Solar in Montana: Big Sky, Rising Rates, and a Changing Landscape

Montana is not the first state people think of for solar power. The winters are long, the population is spread thin, and the solar installer market is small. But Montana has a few things working in its favor that most people overlook — including a state tax credit that survives the expiration of the federal ITC, rising electricity rates that are making homeowners nervous, and surprisingly strong summer solar production under those big sky conditions.

Here is the real picture for Montana solar in 2026.

The Good News

Montana's State Solar Tax Credit

This is the headline. Montana offers a state income tax credit for residential alternative energy systems, including solar. The credit is worth up to $1,000 per taxpayer (or $2,000 for married filing jointly). It is not a massive amount, but it is one of the few state-level solar incentives remaining in the Rocky Mountain region.

In a post-federal-ITC world, every state incentive matters more. Montana's credit is modest but real.

Rising NorthWestern Energy Rates

NorthWestern Energy serves the majority of Montana's residential customers, and their rates have been climbing aggressively. Average residential rates now sit around $0.12-$0.14/kWh and have increased roughly 4-5% annually in recent years. NorthWestern has filed for multiple rate increases, and the trajectory is clearly upward.

This matters enormously for solar economics. At $0.12/kWh, solar payback is long. At $0.16/kWh — which Montana may reach within 3-5 years at current trends — the math looks much better. Solar is a hedge against a utility that shows no signs of slowing down rate increases.

Strong Summer Production

Montana's latitude means very long summer days. In June, Billings gets nearly 16 hours of daylight and 5.5-6.0 peak sun hours. The annual average is lower — 4.3-5.0 peak sun hours depending on location — but the summer production surge is impressive. Western Montana (Missoula, Kalispell) gets somewhat less due to mountain weather patterns, while eastern Montana (Billings, Miles City) is sunnier.

Property Tax Exemption

Montana exempts residential solar installations from property tax assessment for 10 years after installation. After that, the system is assessed at its depreciated value. This prevents an immediate property tax increase and gives you a decade of tax-free added value.

The Challenges

Long, Dark Winters

December and January in Montana deliver 2.5-3.5 peak sun hours per day, and significant snowfall can temporarily zero out production. Annual production is heavily front-loaded into May through September. You need to size your system and set your expectations based on annual totals, not summer peaks.

Small Installer Market

Montana's low population density means fewer solar installers. Fewer installers means less competition, potentially higher prices, and longer wait times for installation. You may be choosing from 3-5 companies rather than the 15-20 available in a major metro area. Get every quote you can and do not be afraid to consider installers based in neighboring cities or states.

Net Metering Uncertainty

Montana has had net metering, but the policy landscape has been shifting. NorthWestern Energy has pushed to modify net metering terms, and regulatory proceedings have created uncertainty about the long-term value of exported solar electricity. Check the current net metering rate and policy before finalizing your decision — this variable alone can swing your payback by 3-5 years.

The Montana Solar Math (2026)

Typical 7 kW system:

• Installed cost: $21,700 ($3.10/watt)
• Federal ITC: $0 (expired)
• Montana state tax credit: ~$1,000-$2,000
• Net cost: ~$19,700-$20,700

Annual production: ~9,200 kWh

Average NorthWestern Energy rate: $0.13/kWh

Annual savings: $1,100-$1,250 (depending on net metering terms and self-consumption)

Payback period: 16-19 years

25-year savings: $12,000-$22,000 (highly dependent on rate increases)

The payback is long at current rates. But here is the key insight: if NorthWestern Energy rates continue increasing at 4-5% annually, your savings in years 15-25 will be dramatically larger than in years 1-5. The system gets more valuable over time in a rising-rate environment. At a projected $0.20/kWh in 2033, annual savings jump to $1,840 — and the payback math looks very different in hindsight.

With a thin installer market in Montana, comparing quotes from multiple sources is even more important to ensure you are getting a fair price.

When Solar Makes Sense

Install if:

• Your NorthWestern Energy bill is above $120/month and climbing
• You plan to stay in your home 12+ years
• You are in eastern Montana with better sun exposure (Billings, Great Falls)
• You want to lock in energy costs against NorthWestern's rate trajectory
• You have a south-facing roof with minimal shading and steep enough pitch for snow shedding

Wait or skip if:

• You are in a heavily shaded mountain valley location
• Your electricity bill is under $80/month
• You plan to move within 5 years
• Net metering terms have been significantly reduced — check current policy
• Your roof is flat or low-pitch (snow accumulation issues)

Key Takeaways

• Montana's state tax credit ($1,000-$2,000) is one of the few surviving state incentives in the region
• NorthWestern Energy's aggressive rate increases (4-5% annually) are the strongest argument for solar as a long-term hedge
• Summer production is excellent due to long daylight hours, but winter output drops significantly
• Property tax exemption protects you for 10 years after installation
• Net metering policy is in flux — confirm current terms before committing
• Expect payback of 16-19 years at current rates, improving if rates continue rising
• Eastern Montana outperforms western Montana for solar production
• The installer market is thin — get every available quote and compare carefully

Affiliate Disclosure: This article may contain affiliate links. If you make a purchase through these links, we may earn a small commission at no extra cost to you. We only recommend products we genuinely believe in. This helps support our work and allows us to continue providing free content.