The state of Minnesota has reduced electricity generation emissions by 54% since 2005. That’s an undeniably impressive feat, and is a goal that’s largely reliant on an increasing shift towards off-grid power sources and, crucially,
Energy storage solutions (ESS) like battery storage make it possible for home and business owners to make the most of solar power potential, minimizing solar energy wastage, and working swiftly towards Minnesota’s goal of achieving net-zero emissions by 2050. But these solutions often come at a steep cost to the user.
In areas like Isanti County, MN, a 20kWh storage system (suitable for large homes) can cost as much as $24,000, while
an enterprise-size 100 kWh storage setup costs as much as $150,000. That’s an expense few people can justify, nevermind the potential savings that energy storage promises.
Luckily, there is now a range of ESS grants available in Minnesota to help offset these costs and make energy storage worthwhile at every level. Keep on reading to find out what these energy storage incentives are, and how they could help energy storage. your clean energy quest.
Understanding MN Energy Storage Incentives
As of August 2024, MN energy storage incentives became available for battery systems up to 50 kWh when paired withexisting home or business solar energy systems. These incentives aim to partially cover energy storage installation costs, which, as we’ve discussed, are often high.
Two programs are available within this initiative, which are administered by either Xcel Energy or the Department of Commerce.
The programs can be broken down as follows:
- Xcel Energy customers: In November last year, Xcel Energy set aside $3,480,000 of incentives, with a low-income cutout for customers inside its service area. These grants sit alongside Xcel Energy’s pre-existing Solar Rewards program, and provide an incentive within 30 business days of adding a new battery storage system to a new or existing solar Interconnection Agreement for your home or small business. Upfront incentives within this program include:
- $175 per kWh up to a $5,000 maximum
- Income qualified $370 per kWh up to a $5,000 maximum.
- Outside Xcel Energy Territory: The Department of Commerce has also set aside approximately $2,160,000 for customers outside of Xcel Energy territory, who may be eligible for:
- $250 per kWh up to a $7,000 maximum
- Income Qualified Pilot Program $1,000 per kWh up to a $15,000 maximum ($270,000 in available program funds)
The Department of Commerce is also working in collaboration with the Tribal Advisory Council on Energy to develop a program specific to Tribal Nations.
While not everybody will meet the eligibility criteria, it’s well worth looking into the application process for these initiatives if you fall within current usage guidelines and are looking to enhance an existing or new solar system.
Considering Solar Battery Tax Credits
It’s also worth considering battery tax credits like the Federal 25D battery storage tax credit. This uncapped tax credit covers 30% of eligible costs when purchasing and installing a battery storage system in a household that pays federal income tax.
This program is available as part of the 25D Residential Clean Energy Property Credit, meaning that it only applies to residential installations (commercial projects should apply and look into section 48 of the IRS code for a similar 30% tax credit), but the 25D tax credit applies to a range of residential projects, including:
- Solar panels
- Battery storage technology
- Solar water heaters
- Geothermal heat pumps
To qualify for the tax credits program, a residential energy storage battery must have a capacity rating of 3 kWh or greater, and should be installed in a US property that’s the primary or secondary residence of the taxpayer. Aside from these stipulations, there’s no dollar amount cap on this tax credit, though you will need to subtract product price adjustments like solar rebates and utility subsidies.
It’s also vital to note that solar battery tax credits are already in the process of being phased out, and will be reduced by roughly 4% annually from the end of 2032. Homeowners considering solar plus storage should act sooner rather than later, before they miss out.
Could Your Home or Business Benefit from MN Energy Storage Incentives?
MN energy storage incentives and tax credit initiatives offer undeniable benefits to eligible candidates, but it’s vital to
ensure your eligibility and consider which scheme is best suited to your needs, before you enter a lengthy application process.
Homeowners, in particular, will need to consider whether energy storage incentives or tax credits would be the most lucrative option, while businesses will need to be sure of MN energy storage eligibility, and cost saving potential, before they go ahead.
However, if you’re considering energy storage incentives in Minnesota, then these offerings could undeniably be worth your while.
