Michigan Solar Panels

Michigan law provides a 100% property tax exemption for the value added to a home by a solar energy system. Although solar panels can significantly increase your home’s market value, this exemption ensures your annual property tax bill will not increase as a result of the installation — saving homeowners an average of approximately $8,300 over the life of the system with no additional paperwork required each year.

To qualify, your solar system must be no larger than 150 kilowatts (kW) in capacity and must be designed to offset all or a portion of the energy used on the property. The exemption was established in November 2019 and applies to residential solar PV systems statewide.

This is one of Michigan’s most straightforward and valuable solar incentives because it requires no annual application — once your system is installed and registered, the exemption applies automatically to your property tax assessment.

Michigan exempts most solar energy equipment from the state’s 6% sales tax. This means that when you purchase solar panels, inverters, racking, and related components for your home solar installation, you will not pay sales tax on those items — providing an immediate reduction in your upfront installation costs.

For a typical residential solar system costing $20,000–$30,000, the sales tax exemption can save homeowners $1,200–$1,800 at the point of purchase. This exemption applies automatically at the time of sale and does not require a separate application by the homeowner.

This incentive works in combination with other Michigan solar incentives such as the property tax exemption and utility rebate programs, helping to lower the overall cost of going solar in the state.

Michigan replaced traditional net metering with a Distributed Generation (DG) Program, which credits solar owners for excess electricity their systems send to the grid. For systems 20 kW or smaller, excess generation is credited at the full retail electricity rate and can be carried forward to the next billing period. For systems between 20 kW and 550 kW, credits are issued at the avoided cost rate, which is lower than retail. Public Act 235 (2023) expanded eligible system sizes up to 550 kW and allows customers to install capacity up to 110% of their previous 12 months of electricity consumption.

Credit rates vary by utility: DTE Energy credits excess solar at approximately $0.0775/kWh (off-peak) to $0.14/kWh (summer peak); Consumers Energy credits range from $0.09–$0.16/kWh depending on season and time of day; Indiana-Michigan Power offers approximately $0.124/kWh; and Lansing Board of Water & Light provides approximately $0.06–$0.10/kWh plus an additional $0.013/kWh for the first five years. Application fees are capped at $25, with total interconnection review fees not exceeding $100.

Customers who were enrolled in the original net metering program before new DG rates were established may retain their original net metering terms and conditions for 10 years from their enrollment date. Note that only a small number of utilities — including Upper Michigan Energy Resources Corporation, Cloverland Electric Coop, Alpena Power Company, Ontonagon County REA, and Xcel Energy — still offer traditional net metering, serving roughly 1.5% of Michigan’s residential electricity customers.

The Michigan Renewable Energy Certification System (MIRECS) was established by the Michigan Public Service Commission (MPSC) under 2008 PA 295 and allows solar owners to earn, track, and sell Renewable Energy Credits (RECs). One REC is generated for every megawatt-hour (MWh) of clean electricity your solar system produces, regardless of whether you use that electricity yourself or send it to the grid. A typical 10 kW residential solar system can generate $300–$1,000 in annual REC income.

To participate, homeowners must first apply for approval from the Michigan Public Service Commission, then create an account with MIRECS to begin tracking and selling credits. RECs can be sold to utilities and other buyers who need them to meet Michigan’s Renewable Portfolio Standard requirements. It is important to note that Michigan RECs have a shelf life of only three years, so credits should be sold in a timely manner to avoid expiration.

While Michigan does not have a formal Solar Renewable Energy Credit (SREC) program like some other states, the MIRECS platform provides a legitimate pathway for residential solar owners to monetize their clean energy production. Contact the Michigan Public Service Commission or visit mirecs.org to begin the enrollment process.

Michigan’s Solar Energy Facilities Taxation Act (2023 PA 108) created a Solar Energy Facility Exemption Certificate (SEFEC) that entitles qualified large-scale solar facilities to a 20-year exemption from standard ad valorem real property taxes. In place of those taxes, qualifying facilities pay a fixed solar energy facilities tax of $7,000 per megawatt (MW) of nameplate alternating current (AC) capacity per year, providing cost certainty for project developers and investors.

To qualify as a ‘qualified solar energy facility,’ the project must be located within a designated solar energy district and use solar energy as the sole source for generating at least 2 megawatts of nameplate AC capacity. This incentive is primarily designed for commercial and utility-scale solar developers rather than residential homeowners.

This program is administered by the Michigan Department of Treasury. Developers interested in applying for a Solar Energy Facility Exemption Certificate should consult the Michigan Department of Treasury’s official resources for application procedures and solar energy district designations.

DTE Energy’s Solar Currents Program offers one of the most generous utility solar incentives in Michigan. Eligible customers receive an upfront rebate of $2.40 per watt of installed solar capacity, plus a long-term production incentive of 11 cents per kilowatt-hour (kWh) for all solar electricity generated, under a 20-year contract. For a typical 7 kW residential system, the upfront rebate alone could amount to approximately $16,800.

The program is available to residential customers within DTE Energy’s service territory, which includes Detroit, Ann Arbor, Flint, Livonia, and surrounding areas in southeastern Michigan. Solar systems must be purchased outright or financed — leased systems may not qualify. Customers interested in the program can contact DTE Energy directly at [email protected] or by calling (313) 235-4786.

The 20-year production incentive provides a reliable, long-term income stream that significantly improves the financial return on a solar investment. Homeowners should confirm current program availability and terms directly with DTE Energy, as utility rebate programs can change or reach capacity limits.

The Lansing Board of Water & Light (LBWL) offers a solar installation rebate of $500 per kilowatt (kW) of installed solar capacity, with a maximum rebate of $2,000 for systems up to 4 kW. This rebate is available exclusively to LBWL customers in the Lansing, Michigan service area and is designed to reduce the upfront cost of going solar.

Since the average residential solar array in the Lansing area is approximately 7 kW, most eligible homeowners will be able to claim the full $2,000 maximum rebate. This incentive can be combined with Michigan’s property tax exemption and the Distributed Generation Program credits to further improve the financial return on a solar investment.

Homeowners should contact LBWL directly to confirm current program availability, application requirements, and any deadlines, as utility rebate programs are subject to funding availability and may change. Visit the LBWL website or call their customer service line for the most up-to-date information.

WPPI Energy, which serves much of Michigan’s Upper Peninsula through a network of member utility companies, offers a solar photovoltaic (PV) rebate of up to $10,000 or 35% of the total installed system cost, whichever is lower. This is one of the largest utility solar rebates available in Michigan and can dramatically reduce the net cost of a solar installation for eligible UP residents.

The rebate is administered by WPPI Energy and offered through seven different member utility companies in the state. In addition to the PV rebate, WPPI Energy also offers rebates for solar-thermal systems at $30 per square foot of collector area, and $2–$3 per projected annual kWh for photovoltaic systems under a separate structure. Eligibility and specific terms may vary by member utility.

Upper Peninsula residents should contact their local WPPI Energy member utility to confirm current rebate availability, application procedures, and any system size or equipment requirements. Program funding is limited and terms are subject to change.

Great Lakes Energy Cooperative offers battery storage incentives to its residential customers through the Energy Wise Residential Energy Efficiency Rebate Program. The incentive covers eligible two-way communication backup power systems, helping homeowners offset the cost of adding battery storage to their solar or home energy setup.

This program is available exclusively to Great Lakes Energy Cooperative members. Battery storage systems must meet specific eligibility requirements related to communication capabilities and system specifications. Homeowners should contact Great Lakes Energy directly to confirm current incentive amounts, eligible equipment, and application requirements, as program details are subject to change based on funding availability.

Pairing a home battery with a solar system allows homeowners to store excess solar energy for use during outages or peak rate periods, maximizing the value of their solar investment. This incentive helps make battery storage more financially accessible for Great Lakes Energy customers in northern Michigan.

Michigan Saves is a nonprofit green bank that offers affordable home improvement loans specifically for energy upgrades, including solar panel installations. Homeowners can borrow between $1,000 and $50,000 with repayment terms of up to 15 years. Interest rates range from 4.44% to 7.90% APR, with most customers financing at approximately 5.50% APR — well below typical personal loan or credit card rates.

Unlike some financing programs, Michigan Saves loans are unsecured, meaning your home is not used as collateral. The program works with a network of approved lenders and solar contractors across Michigan, making it accessible to homeowners throughout the state regardless of their utility provider.

This financing option is particularly valuable for homeowners who want to own their solar system outright (to maximize incentive eligibility) but need help covering upfront costs. Owning the system — rather than leasing — ensures eligibility for incentives like the Michigan property tax exemption and any applicable utility rebates.

The USDA’s Rural Energy for America Program (REAP) provides grants, loan guarantees, and development assistance to help agricultural producers and rural small businesses in Michigan install solar photovoltaic systems and other renewable energy technologies. Grants can cover up to 50% of eligible project costs, while loan guarantees can cover up to 75%, making solar significantly more affordable for farms and rural enterprises.

Eligible recipients include agricultural producers (farmers and ranchers) and rural small businesses located in eligible rural areas of Michigan. The program is administered by the USDA Rural Development office and applications are accepted on a rolling basis, though funding is subject to annual appropriations. Both new solar installations and expansions of existing systems may qualify.

Michigan farmers and rural business owners interested in REAP should contact their local USDA Rural Development office for guidance on application requirements, eligible costs, and current funding availability. This federal program can be combined with Michigan’s property tax exemption and other state-level incentives to maximize savings.

The Michigan Department of Environment, Great Lakes, and Energy (EGLE) offers matching grants through the Agriculture and Rural Businesses Energy Incentive Program to accelerate the adoption of renewable energy — including solar PV — on farms, agriculture-related entities, and rural businesses. The maximum individual grant award is $50,000, and all grants require a minimum 100% match from the applicant, meaning recipients must contribute at least as much as they receive.

Eligible projects include solar energy installations, energy efficiency improvements, electrification, and other innovative energy projects that increase the resilience and stability of Michigan’s agricultural and rural business sector. This program is designed to complement federal programs like USDA REAP and can potentially be combined with other incentives for greater impact.

Interested applicants should monitor the Michigan EGLE website for open grant rounds, as funding is awarded on a competitive basis and application windows are time-limited. Contact Michigan EGLE’s Energy office for details on current solicitations, eligibility requirements, and application procedures.

Lean & Green Michigan administers the Property Assessed Clean Energy (PACE) Financing Program, which enables commercial, industrial, agricultural, and multifamily property owners in Michigan to finance solar PV installations with no upfront out-of-pocket costs. Repayment is structured as an assessment on the property tax bill, spread over a term of up to 25 years, making large solar projects financially accessible without requiring traditional bank financing.

PACE financing is particularly advantageous because the repayment obligation is tied to the property rather than the individual owner, which can make it easier to transfer with a property sale. Eligible properties include commercial buildings, industrial facilities, agricultural operations, and multifamily housing. Note that this program is not available for single-family residential homeowners.

Business and property owners interested in PACE financing should contact Lean & Green Michigan to assess project eligibility, review current financing terms, and begin the application process. PACE can be combined with federal tax incentives and utility rebates to further reduce the net cost of a commercial solar installation.

The Ann Arbor Solarize Program is a community-driven group purchasing initiative that helps Ann Arbor residents reduce the cost of residential solar installations by up to 15%. The program works by aggregating demand from multiple homeowners and negotiating discounted pricing with a selected solar installer, with greater savings achieved as more residents participate.

The discount percentage depends on the total number of participants, the installer selected through the competitive bidding process, and any other applicable incentives. This program can be combined with Michigan’s property tax exemption, the Distributed Generation Program credits, and any applicable utility rebates to maximize overall savings.

Ann Arbor residents interested in participating should monitor local announcements for active Solarize campaign windows, as these programs run for a limited time. Community solar programs like this are an excellent option for homeowners who want the benefits of solar at a reduced cost through collective action.

The MI Solar for All (MI SFA) program was awarded $156 million in federal funding to support solar development — including rooftop solar, community solar, energy storage, and enabling upgrades — for low-income and disadvantaged communities across Michigan. Eligible households were expected to receive benefits equivalent to an average 20% reduction in their electricity bills. Income eligibility was defined as households earning no more than 80% of area median income (AMI) or 200% of the federal poverty level (FPL), whichever is higher.

Important Notice: As of August 7, 2025, the U.S. Environmental Protection Agency (EPA) issued a termination letter for the MI Solar for All program. Michigan EGLE leadership is currently working with the state’s Attorney General on next steps. The program is effectively paused and not currently accepting new applicants.

Low-income Michigan residents who were hoping to benefit from this program should monitor the Michigan EGLE website for updates on the program’s status. If the program is reinstated or replaced with an alternative, EGLE will announce new application opportunities. In the meantime, eligible residents may explore other assistance programs through Michigan EGLE and local utility low-income solar initiatives.