Solar in South Dakota: the 2026 numbers
On our reference case, nothing works here. All four ways of getting solar in South Dakota — cash, loan, lease and PPA — end up worth less than doing nothing.
Our answer for South Dakota: don't buy
Every option we model destroys value on the reference case. The least bad is a cash purchase at -$10,315 — still negative. A cash purchase would need installed cost to fall below $2.04/W before it broke even, against the $3.00/W we assume.
This is not advice to give up on solar forever. It is what the numbers say for a typical household at today's prices and today's rules. Change the inputs below to your own quote and usage — a household with much higher consumption, a much better price, or a utility rebate can land somewhere else entirely.
What South Dakota gives you to work with
| Sunlight (specific yield) | 1408 kWh per installed kW per year — NREL PVWatts v8, Sioux Falls |
| Average residential rate | $0.157/kWh — EIA, May 2026 |
| Export credit | 40% of retail — One of the few states with no net metering mandate at all; compensation is whatever the utility offers, typically avoided cost. |
| Federal credit on a purchase | None — §25D expired after December 31, 2025 |
| State incentives | Checked, and there is no cash incentive — reviewed 2026-08-15 |
The four options, run side by side
A household spending $200 a month on electricity, with the array sized to cover its usage, at the default $3.00/W installed cost. This is the same case the calculator below opens on. Net present value discounts future dollars at 5%, so these are not the inflated “lifetime savings” totals a sales quote shows.
| Option | Net present value | Payback | Cost per kWh |
|---|---|---|---|
| Cash purchase You pay for it. No fee, no interest, no escalator. | -$10,315 | Year 21 | $0.179 |
| Solar loan Includes the 20% dealer fee that a low-APR solar loan hides in the financed price. | -$22,958 | Never | $0.241 |
| Lease You rent the system. The owner keeps the §48E credit. | -$18,949 | Never | $0.222 |
| PPA You buy the output per kWh, not the hardware. | -$14,426 | Never | $0.200 |
A cash purchase delivers electricity at $0.179/kWh while the utility charges $0.157. Generating your own is more expensive than buying it here, which is the core problem.
On these assumptions, none of the four options pays off. Every route has a negative net present value over 25 years. That is a real answer, not a broken calculator — at this electricity price and export rate, staying on the grid is the cheaper choice.
| Option | Owns it | 30% credit | Upfront | 25-yr NPV | Payback | Cost/kWh |
|---|---|---|---|---|---|---|
| Cash purchase | You | None | $32,400 | -$10,315 | Year 21 | $0.179 |
| Solar loan | You | None | $0 | -$22,958 | Never | $0.241 |
| Lease | Provider | Indirect (§48E) | $0 | -$18,949 | Never | $0.222 |
| PPA | Provider | Indirect (§48E) | $0 | -$14,426 | Never | $0.200 |
What this calculation assumes, and where it can be wrong
Federal credit. The 30% federal residential credit (IRC §25D) expired for systems placed in service after December 31, 2025. A 2026 cash or loan purchase receives no federal credit. Leases and PPAs remain eligible indirectly: the third-party owner claims the commercial credit (IRC §48E) and reflects part of it in the price offered, provided the system is placed in service by December 31, 2027.
Estimated §48E value in a lease or PPA quote: about $4,860 for this system, assuming the provider passes through half the credit. That share is our estimate, not a published figure.
Export credit. One of the few states with no net metering mandate at all; compensation is whatever the utility offers, typically avoided cost.
State incentives. South Dakota has no state income tax, so no credit is possible, and no rebate programme. It is also one of the few states with no net metering mandate at all — compensation is whatever your utility chooses to offer, typically avoided cost. Modelled at 40% of retail as a reasonable midpoint, but this is a state where the utility, not the state, decides your economics entirely.
- Cash purchase: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Cash purchase: Exported power is credited at 40% of retail, so savings depend heavily on using power as it is generated.
- Solar loan: Financed amount includes a 20% dealer fee, which is why a $0-down loan quote costs more than the same system bought outright.
- Solar loan: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Solar loan: Exported power is credited at 40% of retail, so savings depend heavily on using power as it is generated.
- Lease: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- Lease: Exported power is credited at 40% of retail, so savings depend heavily on using power as it is generated.
- PPA: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- PPA: Exported power is credited at 40% of retail, so savings depend heavily on using power as it is generated.
Sunlight data: 1408 kWh per installed kW per year (verified — NREL PVWatts v8). Retail rate: $0.157/kWh.
Why South Dakota lands where it does
Across the 50 states we model, South Dakota ranks #42 on the value of a cash purchase, at -$10,315 — behind Mississippi at -$9,371 and ahead ofOhio at -$11,106 . The ordering is not the one people expect, and the reason is worth stating plainly: sunshine matters less than the price of the electricity you stop buying.
South Dakota gets 1408 kWh per installed kW per year and pays $0.157 per kWh. Neither figure is extreme, so the outcome turns on the export rule and the state programme rather than on the weather.
The export rule is the main event here
South Dakota credits exported electricity at 40% of retail. One of the few states with no net metering mandate at all; compensation is whatever the utility offers, typically avoided cost. On the reference system, about 9,884 kWh a year leaves the house rather than being used in it, and the gap between what that power is worth on your bill and what the utility pays for it costs $933 a year.
That single number is the difference between the answer on this page and the answer on a calculator that values every kWh at retail — which is what almost all of them do. It is also why self-consumption is the lever that matters most in South Dakota: shifting load into daylight hours, or adding a battery, an EV or a heat pump, converts exported kWh worth $0.063 into avoided kWh worth $0.157.
What the state actually pays you
South Dakota has no state income tax, so no credit is possible, and no rebate programme. It is also one of the few states with no net metering mandate at all — compensation is whatever your utility chooses to offer, typically avoided cost. Modelled at 40% of retail as a reasonable midpoint, but this is a state where the utility, not the state, decides your economics entirely.
So there is no cash incentive to model. That matters more than it used to: while the 30% federal credit existed, a state with no programme of its own was still fine. Now, South Dakota buyers are on their own entirely, and the whole case has to come from the bill savings.
The financing trap
A solar loan is worth -$22,958 here against -$10,315 for the same system bought outright — a gap of $12,644. The interest rate is not what causes that. A 20% dealer fee is embedded in the financed price, which is how a "1.99% APR" offer ends up costing more than a bank loan at 8%. It is rarely on the quote. Ask for it by name.
Lease and PPA look different from a purchase for a structural reason: the third-party owner still claims the 30% §48E credit, which a homeowner buying outright can no longer get. How much of that credit reaches you in the price is a negotiation, and we assume half. The owner also carries the upkeep and the inverter replacement that a buyer pays for. That is why they still trail a cash purchase here, though by much less than they would have in 2025. Both are tied to systems placed in service by December 31, 2027 — see the 2027 deadline.
Before you accept a South Dakota quote
- Confirm it does not apply the expired 30% federal credit.
- Ask what export rate it assumed. South Dakota credits exports at 40% of retail; if the quote valued every kWh at $0.157, its savings figure is overstated.
- Check the price per watt. Above about $2.04/W the purchase stops paying for itself in South Dakota.
- Ask for the dealer fee on any financed offer, as a dollar amount.
- If it is a lease or PPA, ask for a placed-in-service commitment — §48E requires the system running by December 31, 2027.
More: the 2026 credit change, when solar is not worth it, our assumptions and sources.