Solar Panels in Michigan: Installers, Costs and Incentives

There are plenty of reasons to get solar panels if you live in Michigan, but the lack of state solar incentives and a cap on solar interconnection makes going solar in Michigan a bit difficult. 

Rising electricity rates are reason enough for many homeowners to install solar panels. And while Michigan's electricity rates have increased over the years, frequent power outages are another reason why Michigan homeowners choose to go solar. Michigan suffers from frequent power outages, with the state's winter storms posing a threat to the reliability of the power grid during periods of extreme temperatures. 

"The Michigan grid is in the bottom ten in terms of reliability and performance in the country," Robin Dutta, a campaign director with Local Solar for All, a clean energy advocacy group, told CNET. "That's been the last few years fairly consistently."

Here's what you need to know if you're considering switching to solar in Michigan.

Best national solar companies in Michigan

Local Michigan solar installers

You don't have to go with a big national firm if you want to go solar. Here are some local companies worth considering.

How to determine which solar company in Michigan is best for me

You'll likely have multiple solar installer options in your area. But which is the best and how can you tell? Every house is a bit different, so every solar installation will be different as well. What you really need is an installer who has experience working with the type of roof you have, and the type of system you want installed.

Ben Delman, a communications director with Solar United Neighbors, a clean energy nonprofit, says homeowners should look for solar installers that are certified by NABCEP and have the proper licensing and permits to do their work. Read up on online reviews from as many sources as you can, too. Google and Yelp reviews are a good starting point. Look for solar companies with at least 20 to 30 positive reviews. If you know someone who has solar panels installed on their roof, you can ask them for recommendations too. 

Make sure that your installer is getting the best angle and orientation possible for your system, Dutta said. 

"You want to make sure that they're looking at the orientation of your system so that you can maximize the generation of the system," Dutta said. "So typically that's a south or southeast facing orientation. And if it's not, for some reason, make sure they can explain why and why it's beneficial."

Make sure you're familiar with how the federal solar tax credit works. Your solar installer should be able to explain it accurately. If they can't, that's a red flag. Your installer should also be able to clearly define how pricing works before beginning the project. 

According to Delman and Dutta, a good solar installer should be able to: 

• Give good word-of-mouth references
• Explain the project and working deadlines in detail
• Clearly lay out the cost of everything beforehand. There shouldn't be any surprise charges 
• Define technical terms in an easy-to-understand manner
• Accurately explain how the federal solar tax credit works
• Design a system that is as efficient and beneficial as possible for your needs
• Be knowledgeable and transparent about how financing works
• Have knowledge about the local permit requirements and the process for system interconnection with your local utility company
• Understand homeowners association restrictions and assist you in navigating that process
• Answer any question, even the difficult ones

Read more: Just looking for an emergency backup? Check out portable solar panels and solar generators.

Average cost of solar panels in Michigan

Here's a look at the average cash price for a 5-kilowatt system before factoring in tax credits and incentives, according to data from FindEnergy.com. But your system could cost more if you choose to install a solar battery.

Michigan solar panel incentives and rebates

The most substantial solar incentive in Michigan is the residential clean energy credit. This federal solar tax credit applies to solar panels purchased between 2022 and 2032, and allows you to claim 30% of the total cost of your system back in tax credits. 

Michigan doesn't offer traditional net metering. Instead, there is a similar program called the Distributed Generation Program. You won't receive a set compensation rate for any excess solar sent to the power grid. 

"The compensation that solar owners get for the excess power that they produce is less than the retail rate of the electricity that they pay for," Dutta said. "And that has definitely hurt the value proposition for solar in Michigan."

How to pay for solar panels in Michigan

When it comes to the actual purchase of your solar panel system, you've got lots of options. Here are some of the most common. 

Cash: Paying cash for your panels is an interest-free way to pay for solar panels, but requires a large amount of upfront capital. If you're not ready to go solar yet, consider saving some money in a high-yield savings account.

Solar loan: Your installer will likely offer you financing options via a solar loan. These solar loans are an alternative way to buy a solar array and qualify for tax incentives, but you will have to pay interest. 

Other financing options: Solar loans from your installer aren't your only financing option. You could also consider taking out a personal loan through your bank or opening a home equity line of credit.

Solar lease: When you lease a solar system, you don't own it. Instead, you pay for the use of company-owned solar equipment. Going with a solar lease will save you more money up front, but less over time. Not every solar company offers solar leases. 

Power purchase agreements: When you sign a power purchase agreement, you pay for the electricity generated by a third-party solar panel system to power your home. Certain states don't offer power purchase agreements.

Interconnection limits might hinder your ability to go solar in Michigan 

The state of Michigan has a cap in place on the amount of distributed generation that can be installed. The amount of distributed generation generally cannot be more than 1% of a utility's peak load. This limits the amount of solar panel systems that can be connected to the power grid. In other words, if your power company is at its maximum distributed generation capacity, you might not be allowed to install solar at all. 

"Michigan Public Service Commission has been able to get that cap expanded a little bit, especially over the last two years, but there's still a cap in place," Dutta said. "So first things first, a homeowner needs to make sure that they're in an area that still has room and still allows solar to be installed."

But things are slowly improving for solar power in Michigan. DTE, one of the largest power companies in the state, recently expanded its cap from 1% to 6%. Consumers Energy is another major electric utility in the state that raised its cap from 2% to 4% at the beginning of 2023. 

"What residential gets is a subset of that four to six percent. And so it's still a real question. Are they even allowed to install solar?" Dutta said.

Solar supporters and clean energy advocacy groups in the state oppose the cap. And while there have been small increases made, Michigan solar supporters would like to see the cap eliminated completely. 

"There's no real reason why it should exist in the first place," Dutta said.

Installation factors to keep in mind

Besides deciding on your budget, solar installer, purchase and financing method, consider these five aspects of your home when considering residential solar panels.

Own or rent. Homeowners are set up to get the best incentives and return on investment with solar panels. Renters who want to use renewable energy are better off looking into community solar programs. 

Roof condition: If your roof needs repairs before solar panel installation, factor that expense into your budget. Make sure your installer advises you on how the size and slope of your roof will affect panel placement and performance. A roof oriented toward the sun with an unobstructed view will generate more electricity.

Location: Some states receive more sunlight than others. Michigan doesn't get nearly as much sunlight as other states, only receiving about four hours of peak sunlight per day. 

Neighborhood and HOA rules: Michigan does not have solar rights laws, which means homeowner associations can ban solar panels. Check your neighborhood bylaws before proceeding with solar installation. A reputable installer should help you navigate this. 

Homeowners insurance: Consult your home insurance company to ensure a solar system can be covered under your policy.

How we found the best solar companies 

Doing a hands-on review of a solar company is difficult, and considering all the differences between projects is impossible. Instead, we focused on what we can measure and meaningfully compare among solar companies.

When evaluating solar companies, we focus on three categories of criteria: equipment, warranties and service. 

For the equipment category, companies receive scores for the panels, batteries and inverters they install. The warranty category includes the guarantees on the panels, workmanship and weatherization against leaks. Solar companies will earn points in the service category if they offer a price match guarantee, a decent level of price transparency and a well-rated app for monitoring solar energy production. Solar companies lose points if there are glaring issues concerning customer service. This includes lawsuits, investigations or reputations for low-quality service. These service issues will always be detailed in the review.

Here's a more detailed look at how we break down the scoring.

We don't consider the average price of a solar company's installations in their score. Accurate and reliable pricing information is hard to find and difficult to compare across service areas (and even project to project). Solar companies are often slow to disclose this information as well. We also leave out easy-to-find (but not useful information), such as how many states a company operates in.

Frequently asked questions