As a long time Montana resident and solar advisor, I‘ve seen firsthand how our state‘s abundant sun resources combined with the right incentives can add up to real energy bill savings. But historically, low utility rates have challenged fast solar growth here compared to other states.
In this guide tailored for Montana homeowners, let‘s dig into smart strategies for slashing the cost of going solar even with our affordable electricity prices.
Montana‘s Solar Landscape Today
While Montana ranks high for annual solar potential, just 0.2% of our electricity came from small-scale solar as of 2021. That amounts to only 39 megawatts (MW) of cumulative installed capacity over the past decades.
For comparison, Montana has over 3,000 MW of coal generation capacity. And our total technical potential for rooftop solar alone exceeds 1,300 MW – enough to power 190,000 homes!
So why the slow adoption of home solar despite excellent sun resources? Cost has been the driving factor…
High Upfront Solar Equipment Costs vs. Cheap Utility Rates
| Average MT Electricity Rate | $0.11 per kWh |
| Average Solar Install Cost | $2.40 per Watt |
| Est. Payback Period | 12 years |
With the average payback period on buying a new solar system hovering around 12 years, Montana has lagged behind sunnier but more expensive electricity states like California and Arizona where paybacks can be under 5 years.
The good news is that federal and state incentives can help cut the cost gap substantially. Let‘s break down the options.
Slide Into Home Solar Savings with Federal Tax Credits
The single best program available for slashing Montana solar costs is the 26% federal investment tax credit.
This dollar for dollar tax credit cuts nearly 30% right off your final solar equipment and installation costs. For a $15,000 system, you‘d save over $4,250!
The tax credit applies to any "qualifying solar energy system" on your home, apartment, condo or even newly built residences. And it can directly offset what you owe in taxes.
For a household already planning to itemize deductions, the solar credit provides an extra bonus.
Here is a simple example:
- 6 kW Total Solar Installation Cost: $14,500
- Federal Tax Credit (30% of 14,500): $4,350 credit
- Out of Pocket Solar Cost After Credit: $10,150
Your Takeaway: File for the 30% federal solar tax credit to immediately save thousands off your Montana solar installation.
But act soon – this valuable credit does start phasing down annually beginning next year before expiring fully in 2034. The sooner you install, the higher percentage you‘ll receive.
Federal Solar Tax Credit Schedule
| Year | Credit Percentage |
|---|---|
| 2023 | 30% |
| 2024 | 26% |
| 2025 | 22% |
| 2026 | 10% |
| 2027+ | 0% |
With electric rates rising over time, capturing the most federal credit now makes sense to maximize savings potential in Montana.
Our historical median payback period has been around 11-12 years without incentives. But with the 30% federal tax credit in effect, we could cut typical solar paybacks down to 8 years.
Lean on Net Metering to Balance Out Solar Production
In addition to upfront federal tax credits, Montana homeowners with solar panels can tap into long term savings through net metering.
This policy allows you to earn credits on your energy bills whenever your solar panels generate more electricity than you use in your home during that month.
For example, if your array produces 850 kWh in August but you only use 650 kWh, that 200 kWh excess gets banked on your utility account. You can then draw from those credits later to shrink bills in lower production winter months.
Trading intraday is prohibited to prevent abuse. So the value lies in month to month smoothing.
Montana‘s largest utility NorthWestern Energy tried ending net metering a few years ago through added solar fees that would have disrupted the economics. Fortunately regulators upheld the policy, keeping net metering stable until solar reaches 5% of total statewide generation.
At our current pace, we likely won‘t approach that threshold until 2040 or beyond. So net metering provides reliability.
To estimate your future net metering savings with solar panels:
- Review 12 months of electric bills to calculate average monthly kWh usage
- Use a solar estimator to determine projected monthly kWh output from a planned solar array
- Subtract usage from production to see potential excess "net metering credit" generation each month
This helps give a realistic view on long term utility bill reduction.
Let‘s walk through an example:
- Average Monthly Usage: 650 kWh
- Estimated Production from 6 kW Solar Array: 800 kWh
- Excess Monthly Solar Credits: 800 – 650 = 150 kWh
Accumulating these 150 kWh credits monthly is where the value of net metering really adds up!
Dodge Increased Property Taxes With Solar Exemptions
When making home improvements that increase assessed value, it can sting seeing that property tax bill jump.
Thankfully, Montana offers a complete residential solar property tax exemption. This means if your home value rises specifically due to adding solar panels, you pay no additional tax on that portion of value over 20+ years.
Navigating the exemption begins when filing for solar permits. Be sure to submit a Property Tax Exemption for Renewable Energy Application along with your permit to lock in.
Without the exemption, increased taxes on a $15,000 solar system could cost over $5,000 extra over 20 years depending on local rates. Avoid leaving any money on the table!
Below I‘ve calculated estimated lifetime property tax savings based on typical solar equipment costs in Montana:
| System Size | Added Value | Est. Lifetime Tax Savings |
|---|---|---|
| 5 kW | $15,000 | $4,875 |
| 7 kW | $21,000 | $6,825 |
| 10 kW | $30,000 | $9,750 |
Your Takeaway: File for Montana‘s property tax exemption on solar installations at the time of permitting to avoid 20+ years of higher tax bills.
Weigh the True Cost of Solar Leasing
Some installers may encourage entering a solar lease or power purchase agreement (PPA) rather than buying a system. Under these deals, you pay a locked-in rate for solar electricity from an array owned by the installer on your property – usually for 15-25 years.
But solar leasing forfeits major savings like federal tax credits and net metering in Montana. And eventually, you pay the leasing company far more than if you owned the system yourself.
To illustrate the numbers…
Purchased 6 kW Solar Array
- 25 Year Cost: $14,500 (after tax credit)
- Est. Production: 800 kWh x 12 x 25 years = 240,000 kWh
- Total 25 Year Price Per kWh = $0.06
Solar Lease PPA
- 25 Year Cost at $0.13 per Kwh: $31,200
- Est. Production: 240,000 kWh
- Total 25 Year Price Per kWh = $0.13
By owning solar instead, you could save over $16,500 compared to signing a long term lease or PPA. And remember – utility rates keep rising over time. Locking yourself into a solar lease removes that hedge against inflation.
There are a few cases where leasing makes sense, like renters installing solar. But for most Montana homeowners, owning your array drives maximum savings.
Your Takeaway: Carefully weigh the risks before binding yourself to a 20 year solar lease. Owning solar panels unlocks the most incentives and control.
Finding Solar Support in Big Sky Country
Once you‘ve weighed all the numbers for your situation, partnering with qualified local solar professionals ensures a smooth transition to solar power.
Seeking installers certified by the North American Board of Certified Energy Practitioners (NABCEP) provides assurance of their training and expertise. Preferably choose from Montana‘s Solar Ready Vets brigade as well – these talented veterans represent some of our state‘s best in solar expertise.
Reach out to multiple installers for free consultations without obligation. I always advise homeowners to ask an array of questions on proposed equipment quality, warranty coverage, estimated production outputs and more.
Vetting questions might include:
- What efficiency solar panels do you recommend for Montana‘s climate and why?
- How long have you been installing solar power systems locally?
- Can you provide references from past customers with installations similar to my home?
- Who will pull necessary permits and handle inspections?
In my years advising Montanans on home solar purchases, I‘ve found that a provider‘s responsiveness and patience answering your questions is telling. Rushing into solar blindly rarely leads to the best outcome.
Let the Sun Power Your Energy Savings
Hopefully this guide has shown several compelling reasons to go solar in Montana despite our already reasonable utility prices. Tapping into federal tax credits, net metering savings and property tax exemptions can swiftly offset your purchase costs. finding the right installer seals the deal.
If exploring your own solar options sparks interest or raises additional questions, don‘t hesitate to drop me a line. I love analyzing the nuances and potential of home solar for Montana residences. Let‘s chat!
