Solar in South Dakota: how the rules work
How South Dakota credits the power solar panels send back to the grid, what homes there pay for electricity, and what to check when a home with solar is bought or sold.
How exported power is credited
Power sent to the grid is credited at an export rate well below retail, often tied to the utility’s avoided cost.
South Dakota has no net metering. The PUC states it 'does not compensate solar generation at a net metered rate'. Under PURPA, utilities buy excess output from small (<100 kW) facilities at PUC-approved avoided-cost rates filed by each utility. Xcel Energy SD's Occasional Delivery Energy Service purchase rate was cut from 3.60 to 3.16 cents/kWh, effective Jan 1, 2026 (Docket EL25-025, based on 2025 avoided costs). A Time of Delivery option has lower energy and higher capacity payments. Xcel SD's average residential rate is about 12.95 cents/kWh, so the share is 3.16/12.95 = 0.24. Self-consumed solar still avoids retail. Whether Xcel bills on monthly net or on separate buy/sell registers was not confirmed. A monthly metering charge applies to QF customers. Black Hills and NorthWestern file their own avoided-cost rates; their 2026 merger was approved by the SD PUC in June 2026. There are no grandfathering tiers.
What changes for a home with solar
A savings estimate that assumes full retail credit for exported power overstates the value of that power for systems on the current rules. Power used in the home still offsets the full retail rate.
Older systems are often grandfathered on earlier, better terms for a set number of years. Which rules a particular system is on depends on its interconnection date, stated in the note above.
Electricity here costs about 14.5¢ per kWh (2026) and has risen about 2.1% a year over the last decade. A lease or PPA escalator above that pace makes the solar payment rise faster than utility rates have.
When a home with solar is sold in South Dakota
- Owned outright: proof it is paid off, the warranties, and the utility’s interconnection or net-metering agreement, which has to move into the buyer’s name.
- Loan: a payoff letter, and whether the buyer can assume the loan. Many solar loans are secured by a UCC-1 fixture filing that title will find.
- Lease or PPA: the transfer process and how long approval takes, the buyer’s credit check, the current payment or rate and its yearly increase, and a buyout quote.
- Every case: whether the export-credit terms above stay with the home after the sale, and the last 12 months of production from the monitoring app.
Have the solar contract for a South Dakota home?
Upload it and get a letter-graded report card: price, production, payment changes, value and transfer terms, measured against South Dakota’s rates and rules.
Grade a solar contractSources
- puc.sd.gov/Publications/solarfaq.aspx
- puc.sd.gov/commission/dockets/electric/2025/EL25-025/LTR063025.pdf (2025-06-30)
- puc.sd.gov/commission/dockets/electric/2025/EL25-025/EL25-025TariffRev.pdf (2025-12)
- wattbuy.com/en/utility/south-dakota/xcel-energy/
- Electricity prices: EIA Electric Power Monthly, Table 5.6.B (2026) and EIA state annual averages 2014–2024
- Installed price: EnergySage marketplace, September 2026