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2019 Policy Grade

D

Avg. Yearly Savings

$851

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

2019 Policy Grade

D

Avg. Savings/year

$851

Your 2019 guide to getting solar panels for your home 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!

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** What's new for 2019 **

Tennessee has some truly spectacular environments; from the Great Smoky Mountains to Cherokee National Forest and the high points of the Appalachian Trail, we have some special places to protect. You may already know that switching to solar power can help safeguard those places by reducing greenhouse gas emissions. The real question is, how good of a job is the state legislature and utilities doing to help make that switch to solar easy for you?

In Tennessee that answer is split like night and day. Tennessee Valley Authority (“TVA”) provides electricity for virtually the entire state. Your local electric distributor buys electricity from TVA, distributes the electricity to your home, and connects solar systems to their electric grid. TVA is doing a pretty sweet job encouraging solar power with a strong performance payment program. The legislature, on the other hand, has given us less reason to cheer. The lack of a Renewable Portfolio Standard or state rebates to help offset the initial costs of solar power installation, in particular, present obvious areas for improvement. Let’s take a look at the details.

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 $4,000/kW! This is paired with the Tennessee solar incentives you see below.

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.

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 should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels in Tennessee

The chart above shows the 25-year returns for an investment in solar in Tennessee. We look at two system sizes: 5-kW and 2-kW, and outline what happens whether you choose to purchase a system with cash or pay over time with a loan. Let's be honest here: none of thes options is great. Tennessee does very little to help people who want to go solar, and it shows in the numbers.

As you can see, the cash purchase option provides a big return, but it doesn't happen until many years in the future. The solar loan, on the other hand, earns you a return right off the bat, in the form of a federal tax credit for 30% of the amount of the loan. Ove time, you'll dip into negative territory, but if you want solar, a loan can be an excellent way to pay for it.

Finally, the blue bars represent a solar loan, but for a smaller system. If you only want a little solar and you can pay for it over time, it can be a good way to help the environment while almost breaking even, at least arithmetically.

If you're interested in masochism, read more below about each of the three options for solar in Tennessee.

How much can you save with solar?

Find out

Option 1: Paying cash for solar

Paying up front used to be the only way to get panels on your roof, and it's still the option that allows you the most control. But it isn't the best option from a percentage return on investment standpoint—that award goes to the solar loan.

Still, an outright purchase returns the most money over time, because you own the system from day one and reap all the benefits—the Federal solar tax credit of 30% of system costs and your full annual energy savings.

In our example, you put down $20,000, but by the end of year 1, that tax credit and the energy savings will erase a bunch of it. Over 25 years, your system will have produced over $8,000 in income. But that's still not enough to make a solar purchase worthwhile. It takes 18 years just for the dang thing to pay its simple costs back, and as you can see from the NPV number, you're better off financially with an investment in stocks.

Here’s an example of how the numbers work for a purchase of a 5-kW rooftop solar system in Tennessee:

  • Installing a typical 5-kW solar system should start at about $20,000.
  • The Feds calculate their incentive based on out-of-pocket costs, so you'll get $6,000 (30% of the cost) back next April as a tax credit. Note: you can take the credit over as many years as you need years if you don't owe $6,000 in Federal taxes this year.
  • Then there's your first-year energy savings. That's another $624, and it brings the cost after 1 year to just $13,376.
  • With all the energy bill savings rolling in, your system will pay itself back after 18 years. Once that happens, you’ll be seeing over $1,000 per year in savings until the end of your system’s life.
  • When all is said and done, our 25-year estimate shows a total net profit of $8,092 with an internal rate of return of 3.7%. That's about half as good as an investment in stocks.
  • On top of those returns, your home's value just increased by $8,900, too (your expected electricity savings over 20 years)!
  • And speaking of doing good for the environment... your system will create some green for the earth by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 104 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

This is usually where we tell you that taking a loan for solar panels is a no-brainer, because it means investing in an income-generating asset. It's usually true! Unfortunately, Tennessee is not one of the places where it's true.

Here's the important stuff:

As you can see from the chart above, you'll start out after year one with a big windfall, because with a loan, you're not putting any money down, and you get the rebate and federal tax credit just like if you paid $20,000 up front for your system. You'll come out ahead nearly $5,000 after the first year! In the 14 years that follow, your loan payments will actually cost a little more than the money you'll be saving in electricity, but just think of it like a monthly deposit into a savings account.

The rest of our estimate might look like a see-saw, because you start out with a windfall, drop down into "big investment" territory, and then jump up again after the loan is paid off. That's when the solar "savings account" will pay dividends. You'll be saving tons of money every year because you'll own the system outright. But at the end of our 25-year example, you'll be $1,463 to the good, which isn't enough to make up for the earlier costs of the payments.

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 solar loan or 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 have an appetite for making a little money with a long-term investment, while also producing benefits for the environment.

Here’s how the numbers pencil out for a Tennessee solar purchase with a HELOC:

  • Installing a typical 5-kW solar system should start at about $20,000. That's how big your loan will need to be to cover it.
  • The electricity bill savings in the first year of operation will total $624, but your loan payments will be $1,775, for a difference of $1,151, or about $96 per month.
  • But here comes the tax credit! Because you've technically "paid" for the system with your loan, you'll get the Federal tax credit of 30% of system costs, or $6,000! Even after you make those loan payments, you'll end up with an extra $4,849 at the end of the first year.
  • When your loan’s paid off in year 15, you’ll see about $1,000 per year in savings until the end of your system’s life.
  • For our 25-year estimate, you'll see a small return of $1,463 after all the payments.
  • Finally, the environmental benefits cannot be overstated. Operating your system will take as much carbon out of the air as planting 104 trees 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!

How much can you save with solar?

Find out

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

None

Grade: F

Tennessee's Renewable Portfolio Standard grade

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!

Learn more about Renewable Portfolio Standards

Tennessee's RPS solar carve out

None

Grade: F

Tennessee's Solar Carve-out grade

No RPS means no solar carve out.

Learn more about Solar Carve-outs

Tennessee Electricity Prices

$0.11/kWh

Grade: D

Tennessee's Electricity cost grade

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.

Find out why electricity prices matter

Tennessee Net Metering

TVA Only

Grade: C

Tennessee'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 the surplus.

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 is able to come to the rescue again. Remember the Generation Partners program we talked about above? Remember the part where if you run a surplus and your credit exceeds your bill, you get a check for the extra money? Well, that basically amounts to a net metering program, and a darned good one in fact.

Although the TVA program basically amounts to a net metering program, it has some restrictions. Every year TVA sets a capacity limit on the amount of systems that can be installed in the region. A capacity limit means that not everyone who wants to install a solar system will be able to install one. Although TVA came to the rescue with a solar program, they will only rescue so much per year!

Learn more about net metering

Tennessee Interconnection Rules

None

Grade: F

Tennessee's Interconnection Standards grade

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.

Learn more about solar interconnection rules

Solar Incentives in Tennessee

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 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

None

Grade: F

Tennessee's Solar Rebates grade

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!

Learn more about solar rebates

Tennessee Solar Tax Credits

None

Grade: None

Tennessee's Solar Tax Credits grade

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.

Learn more about state solar tax credits

Tennessee Solar Performance Payments

None

Grade: F

Tennessee's Solar Performance Payments grade

As you've surely guessed from the lack of an RPS, Tennessee lacks any legislation-based (i.e. truly statewide) performance payment program. At least TVA will help you sign up to sell your solar power back to them.

Learn more about SRECs

Property Tax Exemption

2/3 of Assessed Value

Grade: C

Tennessee's Solar Property Tax Exemptions grade

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

100%

Grade: A

Tennessee's Solar Sales Tax Exemption grade

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!

Learn more about tax exemptions for solar

The consensus on Tennessee solar power rebates and incentives

Tennessee has something of a split-identity going on with solar power policy. The legislature has been so silent on the issue, one wonders if they’ve ever even heard the word “photovoltaic.” But where the legislature has failed, the statewide utility company has shone (at least kinda) bright. Before the TVA program, Tennessee was a solar no-man’s land, with payback timeframes pushing decades beyond the expected life of your system. Now, however, TVA’s Generation Partners program has pushed payback down to 12 years. That’s not what we call stellar around here, but it’s more than enough for your solar power system to pay for itself, and then some. But without some strong goals to ensure that the solar scene remains steady, it doesn’t merit any more than a “D” grade.

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Judith MartinJohn AtkinsDalegeorge douglas coxTnAndy Recent comment authors
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John Atkins
Guest

I suggest you research TVA’s GPP again. Once the very positive program you describe, today’s GPP, by paying far less than the retail price/kWh for 100% of the solar power generated, a GPP system will never pay for itself and will never generate positive cashflow. Further, since TVA will not buy any excess power from a customer’s behind the meter system, TVA forces the solar customer to either install a tiny system that will never produce excess power (all solar system occasionally do so) or install still expensive solar storage. TVA has long subtly discouraged solar and continues to do… Read more »

Ben Zientara
Admin

Thanks John, this page does need an update. TVA’s Green Power Providers program is indeed a shadow of what it once was, and Tennesseans are worse off for it. Stay tuned.

george douglas cox
Guest

If I have large capacity batteries to run at night and in off sun hours would I be better off not to connnect to TVA?

Dale
Guest

TVA will purchase your power for a period off 20 years. System size up to 10kW receive $.09 per kWh. Over 10kW and up to 50kW system receive $.075 per kWh. So, if you are on the TVA program, you can offset your power bill while taking advantage of your hybrid solar facility’s stored energy during evening and night hours. You actually have a few different options for set up under this scenario.

John Atkins
Guest

Dale, Just now seeing your comment… TVA’s GPP (enrollment ends this year) pays only 75% commercial) to 90% (residential) of retail price for 100% of your solar output. You then must buy any power you need to use in the regular way: at full retail + about 10% sales tax. Even if you have a separate battery, you cannot add your solar power to it, only purchased power. How does this offset one’s power bill in any kind of positive way the benefits you instead of TVA?

John Atkins
Guest

Behind the meter (not connected) is far better. To sell power to TVA, you must sell ALL of the solar power to TVA and buy all the power you need at full retail, plus sales tax, after paying federal tax on that money and investing $thousands in a solar system. eMail me and I will send you an analysis of the three ways you have to go with solar.

Judith Martin
Guest
Judith Martin

Could you send me your analysis. We are in the process of getting solar installed and considering the Gpp

John Atkins
Guest

Please send me your eMail address and I will send the analysis as an attachment Mine is [email protected]

Steve McQueen
Guest
Steve McQueen

Hello, Can you supply us some Solar Modules with watt rating 300-320 mono? (1). Canadian Solar CS6K-270M 270W Mono Solar Panel (2). Canadian Solar CS6K-275M 275W Mono Solar Panel (3). Canadian Solar CS6K-285M T4 285W Mono Solar Panel (4). Canadian Solar CS6K-285M T4 5BB 285W Mono Solar Panel (5). Canadian Solar CS6K-305MS 305w Mono Solar Panel Your quick respond will be appreciate. Best of regards. Steve McQueen (Purchasing Manager) — Sincerely, Marketing Team Spring City Electric Technologies E:[email protected]

Ben Zientara
Admin

Hey Steve-

We don’t sell solar modules. Hope you find what you’re looking for.

Johnny O
Guest
Johnny O

How is that the TVA requires only certified NABCEP installers are allowed to install your system. One of the reasons I want to instal a PV array is to save money, the main reason; but, it seems to me like the whole approach is rigged to set up the installers for all the monetary gains. They can set the price and really take away from your (my) savings. If I buy a 10kw system and pay 12k for it, I can install it for nothing (other than the Electrician I have to pay to tie in) but the way I… Read more »

Dale
Guest

To be on the GPP program, you are required to have a NABCEP professional oversee, install and/or commission the system. You can install it yourself as long as you can find a NABCEP professional that is willing to oversee the installation and approve of it for commissioning.

Rick
Guest
Rick

Grade F for the lowest rates? You lost me immediately when I read that. You want us to pay 3x for electricity so you can sell your garbage? More Marxist BS here.

Ben Zientara
Admin

Hey Rick- Thanks for writing. It’s true, the state receives an F for its electricity rates, specifically as it regards the potential for financial benefit from solar. That means solar panels make less financial sense here than other places, because they take longer to pay their cost back. The desire to use the tools at your disposal to your economic advantage is as capitalist as it gets, my friend. If you want to talk about “Marxism,” you should know that the energy in Tennessee is so cheap primarily because of huge federal investments in infrastructure over a period of many… Read more »

Michelle Smith
Guest
Michelle Smith

Hello! I came upon your article and I wanted to ask which utility/company in Knoxville buys back solar energy? Thank you!

Ben Zientara
Admin

Hi there!

KUB allows you to connect your home solar system and sell electricity back to the grid under TVA’s Green Power Providers program. More information here: https://www.kub.org/about/environment/green-power/generate-your-own-power/

Thanks, and have a sunny day!
-Ben

andy
Guest
andy

While the State of Tennesse doesn’t have interconnect rules, TVA that supplies power to most of the State sure does. You’ll have to sign a contract with them, and agree to whatever hoops they require to install a PV solar system….or you won’t be interconnecting.

Dale
Guest

Interconnect rules do apply in Tn. They are dictated by the individual LPC (Local Power Company), not the State.

Rick
Guest
Rick

Hi, I can’t read the rest of your article because the free download window pops out and covers half of your content on my screen. And I’ve already gone through the process and downloaded the .pdf. Please fix it. Thanks,

Ben Zientara
Admin

Hey, Rick– there should be an “X” icon in the upper right corner that allows you to close the slide-in for the Ultimate Guide to solar. If you can’t see the X, it might be because of a pop-up blocker, ironically. Hope that helps.

-Ben

Stephen
Guest
Stephen

TVA in Tennessee has eliminated the $1000 solar rebate and has eliminated all performance payments in 2016.

Ben Zientara
Admin

Yep, that’s sadly true. The TVA program worked very well, and Tennessee has much more solar adoption than all the other states in the southeast. Here’s hoping they come up with another program soon!

TnAndy
Guest
TnAndy

Ain’t gonna happen. In fact, as of 1 Jan 2020, the Green Partners program is history. TVA has made the decision they want no more small solar……only utility sized installs will be allowed in the future.

Ben Zientara
Admin

Unfortunately, you’re right about that. People need to band together and demand some action from the General Assembly on some common-sense protections and proactive help for homeowners looking to go solar. Like, stat!

Dale
Guest

GPP is expiring, but it looks like TVA is planning a replacement program. Word on the street is, it’s going to be single bi-directional metering similar to net metering. Hopefully the replacement program will be worthwhile.

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