Alabama solar incentives, tax credits & rebates
Resources to make solar panels more affordable in 2025
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There’s no way around it: Installing solar panels is expensive. On the bright side, Alabama residents can take advantage of federal and state solar incentives. Here’s everything you need to know about how state and federal solar programs can make going solar more affordable for residents.
In Alabama, a typical residential solar panel system costs $11,139 to $31,827, depending on the size of your system and what financial incentives you qualify for.
Jump to insightThe federal solar investment tax credit (ITC) is the best financial incentive for most Alabama homeowners to buy solar panels.
Jump to insightAlabama residents can get the wholesale rate when they sell excess solar power to the local grid.
Jump to insightResidential solar panel incentives in Alabama
The federal solar investment tax credit (ITC) is the most significant financial incentive for most homeowners buying solar panels in Alabama. It reduces your federal tax liability by 30% of your system's total installed cost.
The ITC drops to 26% in 2033 and then 22% in 2034.
The ITC is a credit, meaning it directly decreases the amount of taxes you owe. For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If in the year your system becomes operational you owe $15,000 in taxes, the ITC reduces what you owe to $12,000. Keep in mind that only systems you buy outright or with a loan qualify for the 30% federal tax credit; leased systems do not.
Local property tax exemptions
The state of Alabama offers property tax abatements for qualifying renewable energy facilities. This means that — for tax purposes — the addition of a solar energy system won’t result in an increase in your property's assessed value. Essentially, your property tax bill won’t go up because your solar panels increase the market value of your home.
The exemption typically lasts 10 to 20 years and can save the average homeowner about $70 per year in avoided property taxes.
Energy-efficient retrofits program
The Alabama Department of Economic and Community Affairs offers grants up to $50,000 for local governments, nonprofits and schools that install solar panels and other clean energy technology.
What to know about net metering in Alabama
Net metering is a system of give-and-take between you and your utility company. It lets you access power from the grid when your panels don’t generate enough electricity. Net metering also lets you earn credits for sending any excess solar energy to the grid. These credits can offset the cost of electricity consumed at other times.
Alabama has no statewide net metering policy, meaning no laws require Alabama electric companies to offer net metering. Your local electric company may still provide net metering, though.
Alabama Power, the largest utility in the state, does offer a form of net metering, but it operates under a Purchase of Alternative Energy (PAE) rate system. This means that while homeowners can receive credits for excess energy generated, the compensation rates are much lower than the retail electricity rates. The utility currently pays only a few cents per kilowatt-hour (kWh). This is much lower than the state's average retail rate (about 15 cents per kWh), so the financial payback is limited.
» GREENEST STATES: Alabama ranked 33rd
How much are solar panels in Alabama?
After considering the federal solar tax credit, solar panel costs in Alabama typically range from $11,139 to $22,279. Leasing is often cheaper upfront, but you won’t be eligible for the federal solar tax credit.
Your system size greatly affects how much you pay overall. The typical system size for solar systems in Alabama is 5.8 kW (kilowatts). You might need a larger or smaller system, depending on your average household energy usage.
Average solar cost by system size in Alabama
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $15,913 | $19,096 | $22,279 | $25,461 | $28,644 | $31,827 |
| After federal tax credit | $11,139 | $13,367 | $15,595 | $17,823 | $20,051 | $22,279 |
Solar resources in Alabama
Below are some additional resources that can help you go solar in Alabama.
Find solar companies in Alabama
A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Alabama’s top solar companies to learn more.
| Company | Customer rating | Pro install | Year founded | |
|---|---|---|---|---|
 | No ratingView profile |  | 2006 | Learn more |
 | No ratingView profile | | 1999 | Learn more |
 | 2.5 | | 2015 | Learn more |
 | 4.8 |  | 2018 | Learn more |
FAQ
Can I get free solar panels in Alabama?
No, there is no program that fully covers the purchase of solar panels in Alabama. Some companies offer leasing arrangements with lower upfront costs, but you’ll still have monthly payments.
» FREE SOLAR PANELS: Are they really free?
How can I pay for solar panels?
Many homeowners pay for solar panels in cash or with a solar loan. Loans are offered by banks and specialized lenders and work similarly to other financing options, with an approval process and interest charges. Leasing and power purchase agreements typically lower upfront costs but do not qualify for tax credits.
» SOLAR PANELS: Lease vs. buy
How much can I save with solar panels in Alabama?
On average, Alabama homeowners with solar panels avoid $42,252 in utility costs over 25 years. Even if you don’t generate 100% of your energy needs, you can still save a lot of money versus paying traditional utility bills. In Alabama, solar panels usually pay for themselves within 10.5 years.
» EXPLORE: Where your solar savings go the furthest
What has Alabama’s investment in solar been so far?
Total solar investments in the state amount to $914 million, according to the Solar Energy Industries Association.
Bottom line
Although Alabama doesn’t as many incentives as some other states, appealing tax breaks, low-interest loans and other initiatives make going solar worthwhile for many Alabama homeowners.
The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar and incentives in other states. Turns out, it’s worth it for many homeowners, particularly in Alabama.
Solar costs vs. savings: Alabama and nearby states
| 6-kW system cost (before incentives) | 10-kW system cost (before incentives) | Typical system size needed* | Average cost per watt | Total utility power cost savings** | |
|---|---|---|---|---|---|
| Alabama | $19,096 | $31,827 | 5.8 kW | $3.18 | $58,748 |
| Florida | $13,199 | $21,998 | 7.2 kW | $2.20 | $66,310 |
| Georgia | $15,495 | $25,826 | 6.3 kW | $2.58 | $27,815 |
| Mississippi | $16,690 | $27,816 | 5.2 kW | $2.78 | $27,627 |
| Tennessee | $20,147 | $33,579 | 6.7 kW | $3.36 | $18,925 |
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- DSIRE, “Alabama Programs.” Accessed May 1, 2025.
- Alabama Department of Revenue, “Applicability of Alabama Sales and Use Tax on a solar renewable energy generation facility.” Accessed May 1, 2025.
- Solar Energy Industries Association, “Alabama Solar.” Accessed May 1, 2025.
- SolarReviews, “How much do solar panels cost in Alabama?” Accessed May 1, 2025.
- Energy News Network, “Why Alabama still lags the rest of the Southeast on solar.” Accessed Sept. 3, 2024.
