Is Solar Worth It in South Dakota? (2024 Homeowner’s Guide) – EcoWatch

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How to Figure Out if Solar Panels are Worth It in South Dakota

Solar panels save most South Dakotans a significant amount of money, but they will be nothing but an expense for others. Below are some metrics you can use to determine if solar is right for your home or not.

What’s Your Home Electricity Consumption?

First, you should take a look at your past energy bills to see if you consume enough electricity to make solar panels worthwhile. Solar saves you money on electricity, so the higher your energy needs, the more value you’ll get out of your panels. A good benchmark for solar viability is around 500 kWh per month. Most South Dakotans use about 1,037 kWh monthly, putting them well above the national average and at more than double the standard cutoff for solar panels being worth it. This means that most residents in South Dakota will benefit immensely from going solar and that solar energy is more valuable in the area than in many other states.

How Much Is It To Go Solar in South Dakota?

The price of solar panels in South Dakota hovers around $3.11 per watt, making it the second most affordable state for solar equipment. Residents typically need around a 10.5-kW system to offset electric bills, which puts the average total price at around $22,859 after the federal tax credit is considered. Solar panels reduce your electricity bills, which means they are most valuable in areas where electricity rates or consumption is high. South Dakotans pay below-average prices for energy but use far more than the national average. As such, solar panels provide more value to South Dakotans than to residents in most other states.

What’s the Payback Period for Solar in South Dakota?

An enormous upside to going solar is that your system will almost always pay for itself in energy savings over time. The timeline for panels to pay for themselves depends on many factors, but the average in South Dakota is around 12 years, which is right in line with the national average. Most South Dakotan’s solar panel systems will pay themselves off within 9 and 15 years. If you estimate your solar panel payback period — with a solar calculator or by having a solar installer assess your home — to be longer than 15 years, your return on investment (ROI) will be below average. You’ll still save money, as long as your payback period isn’t longer than 25 years, but it will take longer to recuperate your investment, and you’ll save less overall.

What Are Average Buy-Back Rates in South Dakota?

Net metering is a billing policy mandated by most states that allows solar customers who opt into interconnection to overproduce solar electricity with their solar systems and sell the excess energy production back to their utility companies for a reduction on future bills. Net metering helps solar customers save money and eliminate their energy bills in some cases. Unfortunately, the Public Utilities Commission (PUC) in South Dakota does not mandate net metering, so it’s left up to the local utility companies to offer it or not. You should check with your provider before committing to solar, as a lack of net metering or a below-average policy leads many residents to add solar batteries onto their solar photovoltaic (PV) system to maximize savings.

How Much Sun Does Your Roof Receive?

Solar panels produce energy — and, by extension, save you money — when they receive sunlight and produce electricity for your home. The more sun your roof receives, the more value you’ll get from your solar panels. The average number of sunny days in South Dakota totals around 213, which is above the national average of 205. The above-average sunlight availability makes solar power in South Dakota more valuable than in most other states. You need to assess your home on an individual basis, as not all roofs will receive the same amount of sunlight. Most importantly, the direction your roof faces matters, with south-facing roofs being optimal in the US and west-facing roofs often being suitable as well. You will also need to check for shading on your property from trees or buildings. Any blockage of sunlight will reduce production and solar panel value, especially during peak production hours.

What’s the Outlook on Solar in South Dakota?

As one of the least popular states for solar installations, the solar industry has little to do but improve in the Mount Rushmore State. However, South Dakota consistently ranks as one of the most eco-friendly states, primarily because a massive portion of its energy comes from hydroelectric power.3 4 Thankfully, the lack of solar popularity in South Dakota is not due to a lack of renewable energy popularity as a whole. South Dakota has a relatively unimpressive Renewable Portfolio Standard Goal (RPS), and that goal is reached with hydroelectric power. Although solar installations have increased in prevalence significantly over the past decade, the likelihood is that solar adoption will continue to be slow because of the availability of other clean energy sources. Overall, however, renewable energy is quite popular throughout South Dakota.

Benefits of Solar Energy in South Dakota

Installing solar panels in South Dakota will provide you with quite a few benefits that you might not be aware of. We’ll discuss the most substantial upsides to installing solar panels in South Dakota below.

Electricity Bill Savings

The most significant financial benefit of converting to solar power in South Dakota will come from the savings you’ll enjoy on your electric bills. When your solar power system produces electricity, the amount you generate will offset your energy bills by an equal amount. With most South Dakotans paying around $137.20 per month for electricity, the potential savings in the area totals about $1,646. Over time, your solar panels are expected to pay themselves off and then provide an additional $28,006 in energy savings in South Dakota. Your (ROI) could be significantly higher if the electricity rates continue to go up in the future, as they are expected to do. Installing solar panels means you’ll largely avoid the price increases of electricity for the 25+ years of expected solar panel life.

Lower Taxes & Access to Other Incentives

Although South Dakota isn’t the most solar-friendly state, there are some fairly significant solar incentives offered by the state and federal governments. One such incentive is the federal solar tax credit, commonly called the ITC. The ITC is a credit to your federal income taxes owed, which amounts to 26% of your total installation expense. In South Dakota, most residents will enjoy a federal tax credit in the amount of $9,797 in 2022. Some additional South Dakota solar incentives are listed below:

• Renewable Energy Systems Exemption: This is a property tax exemption that prevents your property taxes from increasing as a result of going solar, even though your home value will go up when you convert.
• Local Energy Efficiency Upgrades: Although there are no solar rebates, specifically, some local utility companies offer rebates and incentive programs for energy-efficiency upgrades, which can be used to make your solar panels even more valuable.

Home Resale Value Increase

One of the often-forgotten solar benefits is the bump in home value solar panels provide. According to Zillow, solar panel installation will cause your property value to go up by approximately 4.1%.5 Given the average home value in South Dakota of $291,081, the value increase will total around $11,934 for most homeowners.6 It’s important to note that this benefit will only be enjoyed by residents who use cash or a solar loan to pay for their solar energy systems. Solar leases and power purchase agreements (PPAs) are not expected to increase home value.

Clean, Renewable Energy

South Dakota is often cited as one of the most eco-friendly states, so many homeowners will also enjoy the environmental benefits solar panels provide. Perhaps most importantly, you’ll be reducing your carbon footprint, the pollution and emissions you create and your reliance on fossil fuels as a whole. Your newfound energy independence will also mean you’ll rely less on your utility company, which means you can avoid energy rate hikes in the future.

What to Look Out For When Considering Solar in South Dakota

Going solar isn’t a terribly complicated process, but there are some things you should be aware of before you start the process. We’ll discuss some important considerations to make below.

Upfront Fees

Most homeowners will automatically be concerned with the upfront system fees, as PV equipment is quite expensive. This is the case even in South Dakota, where the per-watt price is well below the national average. Many homeowners can keep their upfront expenses down by choosing a solar loan with a small down payment requirement. You can also choose a cheaper solar panel brand at the expense of efficiency and durability, and you can stick to panels only and avoid solar batteries and other add-on products that can drive up your upfront fees.

Payback Period

Your estimated solar panel payback period is a wonderful metric for determining your solar viability, but you can also use it to estimate your ROI. The average payback period in South Dakota is 12 years, with a standard range of 9 to 15 years. While the average savings after your panels pay themselves off are around $28,006, your ROI will be lower than this if your payback period is longer than 15 years, and solar might not make sense for you.

Net Metering Policies in South Dakota

As we mentioned above, South Dakota is one of few states that don’t mandate net metering. However, individual electric companies can opt to offer a net metering policy privately, so you should check with yours before signing any contracts. Net metering isn’t usually a make-or-break factor, but solar customers who don’t have a good policy often choose to install a solar battery as well to help lower and eliminate their electric bills.

Pending Policies & Changes to Incentives

Solar policies are always subject to change, and new incentives or rebate programs could pop up as solar becomes more prevalent in South Dakota. You’ll usually save less by waiting for better incentives to come along, but you should certainly check for changes to policies, incentives that have expired and new incentives that might have popped up before you commit to solar.

Weather & Climate in South Dakota

Solar panels provide the most value in areas near the equator, where the sunlight is most intense. As such, some South Dakotans worry that their northern location will make solar a poor investment. However, the state receives more sunny days per year than the national average, and there’s generally plenty of intense sunlight to make solar a worthwhile investment. Other residents understandably worry about the severe weather conditions that sometimes hit the area, including tornadoes and heavy snowfall. A good warranty should allay any concerns with tornadoes damaging your panels, and the snow will only serve to keep your panels clean, which will improve efficiency overall.

Companies Pushing Solar Leases or PPAs

Finally, you should be careful with the company you choose to install your solar panels, as not all installers are created equal. In fact, some solar companies don’t even have your best interests at heart, like those that advertise “free panels,” a marketing tactic to get you to sign a solar lease. Solar leases are far less beneficial than a solar financing option, as they take longer to pay off, provide fewer savings, don’t let you take the ITC and don’t add to your home value. There have been warnings issued in South Dakota about solar scams, including investments into solar timeshares that can cause homeowners to lose thousands and aggressively-pitched solar leases and power purchase agreements (PPAs).⁷ You should be careful which installer you choose, and you should always work only with a trusted, vetted and reputable solar panel installation company.

Wrap Up: Is Solar Worth it in South Dakota?

In general, solar panels are an outstanding investment opportunity for South Dakotans, saving solar customers an average of $28,006 after they pay for themselves. However, solar conversion isn’t for everyone, so you should do your homework before you commit to determine if going solar is a viable option for you. Some things you’ll want to consider as a part of the process include shading on your roof, the direction your property faces, your average monthly energy bills, your estimated payback period, and more. We suggest contacting a reputable solar installer to help you decide if solar panels are worth your investment.

See also: Calculate the costs and savings you can get from installing solar panels

Read More About Going Solar

The cost information presented in this article is derived from a comprehensive analysis, incorporating data from multiple industry sources. The average cost per watt per state was calculated based on figures from Consumer Affairs, Energy Sage, and Berkeley Lab’s Electricity Markets & Policy Department. Additionally, monthly energy consumption and the average monthly cost of electricity were sourced from the U.S. Energy Information Administration, ensuring a well-rounded and accurate representation of the information presented.

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