Is solar worth it in South Dakota in 2026?

For a home with a $150 monthly bill, a 9.1 kW system in South Dakota costs about $32,812 at the state's median price and pays for itself in roughly 34.4 years, with no federal tax credit. That ranks 49 of 50 states we cover.

Updated October 8, 2026 · Estimates, not a quote

Residential electricity price

14.5¢per kWh

Source: EIA, 2026 year to date

Solar output in Sioux Falls

1,362kWh per kW a year

Source: PVGIS, NSRDB data

Median installed cost (US), 2025

$3.60per watt

Source: Berkeley Lab

Calculator · 2026 data, no federal tax credit

How long would solar take to pay for itself?

StateAverage monthly electric bill$Installed cost per watt (state median; use your quote)$Value of solar power vs. retail rate (why)%

Simple payback

34.4 years

System size: 9.1 kW
Installed cost: $32,812
Savings, year one: $954
Net over 25 years: $-10,339

Sized to cover your yearly use at today's price. Panels lose 0.5% a year; prices held flat. Method

How South Dakota pays for your solar power

No statewide rule; set by each utility. South Dakota has no statewide credit rule: each utility files its own buyback rate with the PUC. Xcel Energy pays 3.16 cents/kWh for every exported kWh (2026), NorthWestern 2.547 cents, Otter Tail about 4.6 cents.

In the calculator, 40% of your solar output is used at home at the retail price and the rest is exported at about 22% of retail, so each solar kWh is worth 53% of the retail price on average. Change it if your utility pays more or less. Method

How exports are credited

South Dakota has no statewide credit rate for rooftop solar. Each utility files a tariff for small qualifying facilities (the federal PURPA category that covers home systems) with the Public Utilities Commission (PUC), and the PUC approves the buyback rate. The rate is a fixed price per exported kWh, well below what you pay to buy power.

Xcel Energy (Sioux Falls area). Its Occasional Delivery Energy Service (rate code E50) took effect January 1, 2026 after a PUC order dated October 24, 2025. Electricity Xcel supplies to your home is billed on the normal retail tariff, and energy your system delivers to Xcel is paid $0.0316 per kWh. The tariff caps paid deliveries at 2,000 kWh a month; anything above that is uncompensated. The metering charge is $3.75 a month for single phase, the contract term is at least 12 months, and Xcel bills the customer individually for interconnection costs. A time-of-delivery option (E52) pays 3.97 cents on peak and 2.72 cents off peak.

NorthWestern Energy. Rate 73 pays $0.02547 per kWh for energy delivered to the company, plus a $2.00 monthly customer charge, effective April 1, 2025. Rate 74 pays 3.241 cents on peak and 1.948 cents off peak. The tariff also lists a capacity payment of $4.29 per kW for solar.

Otter Tail Power. The PUC approved Otter Tail’s updated small power rates on March 27, 2026, effective April 1, 2026. The avoided energy cost in the filing is 4.571 cents/kWh, with a renewable energy credit component of 0.096 cents and a solar credit of 0.300 cents.

Black Hills Energy (Rapid City area). Black Hills Power proposed a new qualifying facility tariff in 2021 that would pay 2.48 cents/kWh for all generation. The parties settled and the PUC dismissed the docket on October 14, 2021 without approving that tariff. The current Black Hills buyback terms were not confirmed, so ask the utility for its tariff before you decide.

Co-ops and municipal utilities set their own terms. Ask yours.

State incentives in 2026

No statewide residential solar rebate, tax credit or tax exemption was confirmed, so none is listed.

The federal residential credit ended for systems installed after December 31, 2025. See the federal credit explainer.

What it means for payback

At 14.50 cents/kWh average residential price, Xcel’s 3.16 cent payment is about 22% of retail (3.16 / 14.50). NorthWestern’s 2.547 cents is about 18%. That makes every kWh your home uses on site worth four to five times a kWh you export.

Design around daytime use, not annual totals. A system sized to your midday load pays back much better than one sized to cover 100% of yearly consumption, because the extra production sells at a fraction of its value. Surplus does not roll into later bills under these tariffs. Fixed monthly charges stay on the bill whatever you generate.

A battery stores midday output for the evening instead of exporting it at a few cents. Whether it pays depends on its cost and your rate; see are solar batteries worth it and net metering vs net billing.

Other rules worth knowing

Interconnection charges are assessed individually, so get the utility’s estimate before signing a contract. Xcel’s tariff says the charge can be a single payment or monthly. Utilities may require a production meter or a separate metering charge: $3.75 a month at Xcel and $2.00 at NorthWestern.

The buyback rates are reset by PUC filings, so they can change. Xcel’s and Otter Tail’s rates change in 2026 and NorthWestern’s in 2025, so check the current tariff before signing a contract. HOA and local permit rules were not covered in the tariffs above; read your covenants and ask your city or county.

Berkeley Lab does not publish a South Dakota median from enough systems, so the calculator starts from the U.S. median of $3.60/W. Put your own quote in.