North Dakota Solar Programs and Incentives: Complete 2025 Guide

Introduction: The State of Solar in the Peace Garden State

North Dakota, often recognized for its vast plains and energy production, is steadily carving out a niche in the renewable energy landscape, particularly with solar power. While the state may not boast the same level of sunshine as the Southwest, modern solar technology is highly effective, and the financial incentives available can make a solar investment highly attractive for homeowners and businesses across the state.

For residents considering solar in 2025, the most significant financial driver remains the powerful Federal Residential Clean Energy Credit (ITC). However, North Dakota also provides critical state-level support through property tax exemptions and a mandatory net metering policy, ensuring that solar installations are both financially viable and legally supported.

This comprehensive guide breaks down every available solar incentive, program, and regulation in North Dakota for 2025, providing you with the knowledge needed to maximize your savings and successfully transition to clean energy.

The Cornerstone Incentive: Federal Residential Clean Energy Credit (ITC)

The single most impactful incentive for North Dakota homeowners installing solar is the Federal Residential Clean Energy Credit (ITC). This is a non-refundable federal income tax credit that allows you to claim a percentage of your total solar installation cost.

How the 30% Federal ITC Works

The ITC is not a deduction; it is a dollar-for-dollar reduction of your federal income tax liability. For systems installed through 2032, the credit is set at a generous 30% of the total system cost, including equipment, labor, and permitting fees.

Example: If your total solar installation cost is $25,000, the 30% ITC would provide a $7,500 tax credit. This credit can be used to offset your federal tax bill, and if the credit exceeds your tax liability, the remainder can be rolled over to the following tax year.

Eligibility Requirements

To qualify for the Residential Clean Energy Credit, the following conditions must be met:

• The solar energy system must be new or being used for the first time.
• The system must be installed on your primary or secondary residence in the United States.
• You must own the solar energy system (leased systems do not qualify).
• The system must generate electricity for the home.

This federal incentive is the primary financial mechanism that makes solar power affordable in North Dakota, effectively reducing the upfront cost by nearly a third.

North Dakota State-Specific Solar Incentives and Exemptions

Unlike some states with robust state-level tax credits or cash rebates, North Dakota’s state support for solar primarily focuses on tax exemptions, which prevent your property taxes from increasing after installation.

1. Renewable Energy Property Tax Exemption

North Dakota offers a significant incentive by exempting the value added by a solar energy system from local property taxes. This is a crucial benefit, as installing a solar system typically increases a home's market value, which would otherwise lead to higher property taxes.

• What it is: The Solar, Wind or Geothermal Device Property Tax Exemption exempts the entire value of the solar energy system from property tax assessment [1].
• Duration: The exemption is currently effective for taxable years through December 31, 2025 [2]. This means that for systems installed in 2025, the added value will not be taxed. Homeowners should monitor state legislation for potential extensions beyond this date.
• Eligibility: The exemption applies to locally-assessed solar, wind, or geothermal devices serving a new or existing building or structure.

This exemption ensures that homeowners receive the full benefit of their solar investment without the penalty of increased annual property tax bills.

2. State Solar Tax Credits and Rebates (Current Status)

As of 2025, North Dakota does not offer a state-level residential solar tax credit or rebate program [3]. The state previously had a tax credit for renewable energy devices, but it is no longer active for residential solar installations. Therefore, North Dakota residents must rely on the federal ITC and utility-specific programs for direct financial incentives.

3. Sales Tax Exemption

North Dakota does not offer a general statewide sales tax exemption for the purchase and installation of residential solar energy equipment [4].

While some exemptions exist for large-scale electrical generating facilities or certain manufacturing equipment, residential solar installations are subject to the state's sales tax rate (currently 5% statewide, plus local taxes which vary by municipality). This is an important factor to budget for when calculating the total cost of a solar project.

Utility Company Solar Programs and Net Metering Policies

The ability to sell excess solar energy back to the grid is a critical component of solar economics. North Dakota has a mandatory net metering policy, though its compensation structure is less favorable than in many other states.

North Dakota Net Metering Policy

North Dakota's net metering policy, adopted by the state Public Service Commission (PSC), requires investor-owned utilities (IOUs) to offer net metering to customers with eligible renewable energy systems [5].

The avoided-cost compensation rate is a key distinction. In states with retail-rate net metering, every kilowatt-hour (kWh) sent to the grid offsets one kWh purchased at the full retail price. In North Dakota, the credit for exported power is lower, making it essential for solar owners to size their system to match their consumption as closely as possible to maximize savings.

Major Utility Contacts and Programs

While state-level rebates are absent, some utilities may offer their own programs or financing options. It is essential to contact your specific utility provider to understand their current net metering procedures and any localized incentives.

Low-Income Solar Programs and Assistance

Direct solar installation assistance for low-income residents is primarily handled through federal programs administered at the state level, as North Dakota does not have a dedicated state solar equity program.

Weatherization Assistance Program (WAP)

The federal Weatherization Assistance Program (WAP) is a key resource for low-income households. While its primary focus is on improving energy efficiency (insulation, air sealing), it can sometimes fund the installation of solar hot water or photovoltaic systems if they are deemed a cost-effective measure to reduce energy consumption.

• Administrator: The program is administered by the North Dakota Department of Commerce, Community Services Division [8].
• Eligibility: Eligibility is based on household income, typically at or below 200% of the federal poverty level.
• Application: Interested residents should contact their local Community Action Agency for application details and to determine if solar is an eligible measure for their home.

Rural Energy for America Program (REAP)

For agricultural producers and rural small businesses, the Rural Energy for America Program (REAP), offered by the USDA, provides significant financial support for renewable energy systems, including solar [9].

• What it is: REAP offers guaranteed loan financing and grant funding.
• Grant Amounts: Grants can cover up to 50% of the total project cost.
• Loan Guarantees: Loan guarantees can cover up to 75% of the total project cost.
• Eligibility: Must be an agricultural producer with at least 50% of gross income coming from agricultural operations, or a small business located in an eligible rural area.

While not a residential program, REAP is vital for the many farms and small businesses that make up North Dakota's rural economy, allowing them to significantly reduce the cost of solar adoption.

Solar Rights, Regulations, and Permitting

Understanding the legal framework for solar installation is crucial, particularly concerning local regulations and homeowner association (HOA) rules.

Solar Easements (Solar Rights)

North Dakota law provides for the establishment of solar easements [10]. A solar easement is a legal agreement that protects a property owner's right to receive sunlight across a neighbor's property.

• Statute: N.D. Cent. Code § 47-05-01.1 allows property owners to obtain written solar easements for the exposure of a solar energy device to the sun's direct rays.
• Mechanism: This is a voluntary agreement between neighbors and must be recorded with the county recorder. It is not a statewide mandate that automatically grants solar access, but it provides a legal tool to protect a solar investment from future obstruction.

Homeowner Association (HOA) Restrictions

Crucially, North Dakota does not have a specific "Solar Rights Law" that overrides restrictive covenants imposed by HOAs [11].

• HOA Authority: HOAs in North Dakota generally have the authority to regulate the placement, design, and appearance of solar energy systems, provided their rules are reasonable and uniformly applied.
• Permitting: Permitting for solar installations is handled at the local municipal or county level. Homeowners must comply with local building codes, zoning ordinances, and electrical standards. The process typically involves submitting structural plans, electrical diagrams, and obtaining necessary permits before installation can begin.

Tips for Navigating Regulations

1. Check Local Ordinances: Before starting, check with your city or county planning and zoning department for specific permitting requirements.
2. Consult Your HOA: If you live in a community with an HOA, submit your solar plans for approval early in the process to avoid costly delays or rework.
3. Use Certified Installers: Working with a North Dakota-licensed solar installer ensures that all local and state codes are met, streamlining the permitting process.

Solar Renewable Energy Credits (SRECs) and Community Solar

Two common solar programs in other states—SRECs and mandatory community solar—are largely absent or underdeveloped in North Dakota.

Solar Renewable Energy Credits (SRECs)

North Dakota does not have a viable SREC market [12].

• Reason: SRECs are generated in states that have a Renewable Portfolio Standard (RPS) with a specific "solar carve-out," which mandates that a certain percentage of electricity must come from solar sources. North Dakota's RPS is voluntary, and it does not include a solar carve-out, meaning there is no market demand for SRECs.
• Impact: North Dakota solar owners cannot generate additional income by selling SRECs, unlike owners in states such as New Jersey or Massachusetts.

Community Solar Programs

North Dakota does not have a statewide community solar mandate or program [13]. However, some local utilities and cooperatives have launched their own projects.

• Local Projects: Examples like the Prairie Sun Community Solar project by Cass County Electric Cooperative demonstrate that community solar is available in certain areas [14].
• How it Works: Community solar allows residents who cannot install panels on their own roof (due to shading, roof condition, or renting) to subscribe to a share of a larger, off-site solar array. Subscribers receive credits on their electricity bill for the power generated by their share.
• Action: Residents interested in community solar should contact their local electric cooperative or utility to inquire about any existing or planned projects in their service territory.

Financial Planning and Maximizing Incentives

To ensure the best return on investment for a solar system in North Dakota, a strategic approach to financing and incentive stacking is necessary.

Solar Loan Programs

While North Dakota does not offer a specific state-backed solar loan program, several options are available:

• Secured Home Equity Loans/Lines of Credit (HELOCs): These often offer the lowest interest rates because they are secured by the value of your home.
• Unsecured Personal Loans: These are faster to obtain but typically have higher interest rates.
• Installer Financing: Many solar installation companies offer their own financing options, often with promotional rates or deferred payments.

Tips for Maximizing Incentives

1. Prioritize the Federal ITC: Ensure you have sufficient tax liability to claim the full 30% credit. If not, plan to carry the credit forward to future tax years.
2. Optimize System Sizing: Due to the avoided-cost net metering rate, it is crucial to size your system to offset your annual electricity consumption as closely as possible. Oversizing the system will result in less valuable credits for exported power.
3. Combine with Energy Efficiency: Before installing solar, invest in energy efficiency improvements (insulation, efficient appliances). A more efficient home requires a smaller, less expensive solar system to meet its needs.
4. Confirm Property Tax Exemption: Verify with your local assessor's office that the Renewable Energy Property Tax Exemption is properly applied to your property after installation.

Conclusion: A Viable Solar Future in North Dakota

While North Dakota's solar incentive landscape is heavily reliant on the federal Residential Clean Energy Credit, the state's support through a property tax exemption and mandatory net metering policy provides a solid foundation for solar adoption. The key to a successful solar investment in the Peace Garden State is careful planning, optimizing system size for self-consumption, and diligently applying for the federal tax credit.

By understanding the nuances of the state's policies—particularly the avoided-cost net metering and the lack of a state tax credit or SREC market—homeowners and businesses can make informed decisions that lead to long-term energy independence and significant cost savings.

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Contact Information for Key Resources

North Dakota State Energy Office

• Agency: North Dakota Department of Commerce, Energy & Economic Coordination Office
• Contact: Tom Oakland (Energy & Economic Coordination Office Manager)
• Phone: (701) 328-5392
• Website: https://www.commerce.nd.gov/economic-development-finance/energy-and-natural-resources

Major Investor-Owned Utilities (IOUs)

• Xcel Energy: 1-800-895-4999
• Montana-Dakota Utilities (MDU): 1-800-638-3278

Low-Income Assistance

• Weatherization Assistance Program (WAP): Contact your local Community Action Agency or the ND Department of Commerce, Community Services Division.

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References

[1] North Dakota Office of State Tax Commissioner. Solar, Wind or Geothermal Device Property Tax Exemption. https://www.tax.nd.gov/solar-wind-or-geothermal-device-property-tax-exemption [2] DSIRE. Renewable Energy Property Tax Exemption. https://programs.dsireusa.org/system/program/detail/160/renewable-energy-property-tax-exemption [3] EnergySage. North Dakota Solar Incentives, Tax Credits & Rebates 2025. https://www.energysage.com/local-data/solar-rebates-incentives/nd/ [4] SolarReviews. Tax Exemptions For Home Solar Power - How To Save On Solar. https://www.solarreviews.com/blog/sales-and-solar-property-tax-exemptions [5] DSIRE. Net Metering. https://programs.dsireusa.org/system/program/detail/285/net-metering [6] North Dakota Department of Commerce. SOLAR PV IN NORTH DAKOTA. https://www.commerce.nd.gov/sites/www/files/documents/Community%20Services/Renewable%20Energy/SolarPVND.pdf [7] Wolf River Electric. Solar Installation in North Dakota: A Step-by-Step Guide. https://wolfriverelectric.com/solar-installation-in-north-dakota-a-step-by-step-guide/ [8] North Dakota Department of Commerce. State Energy Program. https://www.commerce.nd.gov/community-services/energy-efficiency-office/state-energy-program [9] USDA. Rural Energy for America Program Renewable Energy Systems & Energy Efficiency Improvement Loans & Grants. https://www.rd.usda.gov/programs-services/energy-programs/rural-energy-america-program-renewable-energy-systems-energy-efficiency-improvement-guaranteed-loans-2 [10] North Dakota Legislative Branch. N.D. Cent. Code § 47-05-01.1 - Solar easements. https://casetext.com/statute/north-dakota-century-code/title-47-property/chapter-47-05-interests-in-property/section-47-05-011-solar-easements [11] Palmetto. Solar Access Laws by State: Can Your HOA Stop You?. https://palmetto.com/policy/solar-access-laws-by-state [12] SRECTrade. North Dakota - SREC Markets. https://www.srectrade.com/markets/rps/srec/north_dakota [13] Open Energy Information. North Dakota. https://en.openei.org/wiki/NCSP_Hub/States/North_Dakota [14] North Dakota Department of Commerce. Renewable Energy in North Dakota. https://www.commerce.nd.gov/economic-development-finance/energy-and-natural-resources