Are solar panels worth it in Tennessee?

5 factors to consider before getting solar panels in Tennessee

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

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

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

Average solar panel costs in Tennessee are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $16,300 to $32,600. That price drops to $11,410 to $22,820 after the full 30% tax credit.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. In Tennessee, the average cost per watt is $3.26.

Average solar installation cost by system size in Tennessee

2. Your current energy consumption

A typical Tennessee household needs a system with a capacity of 12 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

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

If you have older electrical appliances, upgrade those before investing in solar panels. With a lower average electrical load, you can get an overall smaller (and cheaper) system. Then, once you know your current energy consumption, you can calculate your potential savings and the time it should take for your solar installation to pay for itself.

3. Tennessee solar incentives: federal and local

The federal solar investment tax credit (ITC) is the best 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.

Depending on where you live, you might qualify for additional solar incentives in Tennessee. For instance, the Tennessee Valley Authority (TVA) has a program that lets you sell excess energy back to the grid, and some Nashville residents will become newly eligible to get credit for excess electricity generated from rooftop solar systems.

» GREENEST STATES: Tennessee ranked 25th in 2024

4. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 12.5 years on average in Tennessee. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

Solar panels last 25 to 30 years.

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. It might sell for $16,400 more in a few years, according to Zillow. But, you miss out on some of that $51,774 in total avoided utility costs over 25 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.

5. How you pay

It’s great if you can pay for the whole thing upfront. You own the system from day one and receive the benefits of available tax credits; plus, you don’t have to pay interest on a loan. Of course, cash isn’t always an option. That’s when loans, leases and other agreements come into play.

• 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. It can be good if you have limited savings.
• Home equity loans or lines of credit (HELOC): Eligible homeowners can borrow against equity in their house to finance a solar panel system. HELOCs often have variable interest rates, meaning monthly payments can increase over time.
• PACE financing: PACE programs let you finance solar panels without upfront costs. The repayment is made through a special assessment on the property tax bill, which stays with the property even if it’s sold. Currently, Tennessee does not have active PACE programs for single-family homes. Most PACE opportunities are for commercial properties.

Monthly costs: solar payments vs. savings

Solar panels are expensive, and the upfront costs of going solar are the biggest deterrent for many. If you finance solar panels, it makes sense as long as the solar loan payment is lower than what you would be paying in regular electric bill payments (plus the cost of the energy you use from the grid, if any).

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 else 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. Tennessee averages 3.5 to 4.5 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? Tennessee (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.

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. Use  NREL’s PVWatts Calculator to estimate how much electricity solar panels can produce over a year on your house — just type in your address. Project Sunroof is another free solar savings estimator powered by Google Earth imagery.

Pros and cons of solar panels in Tennessee

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

Benefits of solar panels in Tennessee

• Cheaper energy bills: The average homeowner in Tennessee 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.
• More energy independence: For some, solar is worth it for access to a more reliable power source. “Whenever we have storms, it's nice to have a backup,” David in Knoxville said. “I wanted to have something that was sized to be able to run my refrigerator. If we ever did have a power outage, that's 500 bucks worth of food.” Similarly, Clyde in Sparta said: “The system is lovely, and I save a little money with it. The convenience of having backup power is sort of self-fulfilling.”
• 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 Tennessee

• 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 Tennessee. 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. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in Tennessee

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Tennessee’s top solar companies to learn more.

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

Solar panels are generally worth it if you like the idea of cheap, clean energy. The main drawback is the high upfront cost of purchasing and installing the equipment. On the bright side, once that’s paid for, solar panels can significantly reduce or even eliminate your electricity bills. For many Tennesseans, the long-term savings outweigh the upfront costs over time.

Solar costs vs. savings: Tennessee and nearby states