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ichigan may have a reputation for brutal winters, but it also gets a good dose of sunlight throughout the year. Despite this, the state has been slower than other regions in the United States to adopt solar energy.
However, the tides are turning as more people recognize the potential benefits of tapping into the sun’s power. From saving money on energy bills to reducing carbon footprints, there are numerous reasons why going solar is worth it in Michigan. This article is going to break down how much money homeowners can save by making a switch and the various incentives available to them.
From slow to steady: how Michigan is embracing solar energy
Michigan may have been a bit slow to catch up with the solar energy trend, ranking 25th in 2022 with just under 1GW of photovoltaic (PV) capacity installed. However, the state is making steady progress, with SEIA predicting that it will install an additional 2.4 GW of solar power over the next five years.
So, what's driving the rise of solar energy usage in the state? One reason is that it's becoming more affordable. Compared to the nationwide average of 14.46 cents per kilowatt hour, MI residential electricity rate is quite high at 17.64 cents, placing the state at a lower rank of 41st in terms of average electric rate. Moreover, the state's electricity rates keep going up. Conversely, PV prices have reduced by over 50% in the last ten years and are expected to drop even further as technology advances.
Moreover, the state's clean energy sector is expected to receive a major boost from the Michigan Healthy Climate Plan unveiled by Governor Gretchen Whitmer in 2022. The plan aims to produce 60 percent of electricity from renewable sources by 2030, marking a significant milestone in the state's quest for clean energy.
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How much does it cost to go solar in Michigan?
There are various factors that can determine how much money Michigan homeowners can save with solar energy, such as the amount of sunlight their property receives, the size and efficiency of their PV system, and their energy consumption patterns.
However, on average, Michigan has a higher PV panel cost of $4.14 per watt compared to the national average of $3.91/W. But here's an interesting twist - Michigan households require a smaller system (just 7kW) to cater to their energy requirements compared to the rest of the country. This translates to lower costs despite the expensive panels, making the average photovoltaic system in MI more affordable than the nationwide average. If you're looking to install a 7-kilowatt system, the average gross price comes to $28,980. This may sound like a lot at first, but keep in mind that you can lower this cost significantly by making use of incentives.
How much can you save with solar in Michigan?
By switching to solar energy, MI homeowners can significantly reduce their expenses. On average, a standard residential PV system can save residents between $10,000 to $30,000 throughout its lifetime, usually spanning 25 to 30 years.
In addition to the long-term cost savings, installing a photovoltaic system can also increase the value of a home. A Zillow study found that homes with PV modules can sell for 4% more than those without them.
Solar incentives available for Michiganders
While the state may not be considered the most generous state when it comes to solar incentives and policies, there are still some perks for Michiganders to benefit from. They can significantly reduce the cost of transitioning to solar energy, making it more affordable and accessible. In this section, we'll dive into the incentives available to MI residents.
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Federal tax credit
Homeowners can take advantage of the federal investment tax credit, also known as the ITC, which is considered the most crucial incentive. This credit was introduced in 2005 as part of the Energy Policy Act by the George Bush administration to promote the use of clean energy. Initially, it was a 30% credit capped at $2,000 for residential projects, but the cap was removed in 2008. Since then, the ITC has been modified and extended several times, and it is currently set at 30%, which will remain valid until 2032.
If you take advantage of the ITC, you may deduct 30% of the cost of your PV system from your federal taxes. For example, if the gross system cost is $30,000, the tax credit would be $9,000 ($20,000 x 30%= $9,000). However, it's essential to understand that this credit won't come in the form of a check automatically sent to you upon installation. Instead, it's a credit that can be used to offset your federal income tax liability, which can lead to a higher refund or a lower amount owed.
Assuming you have set up a PV system that cost $30,000 and is up and running by 2023, you are eligible to receive a $9,000 tax credit when you file your 2023 federal income tax return in 2024. If your tax liability is more than $9,000, you can avail of the complete credit in the same year. But if your tax liability is below $9,000, you have the option to carry forward the remaining credit to subsequent tax years.
Net metering/Distributed Generation
Unfortunately, Michigan does not mandate net metering (NEM), which enables homeowners to send their surplus electricity to the grid and receive credits in return. Most state utility companies have terminated their net metering programs; however, a few providers, such as Alpena Power Company, Ontonagon County REA, and Xcel Energy, still provide this option to their customers.
Instead of net metering, consumers can enroll in the Distributed Generation Program. While it is not as advantageous as NEM, it still allows homeowners to reduce their electricity expenses. Under this program, energy companies are obligated to compensate homeowners for excess energy generated by their system, but the value of energy credits is no longer equivalent to the purchase costs.
Property tax exemption
The most crucial state-level incentive is a property tax exemption that enables homeowners to reduce their property taxes by excluding the value of their PV system from the overall value of their property.
Let's assume that your system's cost is similar to the state average, which is roughly $29,000, and your tax rate matches the state average of 1.32%. Based on these assumptions, you can save around $383 annually. Over the expected lifespan of 20 years for your panels, this adds up to a total savings of $7,660.
Other opportunities to reduce solar expenses
In addition to the perks listed above, you can also benefit from rebate programs provided by local utility companies. For instance, Lansing Board of Water & Light (LBWL) offers its customers rebates on various energy-saving upgrades, including the installation of solar modules. The rebate amount is as high as $500 per kW installed and up to $2,000 in total. Given that the typical size of a PV system in the area is 7 kW, most qualified residents can obtain the maximum benefit of $2,000.
New incentives may become available from local providers down the line. To keep up to date, you can check the Database of State Incentives for Renewables & Efficiency (DSIRE).
Top solar installers to consider
With over 60 installers in Michigan, it can be challenging to find the right one. Let's explore some of the most prominent regional and local companies that are worth considering.
Michigan Solar Solutions
Michigan Solar Solutions is a reputable company specializing in installing photovoltaic panels, EV chargers, and battery backups. Since its establishment in 2007, they have built a strong reputation for its localized expertise and comprehensive warranty coverage.
Clients are free to choose whether to pay for their installations upfront in cash or opt for a loan that allows them to spread the payments over time. However, the company does not offer leases or PPAs. Michigan Solar Solutions uses only the best equipment from top manufacturers such as Enphase, SolarEdge, Panasonic, Jinko Solar, and Tesla.
Strawberry Solar
Strawberry Solar is a Detroit-based company that offers end-to-end solar services with streamlined design and installation processes. They have superlative customer service and their prices are in line with the MI average, although their limited product selection and short 10-year warranty could be drawbacks for some customers.
The company specializes in solar panel installation, battery installation, and EV chargers, with financing options available for those who qualify. Note that Strawberry Solar only installs SolarEdge modules, so customers who value brand variety may not find what they are looking for.
Considering solar energy solutions in Florida or Michigan? Discover how solar energy consultants can assist you in navigating the unique challenges and opportunities in each state. Explore our comprehensive guide on Solar Energy Consultants to find experienced professionals who can provide tailored advice for your location.
Windfree Solar
Based in Chicago, Illinois, Windfree Solar is a solar company with extensive regional expertise and local offices across Michigan. Their offerings include a standard range of solar services, along with complimentary monitoring for two years. Despite limited financing options and a lack of BBB accreditation, Windfree Solar prices are competitive, even falling below average, and their reliable warranty is backed by overwhelmingly positive customer reviews. The company relies on high-quality solar equipment from reputable manufacturers such as Panasonic and LG and handles installations in-house.
Experience the benefits of solar energy in Michigan with our guide to solar companies serving the region. Despite its reputation for cold winters, Michigan has seen a surge in solar installations driven by falling costs and favorable incentives.
Interested in harnessing solar power in the Palmetto State? Explore our comprehensive resource on Solar Energy in South Carolina to uncover the opportunities for clean and renewable energy. Additionally, learn from the experiences of other states like Florida, Michigan, and New York in our articles on solar energy adoption.
Verdict: Are solar panels worth it in the Great Lakes State?
The state's progress in embracing solar energy may have been slower compared to other US regions, but it is steadily catching up. It's becoming more evident that going solar is a wise investment in Michigan as it proves to be an affordable alternative to the state’s rising electricity rates.
Michigan homeowners can reap substantial savings between $10,000 to $30,000 throughout their solar system's lifetime while simultaneously increasing their homes' value. Furthermore, several solar incentives are available, which can significantly reduce the cost of transitioning to solar energy, making it even more cost-effective and accessible. Experience the benefits of solar energy in Michigan with our guide to solar companies serving the region. Despite its reputation for cold winters, Michigan has seen a surge in solar installations driven by falling costs and favorable incentives.
Sources:
https://seia.org/state-solar-policy/michigan-solar
https://www.seia.org/sites/default/files/2023-01/Michigan.pdf
https://findenergy.com/mi/solar/
https://www.zillow.com/research/solar-panels-house-sell-more-23798/
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