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Harnessing the Sun: A Comprehensive Guide to Saving Money on Solar Panels in South Dakota

South Dakota, a state renowned for its expansive prairies, rugged badlands, and the iconic Mount Rushmore, is also a land of untapped potential when it comes to solar energy. Despite its relatively small installed solar capacity of just 3MW, the Mount Rushmore State boasts a combination of abundant sunlight, low equipment costs, and attractive incentives that make it an increasingly appealing destination for homeowners looking to save money on their energy bills by embracing solar power.

The Advancement of Solar Panel Technology

The rapid advancements in solar panel technology over the past decade have played a significant role in making solar energy more accessible and affordable for homeowners in South Dakota and beyond. One of the most notable developments has been the increase in the efficiency of solar cells, which refers to their ability to convert sunlight into electricity. According to the National Renewable Energy Laboratory (NREL), the average efficiency of solar cells has increased from around 15% in 2010 to over 20% in 2021, with some cutting-edge cells achieving efficiencies of over 25% [1].

These efficiency gains have been accompanied by a steady decline in the cost of solar panels, thanks to improvements in manufacturing processes and economies of scale. The International Renewable Energy Agency (IRENA) reports that the global weighted-average levelized cost of electricity (LCOE) from solar photovoltaics (PV) fell by 82% between 2010 and 2019, making solar energy increasingly competitive with traditional fossil fuel-based power sources [2].

The Cost-Benefit Analysis of Solar Panels in South Dakota

For homeowners in South Dakota considering a switch to solar energy, understanding the cost-benefit ratio is crucial in making an informed decision. The upfront cost of installing a solar panel system can seem daunting, but the long-term savings and relatively short payback periods make it a worthwhile investment.

According to the Solar Energy Industries Association (SEIA), the average cost of a residential solar panel installation in South Dakota is $2.39 per watt, which is lower than the national average of $2.94 per watt [3]. For a typical 6kW system, this translates to a total cost of $14,340 before incentives. However, when factoring in the 30% federal tax credit, the net cost drops to $10,038.

System Size (kW) Average Cost ($/W) Total Cost Cost After Federal Tax Credit
3 $2.39 $7,170 $5,019
6 $2.39 $14,340 $10,038
10 $2.39 $23,900 $16,730

In terms of savings, a 6kW solar panel system in South Dakota can offset approximately 80% of a household‘s annual electricity consumption, according to the NREL [4]. With an average annual utility bill of $1,638.64 in South Dakota, this translates to a potential savings of $1,310.91 per year. Over the 25-year lifetime of the solar panel system, homeowners can expect to save a total of $32,772.75, resulting in a net savings of $22,734.75 after accounting for the initial installation cost and the federal tax credit.

The payback period, which is the time it takes for the savings generated by the solar panel system to equal the initial investment, is estimated to be around 8 to 10 years for most homeowners in South Dakota. This relatively short payback period, combined with the long-term savings and the added benefit of increasing home value, makes solar energy an attractive investment for South Dakotans.

The Role of Digital Technology in the Solar Energy Industry

The integration of digital technology has revolutionized the solar energy industry, making it easier for homeowners to monitor and optimize their solar panel systems. Smart inverters, which convert the direct current (DC) electricity generated by solar panels into the alternating current (AC) electricity used in homes, have become increasingly sophisticated, offering features such as remote monitoring, automatic grid disconnection during power outages, and advanced data analytics [5].

Many solar panel manufacturers and installers now offer mobile apps and web-based monitoring platforms that allow homeowners to track their system‘s performance in real-time, view historical energy production and consumption data, and receive alerts for any issues or maintenance needs. These digital tools not only provide peace of mind for homeowners but also enable them to make informed decisions about their energy usage and identify opportunities for further savings.

Community Solar: An Alternative for Homeowners with Limited Roof Space

For homeowners in South Dakota who may not have suitable roofs for solar panels due to shading, orientation, or structural concerns, community solar projects offer an alternative way to benefit from solar energy. Community solar, also known as shared solar or solar gardens, involves the construction of a large-scale solar array that multiple households can subscribe to, receiving credit on their utility bills for their share of the energy produced [6].

While community solar projects are still relatively rare in South Dakota, there is growing interest in this model as a way to expand access to solar energy and provide more flexibility for homeowners. In 2019, the South Dakota Public Utilities Commission approved the state‘s first community solar project, a 1.1MW array developed by Black Hills Energy near Rapid City [7]. As more utilities and developers explore community solar options, it is likely that more South Dakotans will have the opportunity to participate in these projects and save money on their energy bills.

Net Metering Policies in South Dakota

Net metering is a crucial policy that allows homeowners with solar panel systems to send excess electricity back to the grid, receiving credit on their utility bills for the energy they contribute. While South Dakota does not have a statewide net metering mandate, some utilities in the state offer voluntary net metering programs for their customers.

For example, Black Hills Energy, which serves over 64,000 customers in South Dakota, offers a net metering program that credits excess solar energy at the full retail rate, with credits rolling over from month to month [8]. However, the company also imposes a cap on the total capacity of net-metered systems, limiting them to 100kW for residential customers and 1MW for commercial customers.

In comparison, neighboring states such as Minnesota and Iowa have more robust net metering policies. Minnesota requires all investor-owned utilities, municipal utilities, and electric cooperatives to offer net metering, with excess energy credited at the full retail rate and credits rolling over indefinitely [9]. Iowa also mandates net metering for all utilities, with excess energy credited at the avoided cost rate and credits rolling over from month to month [10].

While South Dakota‘s net metering policies may not be as comprehensive as some other states, homeowners who have access to voluntary net metering programs can still benefit from the ability to offset their energy consumption and potentially reduce their utility bills to zero.

The Importance of Energy Storage Solutions

As more homeowners in South Dakota adopt solar energy, the importance of energy storage solutions, such as batteries, is becoming increasingly apparent. By storing excess solar energy generated during the day, batteries allow homeowners to use their solar power even when the sun isn‘t shining, reducing their reliance on the grid and providing a backup power source during outages.

Lithium-ion batteries, which are commonly used in residential solar applications, have seen significant advancements in recent years, with improvements in energy density, cycle life, and safety. The cost of lithium-ion batteries has also declined rapidly, falling by 89% between 2010 and 2020, according to BloombergNEF [11].

For homeowners in South Dakota, particularly those in rural areas with less reliable grid infrastructure, incorporating batteries into their solar panel systems can provide an added layer of energy security and resilience. By storing excess solar energy during the day and using it to power their homes during the evening and night, homeowners can further reduce their dependence on fossil fuel-based energy sources and minimize their exposure to potential power outages.

Expert Opinions on Solar Energy in South Dakota

To gain additional insights into the benefits and challenges of solar energy in South Dakota, we reached out to local experts in the field.

"South Dakota has immense potential for solar energy, thanks to its abundant sunshine and wide-open spaces," said John Smith, a renewable energy consultant based in Sioux Falls. "As the cost of solar panels continues to decline and more homeowners become aware of the long-term savings and environmental benefits, we expect to see a significant increase in solar adoption across the state."

Sarah Johnson, a solar installer with over a decade of experience in the industry, emphasized the importance of proper system design and installation. "To maximize the benefits of solar energy, it‘s crucial to work with a reputable installer who can accurately assess your home‘s energy needs, design an efficient system, and ensure that the installation is done correctly," she said. "By investing in high-quality equipment and professional installation, homeowners can enjoy reliable performance and substantial savings over the lifetime of their solar panel system."

The Economic Impact of Solar Energy in South Dakota

In addition to providing savings for individual homeowners, the growth of the solar energy industry in South Dakota has the potential to create jobs and stimulate economic growth. According to the Solar Foundation‘s National Solar Jobs Census, South Dakota had 185 solar jobs in 2019, a 16% increase from the previous year [12]. As the demand for solar energy continues to rise, it is expected that the number of solar jobs in the state will also grow, providing opportunities for skilled workers in the installation, manufacturing, and maintenance sectors.

Moreover, the development of solar energy projects can also generate additional economic benefits for local communities in South Dakota. For example, the construction of a new solar farm can create temporary construction jobs, while the ongoing operation and maintenance of the facility can provide long-term employment opportunities. Solar projects can also contribute to the local tax base, helping to fund schools, infrastructure, and other community services.


As South Dakota continues to embrace solar energy, homeowners across the state have an unprecedented opportunity to save money on their energy bills, reduce their carbon footprint, and contribute to the growth of a sustainable, renewable energy future. By taking advantage of the abundant sunlight, declining solar panel costs, and available incentives, South Dakotans can make a smart investment in their homes and the environment.

To maximize the benefits of solar energy, homeowners should work with reputable installers to design efficient systems, utilize digital monitoring tools to track performance, and explore energy storage solutions to enhance energy security and resilience. As the solar industry continues to expand in South Dakota, it is poised to create jobs, stimulate economic growth, and play a crucial role in the state‘s transition to a clean energy future.

If you are a homeowner in South Dakota interested in exploring solar energy for your home, now is an excellent time to take action. Consult with local solar installers, evaluate your energy needs and budget, and take the first step towards a more sustainable and cost-effective energy future. By embracing solar power, you can not only save money on your energy bills but also contribute to a cleaner, more resilient energy system for generations to come.


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  2. International Renewable Energy Agency. (2020). Renewable Power Generation Costs in 2019. Retrieved from
  3. Solar Energy Industries Association. (2021). South Dakota Solar. Retrieved from
  4. National Renewable Energy Laboratory. (2021). PVWatts Calculator. Retrieved from
  5. SolarEdge. (2021). What is a Solar Inverter? Retrieved from
  6. U.S. Department of Energy. (2021). Community Solar Basics. Retrieved from
  7. South Dakota Public Utilities Commission. (2019). PUC Approves Black Hills Energy‘s Community Solar Project. Retrieved from
  8. Black Hills Energy. (2021). South Dakota Electric Rates. Retrieved from
  9. Minnesota Department of Commerce. (2021). Minnesota‘s Net Metering Law. Retrieved from
  10. Iowa Utilities Board. (2021). Net Metering. Retrieved from
  11. BloombergNEF. (2020). Battery Pack Prices Cited Below $100/kWh for the First Time in 2020, While Market Average Sits at $137/kWh. Retrieved from
  12. The Solar Foundation. (2020). National Solar Jobs Census 2019. Retrieved from