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2019 Policy Grade

F

Avg. Yearly Savings

$947

Congratulations! You've found the ultimate guide to going solar in Alabama

2019 Policy Grade

F

Avg. Savings/year

$947

Your 2019 guide to getting solar panels for your home in Alabama

This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Alabama home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

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** What's new for 2019 **

From the southern Bay to the northern Mountains, Alabama has a whole lot of intact natural areas to protect. In fact, about 23 million acres –an astounding 68% of Alabama’s total land area is still forested. If that were not enough motivation to adopt a solar friendly path, Alabama gets a fair bit of sun across the entire state. Put those two together and you get a state that should be at the forefront of solar power usage for homeowners.

Sadly, that has not been the case; the state legislature has done very little to encourage solar power development, continuing to miss golden opportunities to harness natural solar resources and team with existing utility programs to create a strong statewide solar incentive program.

Recently, the state's utility companies have been getting into the solar game, but there has still been very little help for homeowners who want to go solar. There are still ways to make solar work for you in Alabama, so read on to get our best advice!

Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,500/kW!

The Solar Strategy section is focused on the 3 ways of paying for solar in Alabama, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.

The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Alabama. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.

Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Alabama.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Your Solar Strategy in Alabama

Figuring out the best way to go solar in Alabama can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

How should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels in Alabama

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan. As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a home equity line of credit (HELOC), though, your payments over 15 years will be a little more than your savings, but you'll still come out ahead in the end.

The average homeowner in Alabama spends $1,558 on electricity bill every year, despite the state having some very low prices per kilowatt-hour (kWh) of electricity. With a 5.9-kW solar system, consisting of 26 325-watt panels, you can make enough electricity to save about $950 of that bill every year. You wouldn't want to go much bigger than that, because Alabama doesn't offer net metering.

Our calculations below assume this 5.9-kW solar system will cost $3.35 per watt, which isn't as cheap as it would be in a state with better policies that led to a more robust solar industry, but them's the breaks. Read on to find out more about each of the two options for payng for solar in Alabama.

How much can you save with solar?

Find out

Option 1: Paying cash for solar

So you’ve got some cash and you’re ready to buy. An outright purchase returns the most money over time, because you own the system from day one and reap all the benefits. That 30% Federal tax credit and electricity savings bring your first-year cost way down.

In our example, your intial cost is $20,000, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will produce big returns. But also loook into the solar loan option below, because you'll end up ahead in year one from the solar tax credit, and taking a loan to buy an income-generating asset is just a really smart move.

Here’s how the numbers pencil out for an Alabama solar purchase with average-sized 5.9-kW rooftop solar system:

  • Installing a typical 5.9-kW solar system should start at about $20,000. Don’t worry – even without state incentives, you can still knock a big chunk off the price right off the bat.
  • Since the feds calculate their incentive based on actual out of pocket costs, no state incentives means a bigger federal solar tax credit. Subtract $6,000 (30% of $20,000) for a new price of $14,000.
  • After the tax credit we subtract your first year’s energy savings, which we estimate to be about $950. That brings your cost after the first year to $13,050.
  • With a conservative estimate for the future rise of electricity prices (increasing at a rate of 3.5%), you can expect your new solar power system to pay for itself in about 12 years. Even with that slower (than other states) payback time frame, you can still expect to get about 13 years of profits (yes, profits) out of your solar power system. We estimate those profits to be in excess of $20,000 through 2041.
  • And don't forget... your home's value just increased by close to $14,000, too (your exact cost after the tax credit)!
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 123 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Alabama. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 2: Using a loan to pay for solar

This is without a doubt the best option when it comes to percentage return on investment. That’s because it relies on using someone else’s money for the purchase price, which is paid back over time. The cost is similar to a new car loan, but because solar makes you money, it's a tremendous investment. A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can get a home-equity line of credit (HELOC) for $20,000, with a fixed rate of 4.5% or lower and a 15-year repayment period.
  • You love making money without much risk

The reason this works so well is that you don’t have to put any money down, but you still get all of the incentives that go along with buying solar. You'll get the 30% federal tax credit and the energy bill savings will start right away. The bad news is your loan payments will be higher than those energy bill savings, so you'll end up spending about $75/month for solar in the first year. That difference will come down each year as electricity prices rise, but your system will keep on producing about the same amount of electricity.

Here’s how the numbers pencil out for an Alabama solar purchase with a loan:

  • Installing a typical 5.9-kW solar system should start at about $20,000. That will be the amount of your HELOC.
  • The electricity you'll save in the first year of operation would have cost $950. That's enough to pay for a family-sized pizza every week!
  • At the end of the year, the federal government will give you a 30% tax credit based on the cost of your system after the rebate. That's $6,000 you won't be paying in taxes. You can take the credit over as many years as you need if you don't owe $6,000 in federal taxes this year.
  • Your loan payments will total a little over $1,800, which means even though you're paying for a loan, those savings and incentives mean you’ll actually come out way ahead after the first year. You’ll have solar on your roof and an extra $5,000 in your pocket.
  • When your loan’s paid off in year 12, you’ll start see over $1,400 per year in savings until the end of your system’s life.
  • For our 25-year estimate, you'll see a total savings of nearly $12,500 with a solar loan in Alabama.
  • And don't forget... your solar panels are offsetting so much dirty electricity, it's like planting 123 trees per year!
Keep in mind, the numbers above are based on an average home in Alabama. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)

Alabama does not offer solar Power Purchase Agreements or leases. Perhaps it would be a good idea to contact a solar advocacy organization and ask them to fight for solar in your state!

How much can you save with solar?

Find out

Alabama Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Alabama:

Alabama's Renewable Portfolio Standard

None

Grade: F

Alabama's Renewable Portfolio Standard grade

A Renewable Portfolio Standard (RPS) basically requires utilities in the state to source a percentage of energy from renewable sources by a given date. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar.

Alabama currently has no state or local Renewable Portfolio Standards. As we’ve seen in other states, the lack of an RPS has translated to an unfortunate lack of incentives to support solar power.

Learn more about Renewable Portfolio Standards

Alabama's RPS solar carve out

None

Grade: F

Alabama's Solar Carve-out grade

Unfortunately, no RPS means no solar carve out.

Learn more about Solar Carve-outs

Alabama Electricity Prices

$0.13/kWh

Grade: C

Alabama's Electricity cost grade

Alabama pays an average of 13 cents per kilowatt-hour of electricity. That’s a bit below the national average of 13.6 cents/kWh. We know you hate that monthly electric bill, but here at SPR, we actually think that energy is too cheap right now. That’s right, too cheap. Most electricity is currently produced by burning fossil fuels. All that earth-killing oil and coal may be cheap, but the long-term costs associated with fossil fuels far outweigh those monthly bill savings. When all those long-term costs really start to kick in, monthly electricity bills are going to inevitably rise as well and you’ll be patting yourself on the back for having already switched over to clean, efficient solar energy.

Find out why electricity prices matter

Alabama Net Metering

None

Grade: F

Alabama's Net Metering grade

Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for any surplus. Alabama is one of only six states in the nation without statewide net metering standards in place. Net metering remains completely at the discretion of the utility.

Learn more about net metering

Alabama Interconnection Rules

None

Grade: F

Alabama's Interconnection Standards grade

Likewise, Alabama is one of fifteen states lacking statewide standards for interconnection. Utility companies have full discretion not only on whether to offer net metering, but also over what is required for you to get your solar power system connected to the grid in the first place. That can spell a logistical nightmare for attempting to connect your solar panels to the grid.

Learn more about solar interconnection rules

Solar Incentives in Alabama

Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.

These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.

Let's see how Alabama measures up:

The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.

Alabama Solar Power Rebates

None

Grade: F

Alabama's Solar Rebates grade

2016 was the year the solar rebate died in Alabama. TVA used to have a nice program where they'd buy your solar electricity and even give you $1,000 up front, but sadly, it no longer exists. With no RPS in place, politicians and utility companies have no incentive to help promote solar power. They’re happy to leave all the costs to you … until they face stiff penalties for failing to satisfy an RPS, that is. Given all of Alabama’s sunshine, legislators have a great opportunity to secure cheap and plentiful energy, but they need to start pushing statewide incentives to make use of all those solar resources.

Learn more about solar rebates

Alabama Solar Tax Credits

None

Grade: F

Alabama's Solar Tax Credits grade

While Alabama does not have any policies currently to provide renewable energy tax credits, due largely to the lack of a Renewable Portfolio Standard, you Alabamians will benefit from the 30% Federal Solar Tax Credit nonetheless! There's no cap on the federal tax credit and you'll deduct that right off the bat. Sample calculations follow below -- keep scrolling!

Learn more about state solar tax credits

Alabama Solar Performance Payments

None

Grade: F

Alabama's Solar Performance Payments grade

Once again, Alabama’s left in the dark when it comes to solar incentives. If you’re lucky enough to be a TVA customer, your solar power system is eligible for the Green Power Providers Program, which ensures you'll get paid retail rates for the electricity your system produces. Sadly, this program used to pay a bonus of $.02/kWh for that electricity, but those performance payments have gone the way of the dodo.

Learn more about SRECs

Property Tax Exemption

None

Grade: F

Alabama's Solar Property Tax Exemptions grade

There’s no property tax exemption for solar panels installations in Alabama, but there certainly should be. It’s a simple way to encourage solar growth, especially since solar homes appreciate by a multiple of twenty times annual electricity bill savings. That property value increase should be tax exempt, because you’re doing a lot of good for the community, economy, and environment.

Sales Tax Exemption

None

Grade: F

Alabama's Solar Sales Tax Exemption grade

One of the simplest ways for the Alabama state legislature to encourage small scale clean energy adoption is to declare solar panel equipment exempt from state sales taxes as many other progressive states have done. Sadly, there is no such declaration. Luckily for you, however, Alabama has one of the lowest statewide sales tax rates, collecting only 4%.

Learn more about tax exemptions for solar

The consensus on Alabama solar power rebates and incentives

Unfortunately the Alabama legislature is currently squandering the state’s solar power potential. Without any incentives in place, costs after year 1 remain higher than most other states, and the payback time frame here is a sub-par 12 years. That’s not the slowest time to payback we’ve seen, but given the total absence of state policy supporting solar power, we have no choice but to award Alabama with a big, ugly “F” for homeowners who want to go solar.

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DiedraBillyBen ZientaraBill E. Recent comment authors
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Diedra
Guest
Diedra

So, what it sounds like people are saying is this. I live in Andalusia, AL so I should
1. install my own system
2. Don’t tie it to the grid, don’t even tell them
3. Use it for specific applications like the water heater, fridge and AC/heater only
4. Don’t expect any monetary help from the state.
5. Take advantage of all the federal rebates because it is all I am going to get.

Do I have that about right?

Bill E.
Guest
Bill E.

I put in a 10 kw solar system in Northport. Much to my surprise there is a $5/kw/month capacity reserve fee (in my case, $50/mo). Since my system cost $19,600 (after federal tax credit) and produces about $147 worth of electricity per month (net savings of $97 per month after $50 fee taken out), I have a break-even point of about 16 years, with about a 6% ROI.

Ben Zientara
Admin

Thanks for telling your story, Bill. Those fees are sold to the public as a way to make solar owners pay their “fair share” of the transmission and distribution fees included on everyone’s electric bill, but the claims that solar owners are a burden on others are patently false. We like to get the word out when utility companies aren’t playing fair. Can you share the name of your electric company?

Billy
Guest
Billy

I’m sure its Alabama power co.
Selfish people. Our state dont care that we save money or energy

Diedra
Guest
Diedra

I’m not sure why solar owners should be oaying for distribution fees and transmission fees since most of the folks here don’t seem to be utilizong those functions. I don’t quite understand I suppose.

Anonymous
Guest
Anonymous

yes you are right solar works real good ,if you go into your power provider and ask if solar works and they say it dose not (AND THAT IS WHAT THEY WILL SAY) they are good at lying to you ,if we could get the trash out of the capatol in montgomery we could have solar here in alabama,but good luck getting rid of the trash cause they are as sorry as the power companys ,but solar works and they know it dose that is why they say it dont from what I read alabama power is the big hold… Read more »

Anonymous
Guest
Anonymous

I have a 3700 Watt System.. I live in S.E. AL. I use my system conservatively. I have a Hot water heater timer set for 4 hrs. a day. 10:00 AM to 2:00 PM. I use all major appliances such as cloth dryers, electric stoves, and especially AC units during day time only. Most of the time We use crock pots and slow cookers such as electric roasters which may burn a whole 2Kwh a piece during a 8 to 10 hr. cook . It cooks while were at work. The key is to get a system that is big… Read more »

Anonymous
Guest
Anonymous

the last time I posted here about you puting your on meter in to keep check on your power provider,s smart meter ,well once more the smartmeter stuck me again with 10 khw I did not use,the 1-8-2014 it was 11khw ,so if you want to know if you are getting what you pay for or not solar or no solar you need your own meter to track them smart meters ,even your povider calls them smart meters cause while you sleeping they are adding to your power bill , power you did not use it,s true they are smart… Read more »

Anonymous
Guest
Anonymous

im a resident of alabama tue incentive are the worst in the country i do have my own solar array and back feeding to the grit with a 2.5 kwh system saving about 100. dollars a month

Anonymous
Guest
Anonymous

NBC has an article circulating on Utilities fighting back on solar.. They claim the rooftop install avg. in 2013 was on setup every 4 min.

Anonymous
Guest
Anonymous

ok every one i posted down this page about putting your own meter in to keep check on your power providers smart meter,i am glad i did my power provider just stold (11) kill-o-watts from me last night that i did not use, youfolks on alabama power you better start checking on them and all other providers to ,i would not know that i got ripped off last night if i did not have my meter ,

Anonymous
Guest
Anonymous

I’ve purchased a 7kw solar grid tied system and Alabama Power is planning on charging me $35 per month Capacity Reservation Charge which will eat up half of the planned savings and double the time of return on investment. Is there a way around this?

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