Michigan Solar Panels

Michigan law provides a 100% property tax exemption for the value added to your 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. Homeowners save an average of approximately $8,300 over the life of the system.

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

No additional paperwork is required each year to maintain the exemption — it applies automatically once your system is installed and assessed. This makes it one of the most hassle-free solar incentives available to Michigan homeowners.

Michigan exempts most solar energy equipment from the state’s 6% sales tax. 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 is available statewide to all Michigan residents purchasing eligible solar equipment and is one of the simplest ways to reduce the cost of going solar in Michigan.

Michigan replaced traditional net metering with the Distributed Generation (DG) Program under Public Act 235 (2023). Under this program, solar owners receive bill credits for excess electricity their systems send to the grid. For systems 20 kW or smaller — which covers the vast majority of residential installations — 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 the retail rate. The 2023 law expanded eligible system sizes up to 550 kW and allows customers to install solar capacity up to 110% of their previous 12 months of electricity consumption. Utility-specific credit rates vary: DTE Energy credits range from approximately $0.0775–$0.14/kWh, Consumers Energy from $0.09–$0.16/kWh, and Lansing Board of Water & Light from approximately $0.06–$0.10/kWh.

A small number of utilities — including Cloverland Electric Cooperative and Alpena Power — still offer traditional net metering. If you are served by one of these utilities, you may be eligible for a one-to-one credit on all excess generation. Contact your utility provider to confirm which program applies to your service territory.

DTE Energy’s Solar Currents Program is one of the most generous utility solar incentives in Michigan. Eligible residential customers receive an upfront rebate of $2.40 per watt of installed solar capacity, plus a long-term production incentive of $0.11 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 for the rebate.

Customers interested in the program can contact DTE Energy directly at (313) 235-4786 or by emailing [email protected]. It is recommended to confirm current program availability and funding status before installation, as utility rebate programs can change.

The Lansing Board of Water & Light (LBWL) offers a solar rebate to residential customers who install solar panels within its service territory. The rebate is $500 per kilowatt (kW) of installed solar capacity, with a maximum rebate of $2,000 for systems up to 4 kW.

This rebate can be combined with other available incentives, such as Michigan’s sales tax exemption and the DG net billing program, to further reduce the overall cost of going solar. The program is designed to encourage solar adoption among Lansing-area homeowners.

To apply, contact LBWL directly to confirm current program availability, eligibility requirements, and the application process before scheduling your installation. Rebate programs are subject to funding availability and program terms may change.

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 rebate is available to residential and small commercial customers of participating WPPI Energy member utilities.

Participating Michigan utilities include: Alger Delta CEA, Baraga Electric Utility, Crystal Falls Electric Department, Gladstone Power and Light, L’Anse Electric Utility, Negaunee Electric Department, and Norway Power and Light. Customers must reside in the service territory of a participating utility, and the system must be installed on the customer’s property.

Projects must be approved by the utility before installation begins. Contact your local WPPI Energy member utility to confirm eligibility, obtain pre-approval, and learn about any additional program requirements before moving forward with your solar installation.

The Michigan Renewable Energy Certification System (MIRECS), established by the Michigan Public Service Commission (MPSC) under 2008 PA 295, 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 approximately $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. Michigan RECs have a shelf life of only three years, so it is important to sell credits in a timely manner to avoid expiration.

Selling RECs provides an ongoing revenue stream on top of your electricity bill savings, making solar even more financially attractive over the long term. Visit mirecs.org to begin the enrollment process and learn more about current REC market prices in Michigan.

Michigan Saves is a nonprofit energy finance organization that offers low-interest, fixed-rate loans to homeowners looking to install solar panels and other renewable energy systems. Loan amounts range from $1,000 to $50,000, with current interest rates between 4.44% and 7.90% APR and repayment terms of up to 15 years.

This program turns a large upfront solar investment into manageable monthly payments, making solar accessible to homeowners who may not have the cash on hand to purchase a system outright. Financing through Michigan Saves also allows homeowners to retain ownership of their system — which is required to claim other incentives such as the property tax exemption and MIRECS RECs.

Michigan Saves works with a network of approved lenders and contractors across the state. Visit michigansaves.org to find a participating lender, check current rates, and apply for financing for your solar project.

The Property Assessed Clean Energy (PACE) Financing Program, administered by Lean & Green Michigan, enables commercial, industrial, agricultural, and multifamily property owners 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.

PACE financing is particularly well-suited for businesses and property owners who want to invest in solar energy without making large capital expenditures. Because repayment is tied to the property rather than the owner, the obligation can transfer to a new owner if the property is sold, which can be an important consideration when planning a long-term solar investment.

To participate, property owners must be located in a Michigan municipality that has adopted the PACE program. Contact Lean & Green Michigan directly to confirm your property’s eligibility, explore financing terms, and begin the application process.

The Solar Energy Facilities Taxation Act (2023 PA 108) provides a significant tax incentive to owners of utility-scale solar energy generation facilities in Michigan. Qualifying facilities that build a new solar energy facility can receive a Solar Energy Facility Exemption Certificate (SEFEC), which entitles them to an exemption from ad valorem real property taxes for a term of 20 years.

In addition to benefiting solar facility owners, the act provides local governments with a guaranteed and stable revenue stream from solar energy generation facilities, replacing the traditional property tax with a structured payment. This helps ensure community buy-in for large-scale solar development across the state.

This incentive is primarily targeted at commercial and utility-scale solar developers rather than residential homeowners. For more information on eligibility requirements and the application process for a SEFEC, visit the Michigan Department of Treasury’s official website.

The Michigan Homeowners’ Energy Policy Act (MCL 559.301 et seq.), effective April 1, 2025, prohibits homeowners associations (HOAs) from banning solar energy system installations. This landmark law removes a significant barrier to solar adoption for the many Michigan homeowners who live in HOA-governed communities.

While HOAs may still establish reasonable aesthetic guidelines for solar installations — such as panel placement or color preferences — they cannot impose requirements that would substantially increase installation costs by more than $1,000 or meaningfully decrease system energy production by more than 10%. Any HOA rule that violates these standards is unenforceable.

This protection applies statewide and means that if you live in a community with an HOA, you have the legal right to install solar panels on your home. If your HOA attempts to block or unreasonably restrict your installation, you may have legal recourse under this act.

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 competitively selected solar installer — the more residents who participate, the greater the potential discount.

The program is part of a broader Solarize initiative now overseen by the Great Lakes Renewable Energy Association (GLREA), which has expanded to Grand Rapids, Lansing, Kalamazoo, and Oakland, Washtenaw, and Wayne counties. Participants are matched with GLREA-approved vendors and can receive bulk discounts of 5–15% on their solar panel purchases.

The Ann Arbor Solarize discount can be combined with other available incentives, including Michigan’s sales tax exemption, the DG net billing program, and MIRECS RECs, to maximize overall savings. Contact the City of Ann Arbor’s Office of Sustainability or the GLREA to find out when the next Solarize campaign is open for enrollment.

Ann Arbor’s Sustainable Energy Utility (SEU), authorized by approximately 80% of voters, is a first-of-its-kind city-owned program designed to make solar and battery storage accessible to all residents — including renters and those who cannot afford upfront installation costs. Unlike traditional rooftop solar programs, the SEU allows residents and businesses to access solar and battery storage with no upfront costs, with the city owning the equipment and customers paying a monthly rate.

Pilot projects targeting lower-income neighborhoods are expected to launch in 2026, with citywide expansion planned for 2027. The program is specifically designed to address equity barriers that have historically prevented low- and moderate-income households from benefiting from solar energy.

This program is currently in its early stages and is only available within the City of Ann Arbor. Residents interested in participating should monitor announcements from the City of Ann Arbor’s Office of Sustainability for updates on pilot enrollment, eligibility requirements, and monthly rate structures as the program launches.

The USDA’s Rural Energy for America Program (REAP) provides grants, loan guarantees, and development assistance to agricultural producers and rural small businesses in Michigan for the purchase and installation of renewable energy systems, including solar PV. Grants can cover up to 50% of eligible project costs, and loan guarantees can cover up to 75% of eligible project costs.

REAP is an excellent option for Michigan farmers and rural business owners looking to reduce operational energy costs through solar. The program helps offset the often-significant upfront cost of commercial-scale solar installations, making the transition to clean energy more financially feasible for rural operations.

Applications are accepted on a rolling basis through USDA Rural Development. Michigan agricultural producers and rural businesses interested in REAP should contact their local USDA Rural Development state office for current funding availability, application deadlines, and eligibility requirements.