Alabama Solar Incentives in 2026
Are you eligible for solar tax credits and rebates this year?
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There’s no way around it: Installing solar panels is expensive. With the federal solar tax credit gone, it makes sense to take advantage of as many local incentives as possible.
Unfortunately, Alabama has few local incentives to help residents embrace renewable energy.
Before considering any incentives, a typical residential solar panel system costs $17,052 in Alabama.
Jump to insightThere is a statewide property tax exemption on solar panels and other renewable energy equipment.
Jump to insightAlabama residents only 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) was the most significant financial incentive for most homeowners buying solar panels in Alabama. It reduced your federal tax liability by 30% of your system's total installed cost. The ITC expired at the end of 2025.
Local property tax exemption
It won’t help offset your upfront costs, but there is a statewide property tax exemption on renewable energy technologies. This means that your property taxes won’t go up if solar panels add value to your home. The 100% exemption is valid until 2028. You might also be eligible for rebates through solar companies.
Net metering in Alabama
Net metering lets you earn credits for sending excess solar energy to the grid. Alabama Power customers earn only about 3 to 5 cents per kWh for excess electricity their solar panels send back to the grid. This is a relatively low rate.
There are three rate options: Time of Day Rate Option, Time Advantage Rate Option or Residential Demand Option. For most homeowners, there is little practical difference between the rate options.
Don’t expect to earn much money through net metering in Alabama.
“Time of Day Rate” means your extra solar power is worth more during certain times and seasons. On the high end, you can earn 4.69 cents per kWh. Most of the time, though, you’ll be compensated at 3.35 to 3.53 cents per kWh.
“Time Advantage Rate” pays out slightly more during the summer months. “Residential Demand” works similarly, but with different peak windows.
Alabama Power charges a (small but annoying) monthly base fee no matter which option you choose. So, your power bill will never be $0, no matter how efficient your panels are.
How much do solar panels cost in Alabama?
A typical solar panel system in Alabama costs $17,052. 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 panel costs by system size in Alabama
| Cost per watt | 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW |
|---|---|---|---|---|---|---|
| $2.94 | $14,720 | $17,664 | $20,608 | $23,552 | $26,496 | $29,441 |
Solar resources in Alabama
Below are some additional resources that can help you go solar in Alabama.
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
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 Jan. 8, 2025.
- Alabama Department of Revenue, “Applicability of Alabama Sales and Use Tax on a solar renewable energy generation facility.” Accessed Jan. 8, 2025.
- Alabama Power, “Rate PAE Purchase of Alternative Energy.” Accessed Jan. 8, 2026.
- Solar Energy Industries Association, “Alabama Solar.” Accessed Jan. 8, 2025.
- SolarReviews, “How much do solar panels cost in Alabama?” Accessed Jan. 8, 2025.
- Energy News Network, “Why Alabama still lags the rest of the Southeast on solar.” Accessed Jan. 8, 2025.
