Top 5 Solar Companies in south dakota

Below you’ll find the top solar companies in South Dakota as ranked by us and reviewed by verified solar customers. To learn more about what goes into our “Best Rank” score for each company, visit our How We Rank page. For our full South Dakota Solar Overview, keep reading:

South Dakota Solar Overview

With its most significant solar panel installation (approximately 1 megawatt) taking place in 2016, and meddling residential installations in the years since, South Dakota is doing little to promote widespread solar adoption throughout the state.

The Mount Rushmore State has almost no solar incentives or solar-friendly policies to speak of, and with utility rates that are cheaper than the national average, residents have few overtly monetary reasons to make the switch.

Read on to learn more about the ins and outs of going solar in South Dakota.

Pros and Cons of Going Solar in South Dakota

Here's an at-a-glance description of the current benefits and drawbacks of switching to solar in South Dakota:

Benefits of Going Solar in South Dakota:

  • No State Income Tax
  • Property Tax Exemption

Drawbacks of Going Solar in South Dakota:

  • Voluntary Renewable Portfolio Standard
  • No Solar Carve-Out
  • No Net Metering Policy
  • Restricted Interconnection Rules
  • No Solar Power Rebate Program
  • Long Payback Period

Cost of Solar in South Dakota

One way to compare the relative costs of solar energy and traditional electricity is by calculating their levelized cost, or average cost per kilowatt-hour over 25 years. For solar power, the levelized cost is 5 cents per kWh, or in other words, the total system costs of a solar PV system divided by its output over 25 years is 5 cents. For traditional electricity, the levelized cost is 26 cents per kWh — more than five times the cost of solar over 25 years.

Looking at the upfront cost of solar in South Dakota, a typical 5 kW system will set residents back about $20,000, which is on the higher end compared to other, more solar-friendly states. For purchasers, that cost gets cut down to about $14,000 once the 30 percent federal tax credit gets applied.

South Dakota Solar Financing Options

South Dakota residents only have two ways to pay for solar in the state: cash purchase and solar loans. Options like solar leases and power purchase agreements (PPA), which are afforded by other states, are not available in South Dakota:

Cash Purchase

As mentioned above, $20,000 is the average cost of a 5 kW solar energy system in South Dakota. While this is a significant upfront investment (especially compared to other states with upfront fees as low as $12,000), the federal solar tax credit will help ease the financial burden by 30 percent.

Because utility rates in South Dakota are below the national average, a solar PV system in South Dakota could take up to 16 years to offset the upfront investment. After 25 years, customers will have netted between $12,000 and $14,000 in total profits! Meanwhile, home value will increase by an average of $14,500.

Solar Loan

Solar loan is the other alternative to paying for a solar power system in the state. To cover the expenses of the average sized system, customers will need to borrow around $20,000, but will be credited 30 percent of those costs from the federal government.

Assuming 15-year terms and zero money down, customers will have saved nearly $5,000 in utility costs after the first year. Savings will decrease year over year, as loan payments remain more expensive than the utility bill. By year 15, borrowers will actually have paid approximately $8,000 in annual loan expenses. But once the loan is paid off, they will enjoy 10 years of savings, with the system becoming profitable by year 22. By year 25, customers will have netted more than $6,000 in annual savings.

South Dakota Solar Incentives

South Dakota’s solar incentives are scant at best. The state offers no solar power rebate program through the utility providers, nor sales tax exemption for the physical equipment (solar panels, inverters, roof mounting, etc.) used to build the system. South Dakota does not offer a low-income solar program to boot.

That said, the state’s solar incentive profile is not all bleak. With no state income tax, the federal tax credit becomes all the more valuable. Additionally, South Dakota does grant property tax exempt status for solar pane systems. This exemption is worth $50,000 or 70 percent (whichever is greater) of the total property value. This exemption can be applied for the first four years of system operation.

South Dakota Solar Policy Information

Similar to its solar incentives, South Dakota’s solar policies leave much to be desired. The renewable portfolio standard of 10 percent by 2015 is not only laughably low, but is also toothless, as its implementation is voluntary among utility providers. In other words, the state affixes no penalties or fines to power companies that fail to comply. On a similar note, the state requires no solar carve-out, meaning its current solar attribution (0.01 percent of all energy output as of 2020), will not likely grow. South Dakota has no net metering policy.

The one bright spot, policy-wise, in the state is in the form of its interconnection rules, which apply statewide, but come with qualifications. Prior to receiving utility grid approval, residential solar panel systems must have an external disconnect switch installed and an additional home insurance policy in place, both of which can be incredibly costly to homeowners.

South Dakota Solar Statistics

As of 2020, South Dakota has barely installed more than 2 megawatts of solar energy: 32 solar panel installations (the majority for utility solar projects) sending power to less than 200 homes. Only 13 solar installers and manufacturers operate within the state, employing less than 500 people. 

Interested in a solar quote? Check out the top-ranked solar companies in South Dakota and read reviews from verified solar customers.