Ann Arbor, MI
Solar in Ann Arbor
Ann Arbor homeowners are discovering how solar panels for their homes can offset Michigan’s 12th highest utility prices in the nation. With residential electricity rates at 19.29 cents per kWh, solar power offers a practical solution in this progressive university town.
Whether you’re motivated by environmental sustainability or long-term savings, understanding Ann Arbor’s unique solar landscape—from seasonal considerations to local incentives—is crucial before making the switch.
Key Takeaways
- Ann Arbor homeowners can save around $40,000 over 25 years with solar panels while offsetting Michigan’s higher-than-average electricity rates of 19.3¢/kWh.
- Federal tax credits reduce solar costs by 30% in Michigan, saving Ann Arbor residents an average of $6,102 on their solar installation.
- Solar panels in Ann Arbor still produce effectively despite seasonal changes, generating 49.1 kWh per day in summer and 16.7 kWh per day in winter.
Solar Cost Calculator
Discover the true cost of solar in Ann Arbor with our exclusive calculator, powered by real installation data from local neighborhoods like Kerrytown, Burns Park, and Old West Side. Get accurate, transparent pricing based on actual Palmetto installations throughout Washtenaw County—no guesswork, just facts.
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Estimated Investment and Savings
Based on Palmetto Solar installations in Michigan. Current electricity rate: 19.3¢/kWh. Assumes 70% credit of retail rate.
Ann Arbor Electricity Prices
Ann Arbor residents face consistently higher electricity costs than the national average, impacting household budgets and creating opportunities for solar installation solutions.
Local electricity rates have climbed steadily from 17.5 cents per kWh in 2021 to 19.3 cents in 2024—consistently outpacing the national average by nearly 3 cents per kilowatt-hour.
Solar panel installation offers Ann Arbor homeowners a practical path to energy independence, protecting against these rising utility costs while supporting Michigan’s growing commitment to renewable energy.
Over time, solar investments provide stability against unpredictable rate increases, potentially saving Ann Arbor homeowners thousands while increasing property values and contributing to a more sustainable community.
Price of Energy: Michigan vs National Average
Ann Arbor Area Utility Providers
Ann Arbor residents have two main utility providers: Consumers Energy at 18.8¢/kWh and DTE at 19.7¢/kWh (2023 data). Both exceed the national average of 16.0¢/kWh, making electricity costs a significant consideration for homeowners.
These higher rates reflect Michigan’s infrastructure maintenance costs and energy transition investments. Ann Arbor utilities charge approximately 18% more than the national average, with DTE customers paying slightly more than the state average of 18.80¢/kWh.
Solar installation offers Ann Arbor homeowners a practical way to offset these elevated electricity costs. By generating your own clean energy, you can reduce dependence on increasingly expensive utility power while contributing to Michigan’s sustainable energy future.
Ann Arbor Utilities Electricity Rates
Michigan Solar Incentives
Ann Arbor homeowners can significantly reduce solar installation costs through federal tax credits and solar incentives in Michigan designed to make renewable energy more accessible.
Michigan offers property tax exemptions for solar installations, meaning your home’s value increases without raising your tax bill. The state’s Distributed Generation Program also provides credits for excess energy your system produces.
These incentives may change over time, so research current programs thoroughly. Acting promptly ensures you maximize available benefits while contributing to Ann Arbor’s sustainability goals.
Save an average of
$6,102
in solar rebates in Michigan
| INCENTIVE | TYPE | DESCRIPTION | SOURCE |
|---|---|---|---|
| Residential Clean Energy Credit | Federal tax credit | A federal tax credit worth 30% the cost of a solar panel system in the year it’s installed | Learn More |
| Property Tax Exemption | State tax exemption | Exempts your solar system’s added value from property tax assessment. Annual savings based on local tax rates. | Learn More |
The Residential Clean Energy Credit lets people claim a tax credit worth 30% the cost of a solar panel system in the year it’s installed. The credit can only be used against taxes you owe or have already paid that year, but any excess credit can be rolled over to future years.
The credit is broadly available, though there are a few restrictions — you must own the panels and they must be on a house you live in — so be sure to consult a tax professional about your situation.
Michigan’s Property Tax Exemption for solar energy systems allows municipalities to exempt certain renewable energy installations from property taxes. This incentive is established under Michigan Public Act 102 of 2022, which authorizes local authorities to make these tax exemption decisions. When applied, this exemption means your property taxes won’t increase after installing solar panels on your home.
The financial benefit varies by location since each municipality decides whether to offer this exemption. When available, you won’t pay additional property taxes on the value your solar system adds to your home—potentially saving hundreds of dollars annually depending on your system size and local tax rates. There are no specific deadlines for this program, but you should check with your local tax assessor before installation to confirm if your municipality participates in this exemption program. Remember that this is a local option, so availability differs across Michigan communities.
Michigan’s Distributed Generation Program (Net Billing) is a solar incentive that allows homeowners with solar panels to receive credits for excess electricity they export to the grid. Unlike traditional net metering which credits exports at the full retail rate, this program credits exported electricity at a lower rate that varies by utility. When your solar system produces more electricity than your home uses, the surplus flows back to the grid, and you receive a credit on your bill.
The credit rates vary by utility: DTE Energy customers receive approximately 8.5 cents per kWh during off-peak hours and 14 cents during summer peak hours (4-7pm). Consumers Energy provides between 9-16 cents/kWh depending on season and time of day, with highest values during summer peak (2-7pm). Indiana-Michigan Power offers 12.4 cents/kWh, while Lansing Board of Water & Light provides 6-10 cents/kWh plus an additional 1.3 cents/kWh for the first 5 years if you transfer your Renewable Energy Credits to them. All utilities allow excess credits to roll over month-to-month as dollar amounts that can be applied to future supply charges.
Ready to start saving with solar?
Speak with a Palmetto solar expert to find out exactly how much you can save with Michigan incentives.
Get a Free QuoteAnn Arbor Solar Irradiance
Solar panel production varies throughout the year based on daylight hours, weather patterns, and sun intensity. Understanding how seasons affect your solar system helps set realistic expectations for your investment.
Despite Ann Arbor’s snowy winters, the city receives ample sunshine year-round. With proper panel placement and system design, solar energy remains a viable, efficient option for Michigan homeowners.
Solar Production in Ann Arbor by Month
What Can Your Solar System Power?
Summer Production (July)
In July, your 10 kW system could power:
- 3.6 average homes (15 kWh/day per home)
- or Run central AC for 18 hours AND power all other appliances
- or Fully charge 5.4 Tesla Model 3 electric vehicles
Winter Production (December)
In December, your 10 kW system could power:
- 2 average homes (15 kWh/day per home)
- or Keep your home heating system running for 15 hours
- or Fully charge 3 Tesla Model 3 electric vehicles
Annual Production
Over a year, your 10 kW system could:
- Offset 10 tons of carbon dioxide emissions
- or Equal the environmental benefit of planting 175 trees
- or Save approximately $4,234 in electricity costs
Want to know exactly how much solar can power your home?
Get a personalized solar analysis based on your actual home, energy usage, and roof characteristics.
Get My Custom EstimateSolar Installations in Ann Arbor
Discover how Ann Arbor is embracing solar energy! We’ve mapped every solar installation in your community, revealing which neighborhoods are leading the green revolution. Explore our interactive heatmap to see how your neighbors are harnessing the sun’s power and join Ann Arbor’s growing solar movement.
Leasing Solar Panels
In Ann Arbor, MI, Palmetto offers flexible financing through Power Purchase Agreements (PPAs) with both DTE Energy and Consumers Energy customers. With a PPA, you pay only for the electricity your solar panels produce at a set price per kilowatt-hour, rather than a fixed monthly payment like with a lease.
This arrangement is ideal for homeowners who want to go solar without upfront costs. During summer months, your system produces more electricity, maximizing your savings when utility rates are highest. You’ll also avoid maintenance responsibilities and repair costs, as Palmetto monitors and maintains the system.
Ann Arbor residents can access our LightReach PPA program through both major utilities, making solar accessible without the financial burden of purchasing a system outright.
Go solar without the investment
With LightReach, there are no investment costs to recoup, loan payments to manage, or maintenance needs to take on. As soon as your panels are active, your solar savings are too!
Learn MoreFrequently Asked Questions
Yes, solar makes sense in Ann Arbor despite Michigan’s seasonal weather. With electricity rates 18% above the national average at 19.3¢/kWh, solar panels can save homeowners approximately $40,000 over 25 years.
Ann Arbor’s progressive sustainability initiatives, federal tax credits covering 30% of installation costs, and Michigan’s property tax exemption for solar installations make it financially attractive, even with winter production at about one-third of summer output.
Ann Arbor no longer has traditional net metering. Instead, DTE Energy offers a Net Billing program where exports to the grid are credited at approximately 8.5 cents per kWh during off-peak hours and 14 cents/kWh during summer peak hours (4-7pm).
Excess credits can roll over monthly as dollar amounts applied to future supply charges, making solar still financially beneficial despite the lower export rate compared to retail pricing.
Yes, solar panels increase home value in Ann Arbor. According to a Zillow study, homes with solar panels sell for approximately 4.1% more than comparable homes without solar systems.
This premium is particularly valuable in Ann Arbor’s competitive housing market, where the median home value exceeds $450,000. Additionally, Michigan’s property tax exemption for renewable energy systems means you won’t pay higher property taxes on this increased value.
In Ann Arbor, the average cost of a solar panel system ranges from $14,238 for a medium-sized home (6.38 kW) to $19,653 for larger homes (9.13 kW) after applying the 30% federal tax credit.
System costs vary based on roof complexity, equipment quality, and installation requirements. Most Ann Arbor homeowners see payback periods of 10-11 years with approximately $40,000 in lifetime savings.
Yes, solar is financially worthwhile in Ann Arbor. With Michigan’s electricity rates 18% above the national average, solar panels can save homeowners approximately $40,000 over 25 years.
The 30% federal tax credit reduces installation costs significantly, and Michigan’s property tax exemption means your home value increases without raising your taxes. Most Ann Arbor homeowners see payback periods of 10-11 years.
As a national company with strong local presence in Michigan, we at Palmetto provide quality solar installations with exceptional financing options. With 826 Michigan installations since 2020, we understand Ann Arbor’s unique energy needs.
Our comprehensive approach combines industry-leading technology, transparent pricing, and ongoing system monitoring to maximize your solar investment in Ann Arbor’s variable climate.