Welcome to the Ultimate Guide to Solar Panels in Tennessee
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Tennessee 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!
** What's new for 2020 **
TVA’s Green Power Providers program now fully dead. If you want to install solar panels on your home in TN, expect very little in the way of recompense from the utility.
Should you despair and throw your hand up in the air? No! We recommend FIGHTING! Demand that the state legislature and the TVA board reinstate net metering and guarantee the right of all Tennesseans to interconnect and use or sell their electricity as they see fit.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in Tennessee, 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 Tennessee. 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 Tennessee.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
Generate an accurate online solar estimate for your home
|Your Tennessee Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Tennessee|
|Solar Loans in Tennessee|
|Solar PPAs in Tennessee|
|Solar Purchase Payback Time in Tennessee|
|Tennessee Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Tennessee
Figuring out the best way to go solar in Tennessee 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 to pay for solar panels in Tennessee
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, Tennessee has the potential for some financial returns. The purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a loan (the orange bars) and paying for the system over time means you'll come out ahead in the first year and pay off most of your system using electric bill savings.
That's what makes the solar loan option better. If you take a HELOC, you'll pay the system cost down monthly, but you still get a huge tax credit after the first year. Your payments over 15 years will be offset by the savings your panels generate, and when the loan's paid off, you get 10 years of energy for free. All you need is great credit—or the equity for a HELOC.
Read more below about each of the options for solar in Tennessee!
How much can solar panels on roof save you?
Option 1: Paying cash for solar
An outright purchase used to be the only way to get solar, and it's still the option that provides the 'biggest' financial returns. The reason we put 'biggest' in quotes here is because it's technically true. You'll see a net return of almost $17,200 in 25 years if you pay up front. But it requires a significant up-front investment.
If you have equity in your home or good credit, you can get a solar loan or HELOC with an interest rate of 4% or less. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.
If you've got cash and you prefer to pay up front, you'll have to plunk down $19,530. But by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced about $17,200 in income. Solar offsets enough your energy bill to save you about $874 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...
Here’s how the numbers pencil out when you pay up front for a 6.2-kW rooftop solar system:
- Installing a typical 6.2-kW solar system should start at about $19,530. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Feds calculate their incentive based on actual out of pocket costs, so take 26% of $19,530, for a tax credit of $5,078. Your total investment is now down to just $14,452.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $874. That reduces your cost after the first year to only $13578.
- Your system will pay for itself in just 6 years, and over its 25-year life, you'll see a total net profit of $17,250. The internal rate of return for this investment is a stupendous 6.9%!
- And don't forget... your home's value just increased by around $10,900, too (your expected cost after solar incentives)!
- 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. It's like planting 159 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Tennessee. 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
You don't need $20,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in Tennessee, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. Your tax savings will be huge in the first year, which helps right away. Over the repayment period of the loan, your cost will be a little grater than the energy savings your system provides, but that's all an investment in the future. After the loan's paid off, your savings over the next 10 years will produce an estimated $9,887 in net income by 2044. Yes, we said income!
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can qualify for a solar loan or home-equity line of credit (HELOC) for $19,530, with a fixed rate of 4% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
- You love making money without much risk.
Here’s how the numbers pencil out for a Tennessee solar purchase with a loan:
- Installing a typical 6.2-kW solar system should start at about $19,530. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $874, but your annual loan payments will be $1,793, meaning you would spend $919 on solar this year, but...
- You'll also see a huge tax break. The Feds give you 26% of the cost of your system back as a tax credit, which in this case is $5,078. You'll be paying over time but getting all the benefits up front!
- The electricity savings will continue for 25 years, while your loan payments will last only 15. By the end of the 25-year life of your panels, you'll come out $9,887 ahead.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 159 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Tennessee. 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)
Tennessee 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!
Calculate solar panel cost and savings for your specific home
Tennessee 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 Tennessee:
Tennessee's Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a statute or other piece of regulation that mandates that a portion of at state’s electricity is produced from renewable resources (like solar power) by a certain date. If you have been following renewable energy policy at all, you already know that a whole lot of states have passed strong a strong RPS. Many of the RPS’s mandate goals as high as 30%, even 40% renewable production in the next 10-15 years.
So what’s going on in Tennessee? Well, not much. Nothing in fact. Tennessee has absolutely no renewables portfolio, no targets – nothing. Tennessee needs to get on track; Colorado, California, New York, New Jersey, Connecticut, Rhode Island, Oregon, Washington, Arizona, and many other states that have already passed strong RPS’s to ensure a bright future for solar power and other renewable energy. Trust us, a strong RPS is integral to having that bright future here. No one wants to give you free money – least of all the electric companies. Without a strong RPS pushing them, politicians and CEOs have no incentive to give you incentives. Incentives for more solar power, that is!
Tennessee's Solar carve-out and SRECs
No RPS means no solar carve out.
Tennessee Electricity Prices
Electricity costs about 11 cents/kWh here. Here at Solar Power Rocks, we kind of geek out on anything that affects solar power, including electric prices, so trust us when we tell you that 10.96 cents/kWh is super cheap. In the bottom tier of the county, in fact, and well below the national average of 13.14 cents/kWh. You should also trust us when we tell you that cheap electricity is a bad thing.
All that cheap electricity is produced by burning fossil fuels -- tons and tons of earth-killing fossil fuels. When the astronomical environmental costs start to mount, monthly electricity bills are inevitably going to rise as well. When that happens you’re going to feel pretty darn smart for making the early switch to producing your own clean, efficient solar power.
Tennessee Net Metering
TVA Dispersed Power Program
Sadly, Tennessee lacks any statewide program for net metering, and there hasn’t been so much of a peep out of the legislature. Fortunately, with the entire state in its service area, TVA has announced its new “Dispersed Power Program”. This is basically the same thing as net metering, however the credits you get for sending your electricity back to TVA when you’re not using it are set by TVA annually, and will probably not be near full retail rates. For clearer savings estimates, connect with an installer in Tennessee we trust.
Tennessee Interconnection Rules
Interconnection standards govern the procedures and fees that utilities may implement for getting you and your net-metered system connected to the grid.
Like the lack of net metering policy above, Tennessee also hasn't issued any clear policy for easily connecting to the grid. Both net metering and interconnection are critical parts of strong renewable energy policy. They help you get the absolute most out of your solar power production. A solid net metering plan, with interconnection standards that make it simple to get on the grid can help you zero out your entire electric bill, and even turn a profit where net metering regulations provide for cash payments. Legislators have a bit of work to do here.
Tennessee Solar Incentives
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 26% 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 Tennessee 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.
Tennessee Solar Power Rebates
Tennessee currently lacks any sort of statewide solar rebate program. If the RPS set mandatory levels of renewable energy production, we can guarantee more utility companies would offer incentives to help you make the switch to solar. How do we know? It’s worked everywhere that a real RPS has been implemented. Get on it, Tennessee!
Tennessee Solar Tax Credits
Many states like to offer state tax credits as a way to promote the local solar industry. It’s true, Tennessee does not offer any state tax credits, but in a state that has no state income tax, tax credits wouldn't be much of a help anyways.
Property Tax Exemption
2/3 of Assessed Value
What Tennessee doesn't have, sadly, is a property tax exemption for solar power systems. When you install a solar power system your monthly electric bill goes down. When your bill goes down, your property value goes up by about 20 times your expected annual savings. The majority of states now have property tax exemptions for renewable energy systems like your spiffy new solar power system. If the legislature doesn't want to get off its butt to provide a thorough statewide renewable energy policy, the least they could do is at least remove hindrances like this.
Sales Tax Exemption
If there aren't any tax credits, is Tennessee at least helping with a full tax exemption somewhere? You bet! When you install a solar power system here, the cost of that system is exempt from all sales tax. That saves you 6.25-8.25 % off the starting cost! You can choose to apply for the exemption up front (again, our installer partners will take care of all of this for you!) or to take the amount after the system is installed as a sales tax rebate. Hey! Tennessee does have a state tax credit … sorta. It’s not money back per se, but money not spent is still money saved!
Low-income Solar Programs
Grade: FLearn more about low-income solar programs available in the U.S.
The consensus on Tennessee solar power rebates and incentives
Tennessee has something of a split-identity going on with solar power policy. TVA has has several start-and-stop solar programs, and the latest, the Dispersed Power Program, is not all that great. We’re hopeful that Tennessee can get it together when it comes to state policy, but for now, there isn’t much to recommend home solar to the people of the Volunteer State.