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Tennessee Solar Incentives, Tax Credits & Rebates for 2024

Author Image Written by Tamara Jude Updated 04/24/2024

There’s no way around it: going solar is expensive. According to SunPower, a top solar installation company, installing a typical 5-kilowatt (kW) solar panel system can cost $13,000 to $14,850 in Tennessee. Fortunately, the state and federal governments offer several solar incentives and credits to make the switch more affordable. 

Our team found the best Tennessee solar incentives to help you save money on your installation. Read on for more details and answers to other commonly asked solar questions.

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What Are the Available Tennessee Solar Tax Credits and Rebates?

Tennessee offers several incentives to encourage solar energy adoption. However, only a select few are available to homeowners. The state’s programs also focus more on long-term savings than lowering your initial installation costs. Here’s an overview of Tennessee’s solar incentive programs:

Solar Incentive NameIncentive Type Description

Green Energy Property Tax Assessment

State

Receive a 12.5% property value cap for solar equipment

Federal Solar Tax Credit

Federal

Up to 30% of solar system costs returned as a federal tax credit

Net metering

State

Earn bill credits for your excess electricity

Details About These Incentives

Green Energy Property Tax Assessment

Local Energy Efficiency Rebates and Credits

Solar Easement and Access Laws

Solar panels increase home value, which means your property taxes rise. However, the Green Energy Property Tax Assessment helps reduce these property taxes in Tennessee. The state caps taxes for added property value from solar equipment at 12.5%. The exemption is applied automatically, eliminating any additional application process. 

More resources:

Some utility companies offer additional rebates and credits for energy efficiency upgrades, such as installing solar equipment. Investing in these upgrades also improves your home’s efficiency, reducing energy costs. For example, the Knoxville Utilities Board offers up to $400 for installing a Level 2 electric vehicle (EV) charger. We recommend checking the Database of State Incentives for Renewables and Efficiency (DSIRE) website for a complete list of efficiency upgrade programs. 

Tennessee’s solar easement laws protect each homeowner’s right to direct sunlight access for solar panels. You can create an easement that prevents the construction of tall buildings or other obstructions that would block your panels’ access to the sun. These easements also include compensation clauses in case any problems arise. For example, if a developer’s construction plans will interrupt your solar access, you can negotiate for compensation. You can find a sample solar easement on Tennessee’s Department of Environment and Conservation’s website.


What Does the Federal Solar Tax Credit Cover?

Tennessee residents receive the most savings from the federal solar tax credit. This program allows homeowners to claim up to 30% of their solar system costs as a tax credit. During tax time, this credit helps reduce your owed federal taxes. If owe little to no federal taxes, any remaining credits roll over to the next tax year. 

The federal tax credit applies to the total cost of your solar project. As of 2023, this credit also applies to stand-alone solar batteries, allowing homeowners to upgrade their existing system with energy storage. 

All Tennessee residents can apply for the federal tax credit, but you must own your solar system to qualify. Legal system ownership depends on your solar financing option. You’ll need to choose a solar loan or up-front payment to own your system; lease and power purchase agreement (PPA) customers don’t qualify.


Is Net Metering Available in Tennessee?

Although net metering programs don’t directly reduce the cost of solar panels, they offer long-term savings on energy bills. Homeowners earn electricity bill credits for returning excess energy to the power grid. These accumulated credits apply to your future electricity use, helping to reduce your monthly energy costs. 

The Tennessee Public Utilities Commission (PUC) allows net metering for the state but doesn’t mandate its availability with utility companies. Only a few utility companies, such as Tennessee Valley Authority (TVA), offer these programs to their customers. Under TVA’s Dispersed Power Production Program, customers earn energy credits for several renewable energy systems, including solar, biomass, and hydropower. The company pays credits at a lower rate than what you pay for electricity. 

Homeowners should check with their local utility company about net metering availability and program details.


How Much Does Solar Cost in Tennessee?

The average cost for a Tennessee solar panel system is $13,000–$14,850. This price range doesn’t include additional financial incentives or the federal tax credit. For example, applying the federal tax credit would save you $4,200 on a system that costs $14,000, with a total of $9,800. Your final price will vary based on your system size, solar installer, and solar panel quality. 


Is Going Solar in Tennessee Worth It?

Although Tennessee offers limited solar incentives, investing in a solar energy system is worth it. Tennessee receives an abundant 207 sunny days annually, making it an ideal environment for solar panels. Most homeowners reach their solar payback period in six to 10 years. Considering many solar panels last about 25 years, you’ll benefit from 15–19 years of energy savings. You’ll also receive savings on monthly utility bills if your utility company offers net metering.


Our Conclusion

We recommend using solar incentives to lower your investment costs when going solar in Tennessee. Our team researched the best solar companies in Tennessee and chose SunPower as our top pick. SunPower offers an excellent selection of top-quality solar panels and energy storage, plus robust warranty coverage. 

We recommend getting quotes from multiple local installers to find the right solar panel system for your home. Use the tool below to start requesting quotes.

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FAQ About Solar Tax Incentives in Tennessee

Is a state solar tax credit available in Tennessee?

No, Tennessee doesn’t offer a state solar tax credit. Instead, homeowners should apply for the federal solar tax credit to earn up to 30% back on installation costs. 

Does Tennessee charge sales tax for residential systems?

Yes, Tennessee charges sales tax on residential solar systems. It does not have a sales tax exemption for home solar systems. 

How many solar installers are there in Tennessee?

According to the Solar Energy Industries Association (SEIA), there are 60 solar installers in Tennessee. 

How can I get free solar panels in Tennessee?

Unfortunately, free solar panels aren’t available in Tennessee. However, you can apply for federal and state solar incentives to help reduce your installation costs. 


Our Rating Methodology

We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:

  • Solar equipment, installation, and services (25%)
  • Warranty and performance guarantees (25%)
  • Brand reputation and certifications (15%)
  • Financing options (15%)
  • Experience (10%)
  • Availability (10%)

Total scores are divided by 20 for a final 5-point rating scale.

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