How Much Does Xcel Energy Pay for Solar in Minnesota?

This is one of the most common questions Minnesota homeowners have before going solar, and it’s a fair one. If you’re going to invest in a solar system, you want to understand what happens to the electricity you produce but don’t use. Does Xcel actually pay you? How does the math work? And is it worth it?

The short answer: Xcel Energy credits you for excess solar energy you send to the grid, and Minnesota’s net metering law guarantees that credit at the retail rate. Here’s what that means in practice.

Two Ways Xcel Compensates Solar Customers

If you’re on Xcel Energy in Minnesota, there are two separate programs that affect how your solar production translates into money:

1. Net Metering (the standard billing credit)
2. Solar*Rewards (a per-kWh incentive program)

These are different programs and work differently. Most Minnesota solar customers participate in both if they qualify.

How Net Metering Works in Minnesota

Net metering is the billing mechanism that lets you “bank” excess solar electricity. Here’s the simple version:

When your solar panels produce more electricity than your home is using at that moment, the excess flows back to the grid. Xcel’s meter tracks how much goes out. At the end of the billing period, Xcel nets your output against your consumption.

If you produced more than you used in a month, you receive a credit on your bill at the retail rate : the same rate you’d pay to buy that electricity from Xcel. You don’t get a check. You get a credit that rolls forward to offset future bills.

Minnesota state law (Minn. Stat. § 216B.164) requires that net metering credits be applied at the full retail rate. This is meaningful: some states use a lower “avoided cost” rate that’s significantly less than retail. Minnesota’s 1:1 retail rate is one of the more homeowner-friendly net metering policies in the Midwest.

What about excess credits at year-end?
If you accumulate more credits than you can use over the year, Xcel typically issues a small payment for the remaining balance at the end of the annual true-up period. The rate for this annual settlement is lower than the retail rate. Most well-designed systems are sized to avoid significant excess, the goal is to offset as close to 100% of your usage as possible without over-producing.

Solar*Rewards: Xcel’s Per-kWh Production Incentive

Separate from net metering, Xcel’s Solar*Rewards program pays an additional per-kilowatt-hour incentive for solar energy you produce. This is a direct payment for production, not a billing credit.

The Solar*Rewards rate changes over time as the program evolves. Because rates are updated regularly, we don’t publish a specific dollar amount here, hard-coded numbers go stale fast and we don’t want to mislead you.

For the current Solar*Rewards rate, go directly to Xcel’s program page: co.my.xcelenergy.com/s/renewable/solar-rewards

What to know about Solar*Rewards:

• It’s a production-based incentive, you’re paid for kWh produced, not consumed
• Payment terms are structured over a multi-year period
• The program has enrollment caps that open periodically, so availability varies
• Your Centauri installation advisor can tell you whether Solar*Rewards is currently open for new enrollments and what the current rate is at time of your installation

What This Looks Like on an 8kW System in Minnesota

Let’s ground this in real numbers without making promises about specific rates (which change).

An 8kW solar system in the Twin Cities area typically produces roughly 8,000 to 10,000 kilowatt-hours per year, depending on panel orientation, shading, and local weather. The average Minnesota household uses about 8,000 to 10,000 kWh per year.

A well-designed 8kW system in Minnesota is sized to offset close to 100% of a typical home’s annual usage. Under net metering at the retail rate, that means roughly eliminating your electricity bill over the course of the year, with summer overproduction building credits that carry through the darker winter months.

Add in Solar*Rewards production incentives and you’re earning on top of that. The exact dollar figure depends on current rates and your system’s actual production, your Centauri proposal will model this out specifically for your home based on roof data.

Minnesota’s No-Sales-Tax Advantage

One important financial detail that’s easy to miss: solar panel systems in Minnesota are exempt from state sales tax. That’s a direct savings of 6.875% on the equipment purchase. This is established in Minnesota statute and applies to residential solar installations.

On a $25,000 system, that’s roughly $1,700 you don’t pay. It’s not a rebate or a check, the tax simply isn’t collected at point of sale.

What About the Federal Tax Credit?

The federal residential solar tax credit (ITC) ended for systems installed after December 31, 2025. If your system was installed and operational before the deadline, you may have benefited from it, but for new installations going forward, the federal residential ITC is no longer in play.

For current federal incentive status, check energysage.com for updated guidance, or ask your Centauri advisor during your consultation.

How to Maximize What Xcel Pays You

A few things that affect how much credit you accumulate:

System size relative to your usage: A system sized to match your actual consumption generates the most useful credits. Oversizing means credits you can’t use; undersizing leaves money on the table.

Panel orientation and shading: South-facing panels at the right angle for Minnesota’s latitude produce the most over the full year. West-facing panels shift production toward afternoon hours. Your Centauri proposal models your specific roof.

Your Xcel rate tier: Because net metering credits at the retail rate, a higher usage tier means the credit is worth more per kWh. High-usage homes often see proportionally better financial performance from solar.

Time of installation: Solar*Rewards rates can vary by enrollment period. Earlier enrollment into a favorable rate period locks in better long-term economics.

Is It Worth It for Minnesota Homeowners?

For most Xcel customers in Minnesota who own their home and plan to stay 7+ years, the combination of net metering credits, Solar*Rewards incentives, and the no-sales-tax exemption creates a solid financial return. The exact payback timeline depends on your system size, current usage, and the specific incentive rates at your installation date.

The most useful thing we can do is run those numbers for your specific home. That’s what the Centauri consultation is for.

See how solar financing works for Minnesota homeowners | Learn about Centauri’s panel recommendations

FAQ: Xcel Energy Solar Payments in Minnesota

Does Xcel Energy send me a check for my solar energy?
Not monthly. Under net metering, excess electricity is credited to your bill, not paid as cash. If you have remaining credits at year-end, Xcel typically issues a small settlement payment for the balance at a lower-than-retail rate.

What is Minnesota’s net metering rate in 2026?
Minnesota law requires net metering at the full retail electricity rate, the same rate you’d pay to purchase electricity. This rate varies by usage tier and can change as Xcel adjusts rates, but the 1:1 structure is protected by state law.

How does the Solar*Rewards program differ from net metering?
Net metering is a billing credit for excess electricity you send to the grid. Solar*Rewards is a separate production incentive that pays per kWh your system produces. They work together but are administered differently.

What happens to my net metering credits in winter when I produce less?
Summer over-production builds a credit bank that rolls forward and offsets bills in lower-production months. Most well-sized Minnesota solar systems are designed with this seasonal pattern in mind.

Can I enroll in Solar*Rewards after my system is already installed?
Solar*Rewards enrollment typically happens at or before system activation. Your installer (Centauri) handles this enrollment as part of the installation process. Contact Centauri Systems to confirm current program availability.