Tennessee solar incentives, tax credits and rebates

Financial resources for going solar in 2024

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small house with solar panels on roof

After the federal solar investment tax credit, the average solar energy system is $20,916 in Tennessee, which is more expensive than in many other states. The national average is $16,715. Though going solar in Tennessee costs a bit more, you can take advantage of a property tax break to help with some of the cost.


Key insights

  • You can take advantage of solar tax breaks and financing programs.
  • The average federal tax credit value is $8,964 in Tennessee.
  • Tennessee residents with solar panels save an estimated $19,688 over 25 years.

Solar incentives in Tennessee

The federal solar investment tax credit (ITC) is the biggest factor in reducing the cost of going solar in Tennessee. If you install a residential solar panel system by the end of 2032, you will receive a federal income 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 in Tennessee costs $29,880. With this price, you can get a $8,964 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 ITC is a nonrefundable credit. If you don’t use the full tax credit, it rolls over into the next tax year.

Statewide residential solar incentives in Tennessee

Tennessee only has one statewide residential solar incentive — the Green Energy Property Tax Assessment. To qualify, your home has to be certified as a green energy provider. It’s also available for commercial and industrial projects. Incentive amounts depend upon the sector.

» MUST-KNOW: The tax benefits of owning a home: must-know deductions and secrets

What to know about net metering in Tennessee

If your solar system generates more energy than you need (and you don’t store the extra in a solar battery), you have the option to sell the surplus to your local electric company through a process known as net metering.

Tennessee doesn't have any net metering policies in place. This means there are no state laws mandating electric companies to offer net metering. Some local electric companies might still offer net metering programs, however. For example, Appalachian Power runs its own net metering program.

» GREENEST STATES: Tennessee ranks No. 24

Solar resources in Tennessee

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

» GUIDE: Solar panel installation

Find solar companies in Tennessee

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

Do you own or rent?

FAQ

Can I get solar panels for free in Tennessee?

You can lease or enter a PPA with little to no upfront costs. Still, neither is totally free. Solar leases generally require a flat monthly fee; PPAs make you pay per unit of electricity.

» FREE SOLAR PANELS: Are they really free?

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). If you are considering a solar loan, lease or PPA (power purchase agreement), always ask:

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

» SOLAR PANELS: Lease vs. buy

How much can I save with solar panels in Tennessee?

In Tennessee, the average savings is $19,688 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 Tennessee?

Yes, there are commercial solar tax and loan incentives in Tennessee.

» MORE: Commercial solar panel installation

Are there any disadvantages to going solar in Tennessee?

Solar is more expensive than in other states, and Tennessee only offers a property tax reduction as an incentive to install solar.

» MORE: Solar energy pros and cons

Is my HOA allowed to restrict solar panels?

Yes. There are no laws in Tennessee that prevent HOAs from restricting solar panels.

Bottom line: How much are solar panels in Tennessee?

It may seem that going solar in Tennessee isn’t a great idea since systems are more expensive and the state only offers one solar incentive. Despite this, you can still save $19,688 on average over 25 years, so solar is a viable option for many homeowners.

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

Solar costs: Tennessee 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, “Tennessee Solar Programs.” Accessed Nov. 10, 2023.
  2. EcoWatch, “How Much Do Solar Panels Cost in Tennessee?” Accessed Nov. 10, 2023.
  3. United States Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Nov. 10, 2023.
  4. Solar Energy Industries Association, “Tennessee Solar.” Accessed Nov. 10, 2023.
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