South Dakota Solar Calculator

SD averages 5.0 peak sun hours — excellent for a northern state. Enter your Xcel Energy or Black Hills Energy bill to see 30% ITC + no sales tax savings + retail net metering. Simple incentives, strong sun resource.

Your South Dakota solar inputs

Monthly electric bill?

Utility?

System size?

Battery backup?

South Dakota solar estimate

20 × 400W panels (8 kW system)

Monthly usage1,000 kWh/mo

Annual production (SD 5.0 PSH)11,680 kWh/yr

Annual savings (net metering)$1,402/yr

Gross system cost$22,800

Federal ITC (30%)-$6,840

No sales tax savings (~4.5%)-$1,026

Net cost after incentives$14,934

Payback period10.7 yrs

25-year savings$35,040

SD's combination of 5.0 PSH sun + no sales tax + no state income tax + 30% federal ITC makes for solid fundamentals. No state solar tax credit or property tax exemption available. Low $0.12/kWh rates mean longer payback than high-rate states, but excellent sun resource helps. SD has no state income tax so no withholding benefit.

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How to Use This Calculator

South Dakota's solar advantage: excellent sun with simple incentives

South Dakota averages 5.0 peak sun hours — one of the best resources in the northern US. The Black Hills region around Rapid City receives even more. Combined with no state income tax (eliminating the need for a state tax credit), no sales tax on solar equipment, and retail-rate net metering, SD offers a clean, simple incentive structure. The 30% federal ITC is the primary incentive, and SD's low $2.85/W installation cost helps offset the low $0.12/kWh electricity rate.

Enter your bill and select your SD utility

Xcel Energy serves the Sioux Falls area and northeastern SD. Black Hills Energy serves Rapid City and the western Black Hills region. East River Electric and other rural co-ops serve much of central and eastern SD. All investor-owned utilities in SD are required to offer net metering. Enter your monthly bill, select your utility, and set your system size to see your estimated savings and payback period.

No state income tax means no state tax credit — but that's okay

South Dakota has no state income tax, so there's no state solar tax credit to claim (no tax return to claim it on). The flip side: all solar savings are state income-tax-free — your avoided electricity costs and any net metering credits aren't subject to SD state income tax. The federal 30% ITC remains fully available. SD's tax-free environment combined with 5.0 PSH sun makes it a solid solar market despite low rates.

The Formula

Monthly kWh = Monthly Bill ÷ Electricity Rate Annual Production = System kW × 1000 × 5.0 PSH × 365 × 0.80 efficiency ÷ 1000 Self-consumed kWh = Annual Production × 0.65 Exported kWh = Annual Production − Self-consumed kWh Annual Savings = (Self-consumed + Exported) × Retail Rate (SD net metering) Gross Cost = System kW × 1000 × $2.85/W + Battery ($12,000 if added) ITC Credit = Gross Cost × 30% Sales Tax Saving = Solar Cost × 4.5% (SD base rate, solar exempt) Net Cost = Gross Cost − ITC − Sales Tax Payback = Net Cost ÷ Annual Savings

South Dakota averages 5.0 peak sun hours — Rapid City (5.2 PSH) and the Black Hills area receive the most sun in SD; Sioux Falls (4.9 PSH) and Aberdeen (4.8 PSH) are slightly lower. SD's $2.85/W installation cost is among the lower in the region, reflecting competitive installer markets in both Sioux Falls and Rapid City. No sales tax on solar saves approximately $577 on a typical 8 kW system (4.5% × $12,825).

Example

Tom — Sioux Falls Xcel Energy customer

Tom is in Sioux Falls on Xcel Energy paying $120/month at $0.12/kWh. He wants an 8 kW system.

Monthly bill$120 (Xcel Energy, $0.12/kWh)

System8 kW, no battery

LocationSioux Falls, SD (4.9 PSH)

Result

Annual production~11,680 kWh/yr

Annual savings (net metering)~$1,402/yr

Gross system cost~$22,800

Federal ITC (30%)-$6,840

No sales tax (4.5%)-$513

Net cost after incentives~$15,447

Payback period~11.0 years

25-year savings~$35,050

SD's 5.0 PSH sun means Tom's 8 kW system produces 11,680 kWh/year — significantly more production than the same system in most northern states. The strong production (1,460 kWh/kW/year) partially offsets the low $0.12/kWh rate, giving him a reasonable 11-year payback. Over 25 years he saves $35,050. The combination of high production + low system cost ($2.85/W) + no sales tax makes SD solar more attractive than its low electricity rate suggests.

FAQ

Does South Dakota have a state solar tax credit? ▼

No. South Dakota has no state income tax, so there is no state solar income tax credit. The 30% federal Investment Tax Credit (ITC) is the primary tax incentive. SD homeowners can claim the full federal ITC on their federal return in the year the system is placed in service. There is no SD state return to file. The absence of state income tax also means your solar savings (avoided electricity costs) are not subject to SD income tax — a minor additional benefit.

Does South Dakota charge sales tax on solar equipment? ▼

South Dakota does not charge its 4.5% base state sales tax on solar energy equipment. This exemption covers solar panels, inverters, mounting hardware, wiring, and battery storage systems. Your installer handles the sales tax exemption documentation — you should not pay sales tax on the equipment portion of your installation. On a $22,800 system, this saves approximately $513 upfront. Some SD municipalities add local sales tax (typically 2%) — confirm with your installer whether local taxes apply to solar in your specific municipality.

How does South Dakota net metering work? ▼

South Dakota law requires investor-owned utilities to offer net metering to residential customers with solar systems up to 100 kW. Xcel Energy and Black Hills Energy both offer retail-rate net metering — exported solar is credited at your full retail rate ($0.12/kWh). Credits accumulate monthly. At year-end, remaining credits are typically paid out or rolled forward depending on utility policy. Rural electric cooperatives in SD are not required by state law to offer net metering, though many do voluntarily. Confirm your specific co-op's policy before installing.

Is South Dakota's sun resource really that good? ▼

Yes. South Dakota's 5.0 average peak sun hours is genuinely excellent for a northern state — comparable to parts of Texas and better than most of the eastern US. The Black Hills in western SD can see 5.2+ PSH due to high elevation and the semi-arid climate. SD benefits from the dry continental climate with less cloud cover than Great Lakes or Northeast states. The state's open plains landscape means minimal shading from trees or buildings for most residential installations. SD's combination of excellent sun + low installation costs ($2.85/W) + no sales tax gives it better solar economics than its low electricity rate initially suggests.

Does South Dakota have a property tax exemption for solar? ▼

South Dakota does not have a statewide property tax exemption for residential solar energy systems. The solar system's added value may be reflected in your property's assessed value. However, because SD has no state income tax and low property tax rates compared to many states, the lack of a solar property tax exemption has less financial impact than in high-property-tax states. Agricultural solar installations in SD may qualify for different property tax treatment — consult your county assessor. The 30% federal ITC remains the primary incentive for SD homeowners.

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