I spent seven years in Grand Rapids, Michigan, and those long, gray, snowy winters could have anyone questioning the wisdom of putting solar panels on their roof. Solar panels need the sun, right?
While solar panels certainly need the sun to generate electricity, they can be a good fit for homes looking to generate clean energy and save some money in all sorts of climates. Some of the most robust solar markets in the United States are outside the Sun Belt. New York, Virginia, and New Jersey round out the Solar Energy Industries Association’s top 10 solar states. Even outside of the traditionally sunny places, solar can still make financial sense, especially when those places have strong solar incentives.
If you’re wondering if solar makes sense for your home, here’s what you need to know.
See how much you can save by going solar with Palmetto
Does Solar Make Sense in Michigan?
Despite the long gray winters, solar panels can make financial sense in Michigan. Whether or not it will for you depends on everything from how much you pay for electricity to how much you would pay for solar to the reliability of your current service and more.
Price of electricity
Solar panels in Michigan can save you money by letting you avoid buying electricity from the grid (and by earning you credits on your bill. More on that later). The higher the rate you pay for electricity, the more you stand to save.
Michigan’s statewide average electric rate, according to the US Energy Information Administration, was 18.84 cents per kilowatt-hour in 2023. That's a bit higher than the 2023 national average of 16 cents/kWh.
Price of solar
The price of solar varies state to state, city to city, and even home to home. The national average cost of installing residential solar was $3.24 per watt. Plenty of factors can affect that number for any one project: the complexity of the roof, the amount and type of incentives the installation qualifies for, the project’s size, and more.
Credit: SEIA
Available sunlight
While a state’s average hours of sunlight aren’t the most important thing, they do play a role. Michigan gets an average of fewer than four peak sun hours per year.
More important is the available sunlight on your specific property. If your home is heavily shaded, it may not be a fit for solar panels.
Outages and energy independence
Beyond the financial benefits of solar, people have it installed to get around reliability issues. When solar panels are paired with battery storage, it can keep the lights on during a power outage. (Without a battery, solar systems are designed to shut down during an outage for safety reasons.)
In 2022, the average Michigander experienced 513 minutes (about 8.5 hours) without electricity, down from 873 minutes (14.5 hours) in 2021. (This number is calculated by dividing the total number of minutes any utility customer was without power divided by the total number of utility customers. Some people may have had no outages, while others may have had many more.)
If you experience frequent outages, you may find the improved reliability of solar and storage to be worth it regardless of potential savings.
Solar Incentives in Michigan
Like we’ve said, sometimes the solar incentives are the most important factor in the solar savings calculation. Michiganders have access to two of the most important solar incentives.
Federal tax credit
The Residential Clean Energy Credit, sometimes just called the solar tax credit, lets the owner of a newly installed solar panel system claim up to 30% of its cost as a credit on their federal taxes. There’s no upper limit to the dollar amount the credit can be worth.
You must be the owner (leased panels don’t count), and you should claim the credit for the year the panels are installed. You can redeem the credit for taxes you owe or have already paid. If you owe taxes, but not enough to use up the whole credit, you can roll the remaining credit forward into future years. If you don’t pay taxes at all, you won’t be able to take advantage.
Because everyone’s tax situation is different, you should always consult with your tax professionals before making any decisions.
The federal solar tax credit will stay at 30% through 2032, thanks to the Inflation Reduction Act, before it drops to 26% in 2033 and 22% in 2034, before expiring unless it’s extended once again.
Credit: SEIA
Net metering in Michigan
Net metering has become a catch-all term for the variety of ways utilities compensate people for the electricity their solar panels generate, but they don’t use or store for later.
Under Michigan’s net metering regulations, more properly called net billing, solar owners can avoid buying electricity at the retail rate when they use the electricity their panels produce. When they send electricity back to the grid, they receive bill credits for each kWh they send to the grid but at a rate lower than the retail rate.
Credits vary based on your rate plan. If you have a time-of-use plan, they’ll vary by the time of day they’re sent to the grid, for example. Net billing credits won’t apply to delivery charges.
Property tax exemption for solar
Adding solar panels to your property will likely increase its value. Michigan offers a property tax exemption for the increased value from adding solar.
Lansing Board of Water & Light solar rebate
Lansing Board of Water & Light customers may qualify for up to $2,000 in rebates from their electricity provider.
Solar Payback Period in Michigan
A solar payback period is the time it takes for your solar savings to match and surpass your solar costs. While the calculation itself is fairly straightforward, when your solar panels will pay for themselves can be difficult to predict. That’s because the amount you save each month will depend on your energy consumption, any major changes to it, and the price of electricity well into the future.
For example, if you install a six kilowatt system at the national average price of $3.24/watt, you’d have a cost of $19,440 before incentives. Let’s subtract 30% for the federal tax credit and arrive at $13,620. For simplicity’s sake, let’s assume you save $100 each month for annual savings of $1,200. At that rate it will take you about 11 years and 4 months to save enough to match your cost of installation.
Your solar payback period might vary from initial estimates. If electricity prices increase during that time, you’ll save more and your payback period will be shorter. In 2023, electricity in Michigan cost an average of 18.84 cents per kilowatt-hour, according to the US Energy Information Administration. Ten years before that in 2013-2014, electricity in the state averaged 14.46 cents per kWh, an increase of 30 percent.
Credit: EIA
Michigan Utilities and Rooftop Solar Panels
Your utility will affect your experience going solar. It requires certain paperwork and gives your system a final permission to operate. The rate it charges for electricity, its fixed fees, and its other policies will also affect how much you save, too.
| Utility | Avg. electricity rate (cents/kWh) | Fixed fees (monthly) | Net metering | Maximum offset for net metering |
|---|---|---|---|---|
| Consumers Energy | 18.82 | $8.87 | Net billing | 110% |
| DTE | 19.70 | $9.40 | Net billing | 110% |
Average electricity rate comes from EIA data.
The above lists the average rate for the utility, but your actual rate might differ for a few reasons. Rates change over time, and utilities offer variable rates, like time of use rates that can see the price of electricity vary throughout the day.
Michigan gas utilities
If you use natural gas in your home, you might have a second utility. Home electrification paired with solar can help you eliminate your gas bill entirely while keeping your electricity costs down.
| Citizens Gas Fuel Company | Consumers Energy | DTE Gas Company |
|---|---|---|
| Michigan Gas Utilities Company | SEMCO Energy Gas Company | Superior Energy Company |
Leasing Solar Panels in Michigan
Michigan allows third party ownership of solar panels, where the solar panels on your property are owned by a company that you pay a monthly fee. Under the two models for third party ownership, you pay a set monthly fee for the equipment (solar lease) or you pay for the power the panels generate (power purchase agreement). In both cases, when what you pay for your solar is less than the amount you save on your electric bills, you’ll save money overall.
Leases and PPAs typically include an escalator, the amount your payment will increase each year. When your lease payments increase slower than the rate of electricity from your utility, you stand to save even more as time goes on, though the opposite is also true.
Palmetto’s popular third party ownership option, LightReach, is designed to save you money in year one when you lease directly from Palmetto.
See how much you can save by going solar with Palmetto
Solar Panel Maintenance in Michigan
The good news is that once they are installed, solar panels are often low maintenance equipment. Still, issues like faulty equipment crop up and disrupt the normal working of rooftop systems. Some solar customers sign up for monitoring and maintenance services like Palmetto Protect, which offers proactive monitoring, prompt service, and, depending on your package, a production guarantee.
If you lease panels, the company that owns them is typically responsible for their maintenance.
Snow and solar panels
Michigan gets a lot of snow. Is that a problem for solar panels?
Anything blocking sunlight from reaching solar panels is going to decrease their production, but snow isn’t as big of a problem as it might first seem. As solar panels produce electricity, they also produce a bit of heat (typically enough to melt snow) which also slides off tilted panels. For big, lake effect snowfalls, you can speed the process along by carefully and safely removing the interfering snow. You should never use anything that might scratch or otherwise damage the panels.
Finding the Best Solar Company in Michigan
Because going solar in Michigan (and anywhere else) requires navigating bureaucracy, completing technical electrical work, and more, very few people do it on their own. In fact, finding a good solar company is likely the most important part of the process for a lot of people.
To narrow down the field, read reviews, talk to neighbors and friends who have experience with your chosen company, and make sure they offer all the products and services you’re looking for, whether that’s a battery, post-installation services, or an easy way to monitor your home’s energy performance.
Make sure you get all your questions answered and have time to make a decision on your own terms before you move ahead with any project.
Palmetto Reviews
“Very efficient system. We are producing more kw hours than what we are consuming. We are doing this month after month. Love Palmetto.” Ron B., Google Review
“I went through several quotes for solar panels before landing on Palmetto. Their quote was below other vendors, but it wasn't a decision based on price. I chose them because they explained the product and the process very well. I was then set up with an app for tracking the installation process. I'm so happy I chose a company that cares about customer service!” Jeremy L., Google Review
“I had an excellent experience with Palmetto. The sales person was very knowledgeable and answered all of the questions I had, designing a system that was a great fit for my house and energy usage.
I got text messages throughout the process keeping me informed and I could track the status of the project in the app. Palmetto took care of all of the permitting and paperwork, which was really nice.
I could not have been happier with the installers who put the system on my roof.” Jason D., Google Review
Frequently Asked Questions
Does solar make sense in Michigan?
Michigan can be a gray and cloudy place, but that doesn’t mean solar won’t make sense for you. With the right combination of electricity prices, energy consumption, and solar savings, solar panels can make sense in a lot of places not necessarily known for their sun.
The real question is, “Does solar make sense for you in Michigan?” Find out by reaching out to a Palmetto solar advisor today.
Are solar panels worth it in Michigan?
Solar panels could definitely be worth it in Michigan. Solar panels help you avoid buying electricity from your utility and can earn you electric bill credits from the state’s largest utilities (and many smaller ones, too). How much you might save depends on your electricity consumption and utility rate.
Solar panels (when paired with a backup battery) can also keep the lights on when the power gets knocked out by a summer thunderstorm.
Does solar increase your home value in Michigan?
In general, solar panels increase home value. Michigan even has a property tax exemption that says, if you adopt solar, you won’t pay property taxes on any value solar panels add to your house.
How much does it cost to go solar in Michigan?
The cost of installing solar varies by state, city, and even house. The number of panels, the complexity of the roof, local permitting costs, and whether or not you’re including a battery, will all affect the final cost of solar panels. One national trade organization estimates that solar cost $3.24 per watt on average at the start of 2024.
Does Michigan have net metering?
Michigan’s largest utilities, Consumers Energy and DTE, offer net billing. Under net billing, solar panels can help you avoid buying electricity at the retail rate, but electricity that is sent to the grid is credited at a lower rate.
Do solar panels work in the snow?
When snow blocks solar panels, they’ll make less electricity or stop altogether. Luckily, much snow will just melt and slide off rooftop solar panels, since they generate a small amount of heat when they’re operating.
See what solar can do for you:
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew BlokWriter and EditorAndrew has worked as a journalist and writer for four years, over half of those dedicated to covering solar. He currently lives in Tucson, AZ, where you might run into him walking his dog and birding while dodging the heat. He has degrees in English education and journalism.
