Alabama solar incentives, tax credits & rebates

Financial resources for going solar in 2024

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alabama home with solar panels installed on the roof

After the full federal solar investment tax credit, the average cost for a solar energy system is $19,723 in Alabama, which is more expensive than in many other states. The national average is $16,715.


Key insights

  • The average federal tax credit value is $8,453 in Alabama.
  • Residents may also take advantage of a local property tax exemption.
  • Alabama homeowners with solar panels get an average net savings of $28,590 over 25 years.

Solar incentives in Alabama

The federal solar investment tax credit (ITC) is the biggest factor in reducing the cost of going solar in Alabama. If you install a residential solar panel system by the end of 2032, you will receive a tax credit equal to 30% of the system's total cost, including equipment, labor and permits.

The federal solar investment tax credit drops to 26% in 2033 and 22% in 2034.

For example, the average system cost in Alabama is $28,176. With a system at that price, you can get a $8,453 credit when you file your taxes.

The solar tax credit is not a rebate or refund — you must claim it when you file federal taxes in the year that your solar panel system becomes operational. To do this, you have to complete Form 5695. The credit is nonrefundable, which means any unused portion rolls over into the next tax year.

What to know about net metering in Alabama

If you don’t store the excess energy your solar system makes in a solar battery, you can sell it to your local electric company through the net metering process in many states.

There are no net metering policies in Alabama, meaning no laws require Alabama electric companies to offer net metering. Your local electric company may still provide net metering, though. For example, Alabama Power has a net metering program.

» GREENEST STATES: Alabama ranks No. 43

Solar resources in Alabama

Below are some additional resources that can guide you through transitioning to solar in Alabama.

» GUIDE: Solar panel installation

Find solar companies in Alabama

Compare popular solar companies available in Alabama below. Read our guide to the best solar companies for more.

Do you own or rent?

FAQ

Can I get solar panels for free in Alabama?

There are no programs for free solar panels in Alabama. You can lease solar equipment with minimal upfront costs, but you’ll still pay a flat monthly fee.

» FREE SOLAR PANELS: Are they really free?

How can I pay for solar panels?

You can pay cash for solar panels in Alabama, but most people finance solar panels. A solar loan works like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). If you are considering a solar loan or lease, always ask:

  • Is there a down payment?
  • How much will I pay per month?
  • Will monthly payments increase, and by how much?

» SOLAR PANELS: Lease vs. buy

How much can I save with solar panels in Alabama?

In Alabama, the average savings is $28,590 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.

Are there any commercial solar incentives in Alabama?

Yes, there is a commercial property tax incentive for solar in Alabama.

» MORE: Commercial solar panels

Are there any disadvantages to going solar in Alabama?

Solar in Alabama is 18% more expensive than the national average. The state also only offers one solar incentive to help lower the cost.

» MORE: Solar energy pros and cons

Is my HOA allowed to restrict solar panels?

Alabama has no laws that prohibit homeowners associations from restricting solar panels.

Bottom line: How much are solar panels in Alabama?

The state of Alabama has little to offer when it comes to solar. Panels are more expensive, there are no laws governing net metering, and there is only one solar incentive. Your best bet is to shop around for your solar system to get the best price and to take advantage of the ITC.

The average savings over 25 years is more than $28,000, so going solar is still definitely worth it for most people.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much it costs to go solar in Alabama and the average solar costs in other states.

Solar costs: Alabama vs. nearby states

*Before the federal investment tax credit (ITC); **When you pay in full upfront

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:
  1. DSIRE, “Alabama Solar Programs.” Accessed Nov. 9, 2023.
  2. EcoWatch, “ How Much Do Solar Panels Cost in Alabama?” Accessed Nov. 9, 2023.
  3. United States Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Nov. 9, 2023.
  4. Solar Energy Industries Association, “Alabama Solar.” Accessed Nov. 9, 2023.
  5. DSIRE, “Alabama Programs.” Accessed Nov. 9, 2023.
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