Is solar worth it in South Dakota?
For a typical South Dakota home in 2026, solar is not worth it: about a 21.8-year payback and $2,439 saved over 25 years after paying for the system. Check your own home, because roofs, usage and utilities vary a lot.
- Payback, typical home
- 21.8 yrs4.2 kW, paying cash
- Electricity price
- 14.2¢per kWh, U.S. 18.0¢
- Solar production
- 1,418kWh per kW per year
- Exports credited at
- ~21%No statewide net metering
The numbers for a typical South Dakota home
| Electricity use | 981 kWh a month (South Dakota average) |
|---|---|
| Best-value system | 4.2 kW, producing 5,955 kWh a year (51% of use) |
| Price | $14,000 at about $3.00/W |
| First-year savings | $666 |
| Payback | 21.8 years |
| 25-year net | $2,439 (1.2% a year return) |
| Rate increase assumed | 1.9% a year, from South Dakota's 2015–2025 history |
Paying cash, no federal credit, 5% discount rate, microinverters, $25 per kW a year for maintenance and repairs. Methodology.
Why it comes out this way
- Electricity is cheap: 14.2¢ per kWh, 21% below the U.S. average (18.0¢), so each solar kWh saves less.
- Exported solar is typically credited at about 21% of retail, so systems pay best when sized for what you use yourself.
- A typical system here produces about 1,418 kWh per kW per year (ranked #19 of 51).
- There is no federal tax credit for homeowners who buy in 2026, which adds several years to payback compared with 2025.
Net metering and export rules in South Dakota
No statewide net metering. South Dakota has no net metering law. Utilities generally let you use your own solar and buy the excess at their avoided cost (a few cents per kWh).
Excess bought under PURPA qualifying-facility tariffs at avoided cost.
- Netting: varies
- Unused credits: Varies by utility; generally no retail rollover.
- Fixed charges: Varies by utility.
- Last major change: No statewide policy; no recent change found.
Read net metering explained to see why export rules can swing payback by years.
| Utility | Export credit | Notes |
|---|---|---|
| Xcel Energy (NSP - SD) | Avoided-cost export credit | QF/avoided-cost purchase; verify current tariff. |
| Black Hills Energy (Black Hills Power) | Avoided-cost export credit | Avoided-cost buyback; verify current tariff. |
| NorthWestern Energy (SD) | Avoided-cost export credit | Avoided-cost buyback; verify current tariff. |
Solar incentives in South Dakota
The federal 30% Residential Clean Energy Credit ended for systems installed after December 31, 2025. What that means.
| Program | Type | What you get | Status |
|---|---|---|---|
| Renewable energy property tax exemption | property tax exemption | Residential renewable systems: exempt the greater of $50,000 or 70% of assessed value of the system (SDCL 10-4-44). Eligibility: Residential solar systems. | active |
What solar costs in South Dakota
A fair cash price is around $3.00 per watt before incentives. For the 4.2 kW system that fits a typical home, expect roughly $10,700 to $15,100; smaller systems cost more per watt.
How many homes have solar
- Homes with net-metered solar (2025)
- 570
- Share of homes
- 0.1%
- Residential solar capacity
- 4 MW
- Growth over the past year
- -4.5%
Sources: EIA-861 (2025), EIA small-scale solar estimates, LBNL Tracking the Sun and state interconnection data.
Electric utilities in South Dakota
| Utility | Homes served | Price (2026 est.) | Typical use | Typical-home verdict |
|---|---|---|---|---|
| Xcel Energy Minnesota | 94,137 | 17.0¢ | 634 kWh/mo | Not worth it |
| Black Hills Power | 67,608 | 16.1¢ | 702 kWh/mo | Not worth it |
| NorthWestern Energy | 51,787 | 14.2¢ | 939 kWh/mo | Not worth it |
| Sioux Valley SW Electric Cooperative | 22,989 | 14.8¢ | 1,370 kWh/mo | Not worth it |
| Southeastern Electric Cooperative | 20,959 | 13.8¢ | 1,167 kWh/mo | Not worth it |
| West River Electric Association | 18,975 | 16.2¢ | 896 kWh/mo | Not worth it |
| Watertown Municipal Utilities | 11,775 | 9.9¢ | 886 kWh/mo | Not worth it |
| City of Brookings | 10,769 | 11.4¢ | 880 kWh/mo | Not worth it |
| Black Hills Electric Cooperative | 9,415 | 15.8¢ | 1,122 kWh/mo | Not worth it |
| Otter Tail Power | 9,094 | 11.5¢ | 997 kWh/mo | Not worth it |
| Central Electric Cooperative | 6,515 | 15.6¢ | 1,537 kWh/mo | Not worth it |
| Montana-Dakota Utilities | 6,348 | 12.0¢ | 822 kWh/mo | Not worth it |
| City of Pierre | 6,183 | 11.7¢ | 902 kWh/mo | Not worth it |
| Northern Electric Cooperative | 5,823 | 12.2¢ | 2,094 kWh/mo | Not worth it |
| MidAmerican Energy | 4,236 | 11.5¢ | 821 kWh/mo | Not worth it |
| Nebraska Public Power District | 1,047 | 11.7¢ | 958 kWh/mo | Not worth it |
Solar by city in South Dakota
Protect yourself when buying
- Check the license. Electrical contractor license from the SD State Electrical Commission. Look up an installer
- Cancellation rights. Federal law gives you 3 business days to cancel most door-to-door sales over $25. How to cancel
- HOA and solar access. Voluntary solar easements allowed (SDCL 43-13-16); no HOA protection.
- Community solar. No.
Questions about solar in South Dakota
Is solar worth it in South Dakota in 2026?
For a typical South Dakota home, solar is not worth it. A 4.2 kW system costing about $14,000 after state incentives saves about $666 in the first year and pays back in about 21.8 years. Your result depends on your roof, usage, utility and price, so run the calculator for your address.
How much do solar panels cost in South Dakota?
A reasonable cash price is around $3.00 per watt before incentives, or roughly $10,700 to $15,100 for a 4.2 kW system.
Does South Dakota have net metering?
South Dakota has no net metering law. Utilities generally let you use your own solar and buy the excess at their avoided cost (a few cents per kWh).
Is there a solar tax credit in South Dakota?
The 30% federal credit for homeowners ended for systems installed after 2025. South Dakota does not offer a state income tax credit for solar that we're aware of. Solar may be exempt from property tax.
How do I check a solar installer's license in South Dakota?
Electrical contractor license from the SD State Electrical Commission.. Look up any installer with the state's license search at https://dlr.sd.gov/electrical/.
Policy research current as of October 2026; sources include programs.dsireusa.org, surgepv.com. Electricity data: EIA, through July 2026. Found something out of date? Tell us.