South Dakota solar 101: must read before you buy solar panels

The main solar incentive that works across all United States is the Solar Investment Tax Credit (ITC) program. By applying to this program, all Americans can deduct 26% of the total cost of their installation from the income tax. The PV system cost doesn’t amount to only how much you’ve spent on your solar panels, but includes the shipping and installation as well. To claim the ITC, complete all the necessary forms and submit them when filing your taxes. It makes sense to hurry up: in 2023 the Tax credit decreases to 22% and after that it’s 10% for commercial systems only.

A solar system pays for itself primarily through the Net Metering program. The essence of it is the same across all states: you sell solar energy that you haven’t used into the commercial grid and gain credits from the utility company for it. The credits later can be used to cover your electric bills. South Dakota, unfortunately, doesn’t have a statewide Net Metering policy. That means that the options and conditions of selling solar energy into the grid have to be discussed with the utility directly. Ask your electric supplier and installer about the possibility of Net Metering beforehand.

In South Dakota, solar systems under 5 MW are exempt from property taxes. Not completely: the exemption stands for first $50,000 or 70% of the assessed value of a system, whichever is greater. Since the average cost of a home solar system in the US ranges from $10,000 to $30,000, that means residential installations almost always get a full exemption.

There is an alternative tax policy for commercial solar systems greater than 5 MW in size in South Dakota. Instead of all taxes on real and personal property established by the state, the county or the municipality, there is an annual tax of $3 per kW and an annual production tax of $0.00090 per kWh of electricity produced. This South Dakota solar incentive is aimed at speeding up the rise of the industry in the future.

When you install a solar system, it’s important that it gets as much sunlight as possible. Sometimes objects on your neighbors’ land can deprive your installation of the sun and cast shadows over your PV modules. Therefore South Dakota solar laws include the guidelines for solar easements: documents that secure your right to adequate exposure of a system to the sunlight. Easements have to be written down and recorded in the office of the county’s register of deeds. A document can last for up to 50 years. According to South Dakota Codified Laws, it shall include:

•  A legal description of the real properties: the one that is subject to the easement and the one that benefits from it;
• A description of the vertical and horizontal angles (in degrees) and distances from solar system in which an obstacle to the sunlight is prohibited or limited;
• Terms and conditions under which the easement is negotiated or may be ended;
• Any provisions for compensation of the owner of the real property who benefits from the document in the case of interference with the enjoyment of the easement, or compensation of the one who maintains the easement;
• Any other provision necessary or desirable to execute the instrument.

In the US, you often need a permit to install a solar system. Not long ago the South Dakota Public Utilities Commission released the Solar Energy Basics guide. It doesn’t mention anything about statewide requirements for solar permits. However, the officials point out that consumers should contact the utility company about connecting the system to the grid and look into local permitting requirements that can vary in cities and counties. Usually you can rely on your installer whether it is legal to install solar panels on your house in South Dakota and how to do it properly. Be aware that local authorities and utility companies can impose fees on you for inspections or permits.

South Dakota experiences 36 tornadoes on average every year. Solar panels withstand harsh weather very well and aren't afraid of tornadoes. Most tornadoes have wind speeds below 110 mph and PV modules are tested to endure 140 mph winds minimum. Therefore when you go solar, you don’t need to worry about tornadoes as a threat to your photovoltaic system. Quite the contrary: an off-grid solar system in South Dakota can supply you with electricity when the commercial grid is down, which often happens during natural disasters.