The complete list of North Dakota solar incentives and tax credits for 2023, plus how to take advantage.
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Oh, North Dakota. Ranking 51st for installed solar capacity in the U.S., according to the Solar Energy Industries Association (SEIA), the Flickertail State generates enough energy from solar to power a grand total of… 138 homes.
This makes a certain amount of sense when you note the low cost of electricity in the state and the utilities’ enthusiasm for burning fossil fuels. There are also very few financial incentives available for home solar in North Dakota, though they do exist!
For instance, North Dakota offers a state property tax exemption for home solar and mandates net metering, after a fashion. And, of course, there’s always the 30% federal solar investment tax credit, which could save you several thousands of dollars depending on your tax liability.
North Dakota State Solar Incentives
| Incentive | Description |
|---|---|
| State solar sales tax exemption | North Dakota offers a sales tax exemption for solar, but this doesn’t apply to residential solar installations |
| State property tax exemption | North Dakota offers a 5-year exemption from property tax increases associated with installing home solar |
| Net metering in North Dakota | North Dakota mandates net metering but not at full retail rate |
State sales tax exemptions in North Dakota
There is a solar sales tax exemption in North Dakota, but it only applies to commercial and industrial sectors. The same sales tax exemption also applies to coal powered electrical generating facilities, demonstrating North Dakota’s lack of appetite for encouraging the transition to clean energy in the state.
State property tax exemptions in North Dakota
North Dakota offers a Solar Property Tax Exemption for residents who install solar at home. This exemption can be approved for up to five years and helps prevent an increase in assessed property taxes associated with increased value after installing a home solar array.
Net metering in North Dakota
North Dakota mandates net metering but doesn’t require full retail rate compensation. Under rules adopted in 1991 (and not changed much since), customers of investor-owned utilities in North Dakota can sign up for net metering. Customers of municipal utilities or electric cooperatives are not able to access net metering.
Unlike in many other states where credits are granted one-for-one and carried over to offset energy use in future months, North Dakota utilities are only required to purchase any net excess generation at avoided cost rate at the end of a monthly billing period.
Net metered customers retain ownership of any generated renewable energy certificates or credits (RECs) associated with the energy their systems produce and they use. However, any RECs associated with the net excess generation purchased by the utility are also transferred to the utility under North Dakota’s rules.
Utilities in North Dakota can also charge customers additional fees to cover costs associated with monitoring net meters.
Xcel Energy customers in North Dakota can sign up for net metering and sell their RECs to the utility.
Otter Tail Power Company offers net metering to its customers at an avoided cost rate.
Final thoughts on state solar incentives in North Dakota
North Dakota isn’t the most appealing place to install home solar, given the lack of clear financial incentives for homeowners. However, there is at least one solar installer in the state and the increase and extension of the federal solar investment tax credit may give the industry a boost even here.
The good news for homeowners in North Dakota who install solar is that prices have fallen by 50% in the last ten years and you can claim a property tax exemption and benefit from net metering. Your home will also be one of very few in the state to boast a rooftop array, which will certainly make it stand out if you end up selling in a few years.