Solar Panels in Michigan: Costs & Payback in 2025

Solar panels in Michigan are gaining popularity as more homeowners seek ways to reduce rising electricity bills and achieve energy independence. Despite the state’s cloudy reputation, Michigan gets enough sunlight for solar systems to perform efficiently year-round. Most residential systems now pay for themselves in about 9 to 12 years, and last 25 years or more.

With more installers and financing options available than ever, now is an ideal time to explore the cost of solar panels in Michigan, available incentives, and how much you could save by going solar.

How Effective Are Solar Panels in Michigan’s Climate?

Even with Michigan’s cloudy winters, solar panels perform efficiently thanks to long summer daylight hours and improving solar technology. Understanding how the state’s latitude, weather, and seasonal patterns affect production helps homeowners get realistic expectations for solar savings.

Solar potential in Michigan’s latitude and weather

Michigan’s mid-latitude climate delivers solid annual irradiance for residential PV. Winter days are shorter and cloudier, but long summer days and mild temps boost panel efficiency. System design (tilt/azimuth, module choice, inverter window) matters more than “cloudiness” alone.

Annual sunlight hours vs. nearby states

Michigan averages fewer peak sun hours than Illinois or Ohio in summer and more than many Northeast coastal areas in winter. For most homes, a correctly sized array will offset a large share of annual usage, even with lake-effect clouds.

Average system performance and ROI

Well-sited residential systems typically reach a 9–12 year payback (before considering battery add-ons). Performance hinges on shade, roof pitch, snow shedding, and inverter MPPT range. Good modeling and accurate stringing keep you in the inverter’s sweet spot year-round.

Cost of Solar Panels in Michigan (2025 Update)

Home solar installations in Michigan now average around $3.06 per watt, meaning a 5 kW system costs about $15,300 before incentives. Larger, well-designed systems often see slightly lower per-watt pricing, while small or complicated rooftop layouts trend higher.

Typical pricing examples:

• 5 kW ≈ $15,300

• 6–7 kW systems may come in near or a bit under that per watt, depending on roof conditions

• 10 kW+ systems can exploit economies of scale if layout and roof complexity permit

Your total project cost includes:

• Equipment: panels, inverters or optimizers, racking, wiring

• Labor: mounting, site prep, electrical work

• Soft costs: permits, engineering/PE stamps, interconnection, inspections

• Extras: battery add-ons, monitoring systems, critter guards, or service extensions

Cost drivers in Michigan:

• Roof complexity, steep slopes, or multi-plane roofs

• Shading, orientation, and layout inefficiencies requiring advanced hardware

• Electrical upgrades, long wiring runs, or utility service work

• Ground-mount or pole systems — they add trenching, foundations, and structural work but can improve energy yield

For most homes, rooftop systems deliver lowest upfront cost and fastest payback. Ground-mounted arrays may yield more due to optimal tilt and placement, but at a higher initial investment.

Home Energy Consumption & Michigan Solar Panel Potential

According to EnergySage, the average monthly electricity bill in Michigan is approximately $192, totaling around $2,304 annually. Investing in Michigan solar panels offers a promising opportunity for homeowners to significantly reduce these costs. Properly sizing the solar system is critical to maximizing savings on electricity bills and promoting energy independence.

For the average Michigan household, a 6 kW solar system is typically sufficient to meet most electricity needs. However, accurately determining a home’s solar requirements involves reviewing at least a year’s worth of utility bills. This data highlights seasonal energy consumption patterns, offering valuable insight for tailoring the system size.

Seasonal energy use in Michigan often peaks during summer due to air conditioning demands. However, in homes with electric heating—particularly in northern Michigan, where winters are colder—electricity usage tends to spike during winter months. This fluctuation shows the importance of carefully designing solar panels in Michigan to optimize energy production year-round, taking into account both seasonal energy demands and local weather conditions.

Switching to solar panels in Michigan allows homeowners to leverage renewable energy to lower their energy bills while contributing to a sustainable future.

Payback Period of Solar Panels in Michigan

The average payback period for a solar power system in Michigan is usually between 9 and 12 years. Properties with greater solar energy potential will have more productive PV systems. However, the payback system varies by the cost of the equipment, labor, and grid electricity, and whether the homeowner can take advantage of solar incentives. For example, in areas of Michigan with higher electricity costs, the solar payback period will be shorter.

The average residential electricity rate in Michigan was 19.67 cents per kilowatt hour (kWh) as of August 2024, and the average household uses 953 kWh of power each month. But these stats vary throughout the state and by household. Also, if future electricity costs increase rapidly, this will decrease the payback period for solar panels in Michigan.

Michigan Solar Panel Permits

Solar energy experts at GreenLancer, a Detroit-based company specializing in solar permit design and engineering, recently conducted a study of the time it takes to complete the solar permitting and interconnection processes.

Of the 16 states included in the solar permitting study, Michigan ranked 12th with a median permitting and interconnection time of 53 days. Although permitting solar panels in Michigan can be relatively slow, some cities, including Detroit, East Lansing, Ann Arbor, and Grand Rapids, now offer online solar permitting.

Incentives for Solar Panels - Michigan

Several solar incentives in Michigan make solar power more affordable.

National Solar Panel Incentives

The U.S. government offers a federal tax credit for 30% of the total solar system cost, known as the investment tax credit (ITC), and Michigan residents are eligible. The ITC takes into account the total cost of solar panels in Michigan, including equipment, labor, and additional expenses such as solar batteries.

For residential Michigan solar panels, the home must be a primary residence or vacation property, and the homeowner must own the solar system (not lease it). Also, the homeowner must have a sufficient tax liability with the IRS to take advantage of the federal solar tax credit. Likewise, businesses can take advantage of the tax credit and write-offs.

To calculate the value of the tax credit, multiply the cost of the solar array by 30%. For example, if the solar panel system costs $15,000, then the tax credit = 15,000 x .3 = $4,500. This credit will be put towards any tax liability residents hold at tax time. If the full 30% credit is more than the tax liability, it can be rolled over into the next tax year.

State- And Local-Level Michigan Solar Panel Incentives

Although utility companies no longer need to offer net metering for Michigan solar panel systems, there is a Distributed Generation program that compensates solar homeowners for surplus solar energy to the electric grid. Solar systems are interconnected on the utility grid, enabling utility companies to supply the grid with energy from solar panel installations.

Many Michiganders also have Commercial Property Assess Clean Energy (C-PACE) financing programs available for commercial, industrial, and multifamily properties that make clean energy or energy efficiency improvements. This low-cost, long-term financing mechanism offers a fixed interest rate that is paid through property tax payments.

In addition, Michigan offers an alternative energy property tax exemption for systems under 150 kW and must offset some or all of the electricity used on the property. This solar property tax exemption ensures that taxes don’t increase due to installing an onsite renewable energy system.

FAQs About Michigan Solar Panels

Let’s examine some of the FAQs that your potential solar clients may ask.

What solar financing options are available in Michigan?

There are various ways to finance residential and commercial solar systems in Michigan. For example, Michigan Saves is a non-profit green bank that offers solar loans for residential homes and commercial properties, and C-PACE financing is available for commercial and multi-family solar PV systems.

Some homeowners use home equity loans, which may be tax-deductible. Also, certain Michigan contractors offer solar leases or Power Purchase Agreements (PPAs), and some customers may opt to make a cash purchase. Sometimes solar contractors partner with solar financing companies to offer this service to customers.

Are solar panels in Michigan worth it?

Solar panels in Michigan are an excellent way to drastically decrease electricity bills and boost the resale value of homes. Most solar panel systems in Michigan pay for themselves with utility bill savings in 9 to 12 years, but the lifespan of solar systems is usually between 25 and 30 years. That means home and business owners can enjoy many years of low-cost solar power.

A quality solar installation is critical to ensuring years of savings. A solar company that provides a long labor and service warranty for solar installations helps protect the clean energy investment of its customers.

How long do solar panels in Michigan last?

Michigan solar panels generally have a lifespan of 25 to 30 years, with a gradual decrease in efficiency over time due to degradation. On average, the degradation rate is around 2.5% in the first year and 0.5% annually after that. This means solar panels in Michigan could retain approximately 85.5% of their original efficiency after 25 years.

Known for their reliability, PV panel defects are rare. However, regular maintenance and proper care of solar panels can help extend their lifespan and maintain optimal performance.

Does Michigan use a lot of renewable energy and solar power?

Currently, 11% of Michigan’s electricity comes from renewable sources, with the majority from wind power. Coal power plants provide the largest share of electricity at 32%. However, the state plans to phase out the use of coal power plants by 2030, so it is critical to promote energy efficiency and the use of solar panels in Michigan

Installed solar energy capacity has increased significantly in recent years, especially in 2021 and 2022, when more than 400 MW of new capacity was added each year. Numerous utility-scale solar farms in various stages of development in the state have 100 MW or more of planned capacity.

Are there specific regulations for installing solar panels in Michigan?

Regulations govern residential and commercial solar installations in Michigan. These may include building permits, interconnection agreements with utilities, and compliance with local zoning ordinances. Understanding these regulations is crucial for a smooth solar permitting process. GreenLancer specializes in solar permit design and engineering services.

Can I install solar panels in Michigan myself?

Although it's technically possible for handy homeowners to install DIY solar panels in Michigan, it's important to be aware of permitting and interconnection requirements. The state has specific regulations and permitting requirements for electrical work, including solar panel installations in Michigan. Also, connecting solar panels to the grid requires following interconnection standards set by local utility companies, presenting further challenges for self-installation.

DIY solar installers in Michigan need to navigate these regulations, which can be a complex and time-consuming process. GreenLancer offers numerous solar design and engineering services, including PV interconnection and permit-ready solar plan sets, which help streamline these processes. Create a free account to begin shopping for permit-ready solar plan sets, interconnection drawings, and engineering reviews.

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Is there net metering for solar panels in Michigan?

In Michigan, most utility companies no longer offer net metering for solar panels. Instead, homeowners can enroll in the Distributed Generation program, which allows them to provide excess energy back to the utility. The Distributed Generation program sets specific interconnection and net metering standards, enabling customers to generate up to 110% of their annual electricity consumption. This program replaces traditional net metering and allows homeowners to receive credit for the excess electricity they generate, but at a much lower wholesale or avoided cost rate.

Advocates for solar energy in Michigan often criticize this change to net metering laws because homeowners are no longer compensated at the retail rate for surplus solar power. Many believe this isn't fair compensation for solar power.

Do I need to remove snow from solar panels in Michigan?

In Michigan, removing snow from solar panels isn't necessary, and it can actually be risky and unsafe. Solar panels are typically angled, which allows snow to slide off once the sun comes out. Attempting to remove snow with tools like a rake can scratch or damage the panels, reducing their efficiency and lifespan. Plus, getting up in a roof that may be icy can be very dangerous. So, it's generally best to let the snow naturally melt or slide off of solar panels in Michigan.

Solar Panels in Michigan Are Worth It For Many Residents & Businesses

The solar energy industry in Michigan is rapidly growing in Flint, Detroit, Grand Rapids, and beyond. As electricity prices increase, so will the savings from solar panels in Michigan.

As clean energy use increases, the use of fossil fuels for electricity will taper down, especially coal consumption. Although Michigan doesn’t offer state-wide solar rebates, numerous other solar incentives are available, including net metering and the federal solar tax credit.

The GreenLancer platform has a number of vetted drafting and certified engineering partners who specialize in all jurisdictions throughout Michigan and the rest of the United States. Sign up for free, or contact us using the form below to solve your next solar permitting or engineering roadblock!