 years.

The Michigan Saves loan program is an option to finance the project if paying in one lump sum is not possible and can well be worth considering. After all the discounts have been factored in and the loan agreement is taken over the maximum term of 10 years, the repayment could well be under $300 a month.

After the 10 years have elapsed, all the electricity generated from there on will be all yours for zero dollars.

So not only would you completely be self-reliant and detached from the utility grid that has been used for the delivery of constant electricity to its consumers,13 but any power outages that may affect your neighbors will not leave you stumbling around in the dark.

Community Solar Farms in Michigan (Solarize Michigan)

It is not necessary to be out in the middle of nowhere to be able to take advantage of going off-grid.

Nor do you need to have a lot of money to be able to do so. Nor do you need a massive rooftop or acres of free land.

Map showing locations of solar plants in Michigan using yellow markers and Michigan solar panels with a US cut out showing the location of the state of Michigan.

Step by step, many Michiganders are discovering that there is a way to have solar power as their only source of electricity, a community solar farm.

Forming a partnership is the traditional method of undertaking such a project. That can be just between you and your neighbor, or 20, 200, or 2,000 homeowners and business people.

It can be supported by investors, a utility company, nonprofit organizations, or even an individual cooperative of local individuals who have combined all their financial resources.

A solar farm has the flexibility to fit into your budget, to be a large utility-scale conglomerate, or to be set up by a couple of good buddies banding together, all without sacrificing any Michigan solar incentives.

Here are a few examples of the types of solar farms:

Small Solar Farm: Solar Panels in Michigan

A scenario can arise in Michigan where you and a neighbor are interested in going off-grid and fully solarizing your homes, but one of you has the funds but no land, and the other has the land but no funds.

A contractual agreement between you to apportion the kWh allocated for each household would have to be included to prevent any disagreements at a later date if any circumstances were to change.

Once all the details are finished, the installation can be constructed and a qualified electrician employed for connecting all the cables, inverters, and smart meters to your homes.

An energy purchase agreement signed with a local utility provider will allow for excess electricity to be sold to the company at an agreed-upon rate.

Community Farm: Free Solar Panels Michigan

A larger community farm installation can work on a slightly different model where the responsibility for purchasing, installing, and signing all agreements with the utility company would fall onto the shoulders of the investors.

The advantage of this type of community farm is that its location does not have to be close to your community, and provides clean energy for everyone as it is generally metered through the local electricity company.14

Participation is under an enrollment system where you either purchase the intended quantity of kWh you wish to use upfront or pay for what you consume.

This is not a method for learning how to get solar panels for free, but you will be able to benefit from using solar without paying for solar panels.

Your utility bills will be cheaper and will, just like net metering from a system installed in your home, display the fixed costs, and the kWh you have used from the community farm and the utility company.

These sized solar farms supply communities with about 100-500 customers.

Large Utility-Scale Solar Farm Michigan: Solar Tax Credit

There are over 70 major solar farms in Michigan that are run by private investors, entrepreneurs, and utility companies. One of the largest installations is based in Shiawassee County on 1,200 acres of land.

The project was recently completed with 800,000 bifacial solar panels that have the capacity to supply electricity to nearly 16,000 homes.

Rows of solar panels installed on a grassy surface using ground mounted racking system in Michigan absorbing sunlight with a type of bird perched on one of the panels.

(Image: Deb Nystrom26)

The developers will be investing millions into such a project and will be able to claim tax credits from both federal and state to offset their investments.

Enrolling is straightforward and the system will work similarly to net metering.

If solar home installation is not possible on your rooftop or in a ground-mounted location, or if you are a low-income household, then a community solar farm is an excellent option for you to pursue.

It has proven across the country to be an economical path forward and can alleviate the burden of high electricity expenses burdening you every month.

A Floating Solar Farm

Rooftops or acres of land are not the only locations for solar panels, as a community in Grand Rapids is about to prove in 2024.

The Plainfield Township has come up with an invented way to locate solar panels in a local pond and has partnered with a developer from San Francisco to create a floating solar farm in the municipality.

The actual site is an abandoned gravel pit filled with water and the intention is not to generate electricity for the township but to help them increase their clean energy production and reduce their utility bills in another way.15 Namely water.

Adjacent to a water treatment plant, the water-filled gravel pit was chosen for the solar panels due to its close proximity to the plant.

It will work under a grid-tied system where the electricity will be credited against the water bills of the participants and it is estimated that within a few years the investment will have paid for itself, and water bills will be cheaper.

So, even though the benefit of this community farm is not like for like, electricity credited against electricity, it is still a bill-reducing, money-saving structure that is community-friendly.

How Does the Solar Tax Credit Work if I Don’t Owe Taxes?

Learning how does the solar tax credit work if I don’t owe taxes will help you understand the federal solar tax credit better.

The IRS is one of those government agencies whose reason for being is to collect taxes. As such, they are not too keen on giving those same taxes back.

The solar tax 30% credit is a program designed to relieve the financial commitments of working homeowners to purchase a PV system.

It works by reducing the amount of your tax liability owed to the IRS by deducting the tax break of 30% calculated from the price of your solar array.

For example, if your system costs $15,000 to purchase, 30% of that amount, $4,500, would be subtracted from your tax liability for an extended period of 5 years until it is fully credited. However, if your tax liability for 5 years is only $2,000, that would be the maximum amount that you will be credited for.

As a result, paying little or no taxes means the government has no way to fully balance the figures, and you will, unfortunately, miss out on the benefits of this incentive, either partially or fully.

Solar Rebates From the Government (Michigan Solar Incentives)

Even though Michigan doesn’t have a sales tax exemption program that can save 6% on the retail price of a PV system, nor any state-level energy tax credit, there is one program available that can knock $2,000 from the price.

This specific offer is from the Lansing Board of Water & Light (LBWL) and is called the Residential Energy Efficiency Rebate. In a sense it is a reward or an incentive for customers to become more energy efficient, to lower their carbon footprint.

A rebate of $500 is claimable against every kW installed on the property but it is limited to a maximum payout of $2,000, which most residents will be in a position to claim.

Always refer to the website of the Database of State Incentives for Renewables & Efficiency (DSIRE) so you don’t miss out on any new programs, rebates, or incentives that can help to cut the cost of solar panels in Michigan.

The Alternative Energy Property Tax Exemption has only been reinstated in 2019 after being canceled several years previously. With it, your property will not be punished for energy efficiency upgrading as a PV system increases the value of your property.

Long shot of a house showing a solar panel system installed on the roof absorbing sunlight that produce clean and renewable energy.

(Image: Tiia Monto25)

In years gone by, when your property was reassessed after your solar upgrade, your taxes would be higher, but now after the program’s reintroduction that is no longer the case and the added value will be exempt from additional taxation.

Michigan Solar Incentives for Recycling Solar Panels in Michigan

What to do with end-of-life photovoltaics,16 has been a problem that has plagued the industry for the last few years as the growing mountain of discarded modules continues to build in landfills in every state.

They are an eyesore, but more than that they can pose a health hazard and a potential pollutant to the surrounding ecosystem as metals can leak into the soil and enter underground waterways.

The strange thing about solar panels is that more than 90% of the components are recyclable, yet only 10% are recycled in the United States. When millions of panels are littering landfills, 10% is not a great deal.

Furthermore, many of those solar panels are being abandoned when they could be reused in smaller solar applications such as sheds as they still have at least a 60% level of efficiency which can still produce electricity for some appliances.

However, due to the extremely costly process of extracting valuable metals and components from the modules, installers find it cheaper to pay $3-$4 to throw the old units into landfills across the country that started to overflow with tons of wasted solar panels and old batteries, instead of paying the $12 to have them recycled.

The Department of Energy in Michigan and the solar industry are all becoming aware that solar waste is becoming a major issue, and needs to be tackled head-on sooner rather than never.

Fortunately, technological advancements, and the will to avert an impending disaster, have opened up a secondary sector in the solar market that can possibly be more profitable than anyone had dreamed.

Now it is becoming feasible and cost-effective to separate materials that previously were irretrievably bonded into the modules but that can be easily repurposed into new systems.

Silver, lead, and copper do not degrade so are reusable, and now silicon can be separated from the solar cells to be reformed inside new cells, rather than any of them causing serious environmental consequences due to leaking into surrounding ecosystems.

In Michigan, the newly extracted metals and components are helping to keep the cost of solar panels in Michigan down in price and are opening up a new market that could benefit low-income households or nonprofit organizations.

It is only a matter of time before there are more Michigan solar incentives to encourage local companies to open subdivisions in their companies dedicated to recycling.17

At the moment there are several nationwide enterprises dedicated to solar panel recycling, one of which has a facility in Michigan, that are doing their best to get to the modules before they end up on the scrap heap where they will be no good to anybody.

A Few Solar Facts in Michigan

Despite not having the most peak sunlight hours in the United States, there are over 200 solar panel companies in the state that are constantly working to improve on the 25th position Michigan occupies in regard to the solar capacity that has been installed in the state.

Front shot of a two-storey house's facade showing a solar panel installation on the roof absorbing sunlight with the sky in the background.

(Image: Gray Watson27)

Here are a few more quick facts:

  • Because solar panels operate better in lower temperatures, Michigan’s environment generates more electricity per sunlight hour than hotter climates such as Southern California, Arizona, and Florida
  • Over $1.4 billion in solar investments have been received in Michigan
  • Approximate 12,000 rooftops in Michigan now have solar arrays installed
  • Nearly 600 MW of electricity is available from solar energy in the state from community farms, business installations, as well as residential rooftops, enough to power nearly 100,000 households
  • Companies such as IKEA, Target, Ford, and even General Motors, have installed large solar arrays on their rooftops
  • Less than 1% of the electricity produced in Michigan comes from solar power

Michigan Solar Incentive Options

It’s fair to say that Michigan gets its fair share of snow in the winter, or is that an understatement?

Because of that, you would think that solar panels would become ineffective at gathering any solar radiation. Surprisingly, though, that is not the case.

Solar panels function better in the cold rather than in the hot summer months when they can overheat and need cooling fans to reduce their temperature.

It is the quantity of sunlight that the arrays get bathed in, not the heat from the sun, that determines their effectiveness.

True, if they are covered in snow the cells cannot work as well, but it doesn’t take long to clear them clear of obstructions, and there are solar panels that work better under conditions like these.

They are called bifacial panels as they have the ability to absorb solar irradiation from both sides and even reflected light that bounces from another surface can be absorbed.

Combine your solar array with a dual-axis tracker to follow the sun across the sky, and the efficiency will be further boosted.

By using Michigan solar incentives, residents and business can reduce the cost of solar panels in Michigan for home solar installation or more.

Frequently Asked Questions About Michigan Solar Incentives

Does Solar Increase Home Value?

To those asking, does solar increase home value? Yes, installing a solar panel system in your home will increase the family across the country by about 4%.

Do I Have To Do Maintenance Checks on the Solar Panels?

Solar panels are maintenance-free, only requiring an occasional wipe down once a year to remove any dirt build-up that may obscure the face of the cells and slow down solar absorption.

What Is the Payback Period in Michigan?

The average payback period is between 7 -12 years when combined with any Michigan solar incentives. New cell technology may soon be able to reduce that payback period faster,18 from years to mere months.

How Much Can Be Saved on Electricity Bills?

It has been determined that at least 75% can be saved on the average energy bill in Michigan.

What Is the Better Option To Lower the Cost of Solar Panels in Michigan, Is It Buying or Leasing Solar Panels?

Leasing can seem like an excellent option but if you have the possibility to purchase the system outright it will be better to keep the cost of solar panels in Michigan as low as possible. Within a space of 10 years, your PV system will be paid up and will be providing you with clean and free electricity forever.


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23U.S. Department of Energy. Flickr. Retrieved from <https://flic.kr/p/2dTq6Xn>

24Solar Panel for water pump Photo by Shailsh Telang / Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). Resized and Changed Format from Wikimedia Commons <https://commons.wikimedia.org/wiki/File:Solar_Panel_for_water_pump.jpg>

25Solar panels in Naklo Photo by Tiia Monto / Attribution-ShareAlike 3.0 Unported (CC BY-SA 3.0). Resized and Changed Format from Wikimedia Commons <https://commons.wikimedia.org/wiki/File:Solar_panels_in_Naklo.jpg>

26Red-tailed Hawk by the solar arrays Photo by Deb Nystrom / Attribution 2.0 Generic (CC BY 2.0). Resized and Changed Format from Flickr <https://flic.kr/p/rC3KyX>

27Solar panels on house roof winter view Photo by Gray Watson / Attribution-ShareAlike 3.0 Unported (CC BY-SA 3.0).Resized and Changed Format from Wikimedia Commons <https://commons.wikimedia.org/wiki/File:Solar_panels_on_house_roof_winter_view.jpg>