Tennessee Solar Incentives, Tax Credits and Rebates

Are there any solar panel incentives in Tennessee?

Tennessee does offer some solar incentives, but they’re a bit limited. Homeowners can still save through things like property tax breaks, though many of the bigger financial perks are aimed at businesses.

Since traditional net metering isn’t widely available, getting the most out of your solar setup often comes down to how you use your energy day to day.

Green Energy Property Tax Assessment

This program helps lower your property taxes if you install solar or other clean energy systems. Instead of your system being taxed at its full value, the state limits how much of that value counts toward your property taxes.

For certified solar systems, the initial appraised value used for property-tax purposes may not exceed 12.5% of the system’s installed cost. This can substantially reduce — but not necessarily eliminate — the property-tax increase associated with solar.

To qualify, your system has to be officially certified as a clean energy system by the state.

Community solar programs

If you can’t install rooftop panels — because you rent, your roof is shaded or the upfront cost is out of reach — some Tennessee utilities offer community solar as an alternative. Nashville Electric Service’s Music City Solar program lets customers buy panel subscriptions in a shared solar array for less than $200 per panel, with no roof or homeownership required, and get a monthly bill credit through 2038.

Middle Tennessee Electric also offers a community solar option, although availability may be limited. The Knoxville Utilities Board (KUB) is currently fully subscribed, but customers can join its waiting list.

Commercial solar incentives in Tennessee

A clean energy sales tax exemption lets certain businesses avoid paying sales tax on solar and other clean energy equipment, which can significantly lower project costs.

The tax break can cover 100% of sales tax on things like solar panels, batteries and related equipment — but only if the system is part of a state-certified energy project.

However, this incentive is only available to commercial and industrial properties. It’s a big cost saver for businesses going solar, but most homeowners won’t qualify for it.

Pathway Energy Efficiency Loan Program

Pathway Lending’s sustainability loans can finance up to 100% of eligible solar, energy-efficiency and sustainability projects for businesses, nonprofits and public entities.

What to know about net metering in Tennessee

Net metering is a billing arrangement that gives solar customers credits for excess electricity sent to the grid. Those credits offset some or all of the electricity they buy from their utility. It lets you use power from the grid when your panels aren’t producing enough, and earn credits for any extra energy your system sends back. A battery can let you use more of your solar power instead of exporting it at a low rate, although whether it improves your overall savings depends on the battery’s cost and your energy-use patterns.

Solar batteries typically add $7,000 to $18,000 to the project cost.

Tennessee has no statewide net-metering policy. Most customers served by the Tennessee Valley Authority (TVA) receive much less than the retail electricity rate for exported power, although Appalachian Power offers net metering in its Tennessee service area.

What to know about TVA guidelines

Some Tennessee homeowners can sell excess solar energy to TVA through its Dispersed Power Production program, but not at the full retail rate. Instead, you’re paid TVA’s avoided-cost rate — about 3.4 cents per kWh as of July 2026, though TVA recalculates it monthly and it can change — which is far less than what you pay for electricity (typically around 12 to 14 cents per kWh).

Enrolling requires a five-year commitment to TVA, and many local power companies simply bank your excess generation as a future bill credit rather than paying cash for it.

Because of this gap, sending power to the grid is less valuable than using it yourself. Many homeowners add a battery system to store extra energy and use it later, which can significantly increase savings.

Solar panel costs in Tennessee

Average solar panel costs in Tennessee generally start between $15,231 and $30,462 before any financial incentives.

System size is a major cost factor when going solar. A typical Tennessee household needs a system of about 6.7 kW, which costs $20,435 on average. Depending on your energy needs, you might need a smaller or larger system.

Your total price also depends on whether you add battery storage to your system. Solar batteries cost $7,000 to $18,000, which can nearly double the total system price.

Average solar panel costs by system size in Tennessee

How can I pay for solar panels?

You can pay cash, 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). Alternatively, you also have the option of leasing solar equipment.

» SOLAR PANELS: Lease vs. buy

PACE financing in Tennessee

Tennessee’s C-PACER program can help finance large commercial and multifamily energy upgrades, but it is not available for single-family homes.

Most PACE opportunities are for commercial properties.

The payments stay tied to the property, not you, so if you sell your home, the next owner may take over the remaining balance. However, this type of financing is mostly for commercial properties.

Federal solar loan programs

The 30% federal Residential Clean Energy Credit is not available for systems installed after Dec. 31, 2025, but Tennessee homeowners may still qualify for certain federal financing programs.

• Energy Efficient Mortgages: FHA- and VA-backed Energy Efficient Mortgages let eligible homebuyers and homeowners roll the cost of solar panels and other qualifying energy improvements into their home loan, based on expected energy savings.
• Fannie Mae Green Financing: Fannie Mae offers green financing with favorable pricing for multifamily properties that invest in solar and other efficiency upgrades; it’s less relevant to single-family homeowners, but may apply to larger residential developments.

Compare solar companies in Tennessee

Working with a local Tennessee solar company can make it easier to understand utility rules, permitting and available incentives.

» RELATED: Top solar companies in Nashville

FAQ

Bottom line

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 Tennessee.

Solar costs vs. savings: Tennessee and nearby states