Are solar panels worth it in Alabama?

5 factors to consider before getting solar panels in Alabama

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process, including several from Alabama. Here’s what to consider before making the switch.

1. Solar panel installation costs
2. Your energy consumption
3. How long you stay in your house
4. Alabama solar incentives
5. How you pay

1. Solar panel installation costs: $10,000 to $30,000

Average solar panel costs in Alabama are comparable with the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $16,700 to $33,400. That price drops to $11,690 to $23,380 after the full 30% tax credit.

Average solar installation cost by system size in Alabama

2. Your current energy consumption

A typical Alabama household needs a system with the capacity of 11.22 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

You get the most out of solar if most of your appliances are electric. If you also have an electric vehicle, solar panels will save you even more. (This may seem obvious, but solar panels generate electricity. They won’t help you save on gas bills.)

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

Getting your electrical loads as low as possible before going solar is smart. That way, you can get a smaller, cheaper system overall. If you have older electrical appliances, upgrade those before investing in solar panels.

3. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 10.5 years on average in Alabama. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. Let’s say you spend $25,000 putting solar panels on a house that costs $400,000. According to Zillow, it might sell for $16,400 more in a few years. But, you miss out on $65,922 in total avoided utility costs over 25 years.

Solar panels last 25 to 30 years.

In other words, don't get solar panels just because you want to sell your house soon. Consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen, instead.

4. Alabama solar incentives: federal and state 

Compared with some other states, Alabama solar incentives are less generous:

• Federal solar tax credit: The federal solar investment tax credit (ITC) is the most significant incentive for most homeowners going solar. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits. It will drop to 26% in 2033 and 22% in 2034.
• Net metering: Net metering lets you earn credits for sending excess solar energy to the grid. In Alabama, utility companies typically compensate through energy credits at the wholesale rate, which is less than the rate that residents pay for electricity.

» GREENEST STATES: Alabama ranked 33rd in 2024

5. How you pay

It’s great if you can pay for the whole thing upfront. Of course, that’s when loans, leases and other agreements come into play. The good news is that loans, leases and other agreements make it easy to go solar with minimum upfront costs.

• Loans: Solar loans work like any other type of loan. They have relatively low fixed interest rates. Once you pay it off, you own your system outright.
• Leases: Leasing panels is one way to get the benefits of solar energy without the high upfront cost. A solar lease works like a car lease — you get to use the panels but don’t own them. Leasing can be good if you have limited savings. Solar lease agreements typically last 20 to 25 years.
• Home equity loans or lines of credit (HELOC): Eligible homeowners can borrow against equity in their house to finance a solar panel system. These often have variable interest rates, meaning monthly payments can increase over time.

Monthly costs: solar payments vs. savings

Given rising energy costs in Alabama and elsewhere, financing solar panels makes sense as long as your monthly loan payment is less than what you would be paying the utility company anyway. Solar panels essentially generate free electricity once the initial installation costs are paid.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support the panel installation. Here’s what to think about before you commit:

• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Alabama averages 3.5 to 4 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of my roof? Alabama (and the rest of the United States) is in the Northern Hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels.
• How much energy can I generate? Use the National Renewable Energy Laboratory’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. Project Sunroof is a free solar savings estimator powered by Google Earth imagery.

Pros and cons of solar panels in Alabama

It’s a common misconception that solar panels will completely eliminate your monthly power bill — but this is not always the case. Still, you’ll likely pay less than you would for traditional utility bills.

Benefits of solar panels in Alabama

Some people go solar for long-term savings. For others, it’s more about the environmental benefits or gaining more energy independence. It’s really just a nice perk that solar panels can increase your home’s value.

• Cheaper energy bills: The average homeowner in Alabama uses a lot of power, which adds up to a lot of savings when you switch to solar. Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower). Solar panels also protect you from future energy cost increases.
• Better for the environment: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study mentioned above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in Alabama

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision.

• Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Solar battery costs are generally between $7,000 and $18,000. Getting a solar battery might be strategic if net billing rates continue to decline in Alabama. That way, you can store energy at home instead of tapping into the local grid when you need to.
• Potential roof leaks: The installation process involves drilling holes into the roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage.
• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy.

» MORE: Solar energy pros and cons

Find solar companies in Alabama

We’ve heard from several solar customers in Alabama. In the best-case scenario, it’s easy, and you’re happy with your system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support. Compare our picks for Alabama’s top solar companies to learn more.

Bottom line: Is going solar in Alabama worth it for you?

Alabama might not be the best state for solar. However, with electricity costs continuing to rise, more homeowners find solar power is financially worth it in the long run. Others are happy to go solar for the environmental benefits alone.

Solar costs vs. savings: Alabama and nearby states