Solar Guide
Solar in Ann Arbor
Ann Arbor homeowners are turning to solar energy as electricity costs continue climbing. With Michigan’s utility rates at 19.29 cents per kWh—well above the national average—many residents are exploring how solar panels for home use can create meaningful savings.
This comprehensive guide walks you through solar installation in Ann Arbor, covering local incentives, system performance, and what to expect throughout the process.
Key Takeaways
- Ann Arbor’s high electricity rates at 19.3¢ per kWh make solar panels a smart investment for reducing monthly energy bills.
- Michigan homeowners save an average of $6,102 through federal tax credits and state property tax exemptions.
- Solar systems in Ann Arbor typically pay for themselves in 10-11 years while providing 25+ years of energy savings.
Solar Cost Calculator
Our solar cost calculator uses real installation data from Ann Arbor neighborhoods including Kerrytown, Burns Park, and Water Hill. Get accurate pricing estimates based on actual local projects, not generic estimates.
System
Cost
Savings
Ann Arbor Electricity Prices
Understanding Ann Arbor’s electricity costs helps homeowners make informed energy decisions for their homes and budgets.
Michigan’s electricity rates have climbed from 17.5 cents per kWh in 2021 to 19.3 cents in 2024, consistently exceeding national averages.
Solar panels generate electricity at a fixed cost, helping homeowners avoid future utility rate increases while reducing monthly energy expenses.
Over 25 years, solar systems can provide predictable energy costs, protecting Ann Arbor families from ongoing electricity price volatility and inflation.
Price of Energy: Michigan vs National Average
Ann Arbor Area Utility Providers
Ann Arbor residents receive electricity from two main utilities: Consumers Energy at 18.8¢ per kWh and DTE Energy at 19.7¢ per kWh (2023 data).
Both utilities charge above the 2023 national average of 16.0¢ per kWh, with DTE Energy exceeding Michigan’s state average of 18.80¢ per kWh.
These higher electricity rates make solar more attractive for Ann Arbor homeowners, as solar panels can offset expensive grid electricity with clean energy.
Ann Arbor Utilities Electricity Rates
Michigan Solar Incentives
Ann Arbor residents can reduce solar installation costs through available solar incentives in Michigan and federal programs.
Michigan offers property tax exemptions that protect homeowners from increased assessments when adding solar systems. The state’s net billing program provides credits for excess energy production.
These incentives can change over time, so research current programs thoroughly and consider acting promptly to maximize available benefits.
$6,102
Average savings in Michigan solar rebates
| 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.
I apologize, but the document you’ve provided appears to be about emergency services authorities and municipal bond financing, not a solar property tax exemption program. The legislation (Michigan Senate Bill 821) deals with emergency services authorities’ powers to issue bonds and levy taxes, but does not contain any information about solar energy systems or property tax exemptions for renewable energy installations.
To provide you with an accurate description of Michigan’s solar Property Tax Exemption incentive, I would need the correct documentation that specifically addresses solar energy systems and property tax exemptions. If you could provide the proper source material for Michigan’s solar property tax exemption program, I’d be happy to create a clear, detailed explanation of how this incentive works for homeowners considering solar installations.
Michigan’s Distributed Generation Program (Net Billing) is a state-wide policy that allows homeowners with solar panels to receive credits for excess electricity they send back to the grid. Unlike traditional net metering where you receive full retail value for your solar exports, this program credits you at a reduced rate that varies by utility company and time of day. You’ll still pay the full retail rate for electricity you use from the grid, but any solar power you generate and don’t immediately use gets credited at a lower wholesale-style rate.
The financial benefits depend on your specific utility company. DTE Energy customers receive approximately 8.5 cents per kWh for off-peak exports and around 14 cents per kWh during summer peak hours (4-7pm). Consumers Energy credits range from 9-16 cents per kWh depending on season and time, with the highest rates during summer peak (2-7pm). Indiana-Michigan Power offers 12.4 cents per kWh, while Lansing Board of Water & Light provides 6-10 cents per kWh plus an additional 1.3 cents per kWh bonus for the first five years. All excess credits roll over month-to-month as dollar amounts that can be applied to future electricity bills.
This program is available to all residential solar customers in Michigan, with monthly settlement periods across all participating utilities. The key consideration for homeowners is that maximizing your solar savings means using as much of your generated electricity as possible during daylight hours, since the solar power you consume directly avoids paying the full retail rate. Any excess power sent to the grid will be credited at these lower export rates, making energy usage timing an important factor in your overall solar economics.
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.
Ann Arbor’s four distinct seasons and varying daylight hours create unique solar production patterns. Despite Michigan’s cloudy reputation, proper system design maximizes year-round energy generation.
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
We’ve mapped every solar installation across the United States to show you how Ann Arbor neighborhoods are embracing clean energy. Click any hexagon to discover how many of your neighbors have already made the switch to solar power!
Leasing Solar Panels
In Ann Arbor, Palmetto offers Power Purchase Agreements (PPAs) for customers served by DTE Energy and Consumers Energy. With a PPA, you pay for the actual electricity your solar panels produce at a fixed rate per kilowatt-hour, rather than making a large upfront investment or managing loan payments.
A PPA provides several advantages over purchasing a system outright. You avoid the substantial upfront costs and don’t need to handle system maintenance or repairs – Palmetto takes care of all equipment servicing. Your monthly payments fluctuate with actual solar production, typically higher in summer and lower in winter, but average out to consistent annual savings.
This financing option makes solar accessible without the financial commitment of ownership, while still providing immediate electricity bill reductions. Learn more about solar financing options or explore our LightReach program for complete details on how PPAs work in Michigan.
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 due to high electricity rates at 19.3¢ per kWh, which are well above the national average. Despite Michigan’s cloudy reputation, solar panels still generate significant energy throughout the year.
With federal tax credits saving homeowners an average of $6,102 and typical payback periods of 10-11 years, solar provides long-term financial benefits. Ann Arbor residents can expect 25+ years of energy savings after their system pays for itself.
Ann Arbor does not have traditional net metering. Michigan utilities, including DTE Energy and Consumers Energy serving Ann Arbor, use a net billing system where excess solar energy is credited at rates lower than retail electricity prices.
DTE Energy credits exports at approximately 8.5¢/kWh off-peak and 14¢/kWh during summer peak hours. Consumers Energy provides 9-16¢/kWh credits depending on season and time. Credits roll over monthly as dollar amounts applied to future bills.
Yes, solar panels increase home value in Ann Arbor, MI. Research shows that solar installations typically add value to residential properties, with a Zillow study finding homes with solar panels sell for 4.1% more than comparable homes without solar.
In Ann Arbor’s competitive real estate market, solar panels represent an attractive feature for buyers seeking energy-efficient homes with lower utility costs. Michigan’s property tax exemption also means the added solar value won’t increase your property taxes.
Solar costs in Ann Arbor range from $11,721 to $19,653 after federal tax credits, depending on your home size and energy needs. A typical medium-sized home requires a 6.38 kW system costing $14,238 after the 30% federal tax credit.
System prices include equipment, installation, permits, and warranties. Michigan’s property tax exemption prevents solar installations from increasing your property taxes, providing additional long-term savings for Ann Arbor homeowners.
Yes, solar is financially worth it in Ann Arbor. With electricity rates at 19.3¢ per kWh—well above the national average—solar panels provide immediate monthly savings on energy bills.
After federal tax credits, systems typically pay for themselves in 10-11 years while providing 25+ years of total savings. Ann Arbor homeowners can expect $40,000+ in lifetime energy cost reductions, making solar a solid long-term investment.
Palmetto Solar is a leading choice for Ann Arbor solar installations. We’ve completed 826 installations across Michigan since 2020, bringing extensive local experience to every project.
Our comprehensive approach includes competitive financing options, professional installation networks, and complete project management from permits to activation. We focus on delivering quality solar solutions that maximize your energy savings in Ann Arbor’s unique climate conditions.