Cost of solar panels in Tennessee (2024)

How much do solar panels cost in Tennessee?

With professional installation, a typical 8-kilowatt residential solar panel system in Tennessee costs $26,080. That price drops to $18,256 after the full federal solar investment tax credit (ITC).

This doesn’t include the cost of a solar storage battery, which sometimes costs as much as the panels. Solar batteries are a must if you want real energy independence and essential if you go off-grid. Permitting, utility fees and maintenance also add to the cost of going solar.

On the higher end, John in Smithville told us his system was $50,000, and Billy in Brush Creek spent $80,000 going solar.

Average solar installation cost by system size in Tennessee

Are solar panels worth it in Tennessee?

Several residents have told us that solar is worth it in Tennessee. For most, it’s about saving on electric bills. Over 25 years, Tennessee homeowners with solar panels avoid $51,774 in utility costs on average.

For others, it’s about gaining energy independence. “Whenever we have storms, it's nice to have a backup,” David in Knoxville told us. “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.”

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

But it doesn't work out for everyone. Another resident, AJ in Knoxville, went solar years ago. His advice to other residents: “This is a major decision when purchasing these products. I would suggest studying the financial aspect and your budget to see if this is the right decision for you and your family.”

You can 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. 

As long as your house is a good candidate for solar, it’s worth considering if you like the idea of lower monthly utility bills and more energy independence.

» STILL NOT SURE? Solar energy pros and cons

Solar panel installation cost factors in Tennessee

The equipment — solar panels, inverters, mounting hardware and other electrical accessories — is typically the largest portion of your overall total costs (approximately 25% to 50%). Labor, which includes planning, preparing and connecting your system to the grid, accounts for 10% to 30%. Local permits and fees are a small part of your overall costs.

Solar panels

Most of your solar equipment costs come down to how much you pay for solar panels. You’ll hear installers talk about how “efficient” their panels are.

Solar panel efficiency is a measure of how well a panel makes electricity. The more efficient the solar panels you buy are, the fewer panels you need. While more efficient panels cost a little more, you can potentially save by buying fewer panels.

In general, monocrystalline panels are considered the best bang for your buck. Cheaper solar panels are typically polycrystalline. The difference comes down to materials: Monocrystalline panels are made from pure, single silicon crystals; various silicon fragments melted together are used to make polycrystalline panels.

Additional solar equipment costs

Solar arrays also contain mounting equipment, wiring and other devices, such as inverters, batteries or a monitoring system.

• Solar batteries: A battery stores energy for later use. It’s a must if you want real energy independence, and they sometimes cost as much as the panels. Prices often depend on the battery’s storage capacity, life span, brand and other factors. Expect to pay between $7,000 and $18,000, though some cost $30,000 or more.
• Solar inverter: Inverters convert the electricity generated by your solar panels from direct current (DC) to alternating current (AC). Inverter costs usually range from $1,000 to $3,000.
• Monitoring system: Some companies include a solar monitoring system to track how much energy your system produces and if there are any problems. If not, you can buy a standalone system for $80 to $400.

Size of your system

The size of your solar panel system is another big factor in your overall solar costs. The average size of solar systems in Tennessee is 12 kW (kilowatts). Depending on your household energy usage, you might need a smaller or larger system.

The average solar panel installation costs $3.26 per watt in Tennessee. “Cost per watt” is similar to the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes.

Condition of your roof

Quality solar panels should last 25 to 30 years, and your roof needs to last just as long. ConsumerAffairs often hears from disgruntled solar customers who felt blindsided by expensive roof repairs needed after their solar panel installation was complete. This is a frustrating and expensive process you should avoid if you can. Get your roof inspected, fixed or replaced before you go solar.

Labor costs

Solar equipment costs are going down, but labor costs are higher than ever in some areas. Installing solar panels yourself might initially seem cheaper because you'll save on labor costs. However, it's crucial to consider several factors for safety before going the do-it-yourself route. If not installed correctly, solar panels pose safety risks, causing roof leaks and other problems.

» DIY solar panels: Pros, cons and installation guide

How to save money on solar panels in Tennessee

There’s no way around it — solar panel installations are expensive. Here are some tips to maximize your savings on solar panels in Tennessee:

• Compare quotes: Get quotes from at least three or four solar companies in Tennessee. This lets you compare different equipment, pricing, financing terms and estimated energy production to find the best overall value. Don't just go with the cheapest option without vetting quality and services.
• Lower your electrical load: Before going solar, it’s smart to upgrade any old appliances. For example, replacing an old refrigerator with a more eco-friendly one reduces your electric load, which also helps lower your utility bill. If you use less electricity, you need fewer solar panels, making the whole system cheaper.
• Use incentives: Besides government solar incentives, some solar panel manufacturers offer rebates on their products.

» MORE: Why are solar panels so expensive?

Solar incentives, tax credits and rebates in Tennessee

The federal solar investment tax credit (ITC) is usually the most significant financial incentive for homeowners buying solar panels. It is not a rebate or a refund but goes toward what you owe on federal income taxes.

The ITC drops to 26% in 2033 and 22% in 2034.

For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If you owe $15,000 in taxes, the credit reduces your debt to $12,000. The ITC only offsets your tax liability; you can't take advantage of it if you don’t owe taxes in the first place.

Additional Tennessee solar incentives include a statewide property tax reduction, which can also help justify the cost of going solar.

» GREENEST STATES: Tennessee ranked 25th in 2024

How can I pay for solar panels in Tennessee?

Financing makes the upfront costs of solar more manageable. You can also lease a system with minimal upfront costs. However, you won’t be eligible for the federal tax credit if you do.

• Loan: A solar loan works like any other type of home improvement loan — there’s an application and approval process, and you pay it back over time (with interest) each month. In an ideal financing scenario, your system generates enough extra power to pay off the loan. Solar loan terms typically last eight to 20 years.
• Lease: Leasing solar panels is a great way to set up a system without the high upfront costs. A potential downside is that you are not eligible for the same tax incentives.
• Home equity: Using a home equity line of credit or loan to finance a solar installation can be a financially beneficial option — home equity interest rates are relatively low, and homeowners can still take advantage of the federal solar investment tax credit.
• PACE financing: In Tennessee, Property Assessed Clean Energy (PACE) programs help property owners pay for energy efficiency and renewable energy upgrades, like solar panels. Currently, most PACE opportunities are for commercial properties (the state doesn’t have an active program for single-family homes).

» SOLAR PANELS: Lease vs. buy

Compare solar installation companies in Tennessee

We compared ratings and reviews, equipment options, warranties, availability and other factors to pick the top solar companies in Tennessee.

Bottom line

Residential solar panel system costs typically fall between $10,000 and $30,000 or higher, depending on factors like the system's size, local labor rates and available incentives. On average, Tennessee homeowners with solar panels avoid $51,774 in total utility costs over 25 years.

The ConsumerAffairs Research Team has conducted extensive research to compare the costs of going solar in Tennessee and other states.

» EXPLORE: Where your solar savings go the furthest

Solar costs vs. savings: Tennessee and nearby states