Alabama solar 101: must read before you buy solar panels

The main solar incentive that works across all United States is the Solar Investment Tax Credit (ITC) program. By applying to this program, all Americans can deduct 26% of the total cost of their installation from the income tax. The PV system cost doesn’t amount to only how much you’ve spent on your solar panels, but includes the shipping and installation as well. To claim the ITC, complete all the necessary forms and submit them when filing your taxes. It makes sense to hurry up: in 2023 the Tax credit decreases to 22% and after that it’s 10% for commercial systems only.

Alabama is one of the three states in the USA without a net metering policy. You have to discuss the possibility and conditions of net metering with your electric supplier directly. For example, Alabama Power pays for excess energy if the customer is on Rate PAE (Purchase of Alternative Energy). However, its customers are subject to monthly Power’s fee. An owner of a solar system pays $5.41 for 1 kW of power. For a 5kW system, which is the average size of a solar installation in the USA, it amounts to $27 a month, $325 a year and over $8,000 in 25 years, which is the guaranteed lifespan of solar panels. Overall, it makes the payback period for solar in Alabama much longer. Everybody is unhappy about the fee and actively protests against it, as AP reports, so hopefully in the future solar laws in Alabama change and the Alabama Power fee will be cancelled.

The Energy Efficient Mortgages (EEM) program allows you to quickly get more money for energy upgrades for your home or for a new property with preinstalled upgrades. These loans are insured through Federal Housing Authority (FHA) and Veterans Affairs (VA) programs.

If you qualify for an FHA loan, you do for the EEM program. Usually the energy package that can be added to a standard FHA loan amounts to:

– the cost of upgrades based on the home energy assessment; or

– the lesser of 5% of:

• the Adjusted Value;
• 115 percent of the median area price of a Single Family dwelling; or
• 150 percent of the national conforming mortgage limit.

Solar systems, of course, qualify as energy-efficient upgrades, so your loan can be increased by the amount your system costs. Again, the cost of a PV system doesn’t amount to panels only, but includes accessories, shipment and installation as well. Read more about the FHA program and apply here.

EEMs through the Veterans Affairs program are available for military personnel, reservists and veterans. The exact loan amount depends on your status and credit history. Check the guide on how to apply for the VA loan here.

Property taxes for solar system owners in Alabama are lower. The abatement of tax is based on the value of the system. The property has to be assessed and evaluated every year. The abatement is granted by your local authorities (municipality, county) for 10 years and then can be extended for 10 years with an official approval. This program is to expire in 2023, but there is a chance the officials will prolong this Alabama solar incentive further. To get the abatement you have to apply to your county or municipality officials and they will schedule and perform cost/benefit analysis. Find the guidelines, forms and all the additional information about the program here – renewable energy projects fall into Chapter 9B type of abatement.

Generally, you would need a solar permit to build your own solar system in Alabama. The requirements may vary from city to city. Here’s, for example, the guide on permits in the Town of Alabama. Usually, it’s your installer who handles most of the work, including the steps of obtaining the permit, so you can rely on them to learn all the details about getting the papers. Don’t forget that your county or municipality can impose fees. After all papers are submitted, it is legal to install solar panels on your house in Alabama.

Alabama ranks fifth in the list of states with the highest number of hurricanes. On average 82 tornadoes hit Alabama annually, according to the National Weather Service. Besides, some meteorologists say that hurricanes started hitting Alabama more and more often recently. On June 19, 2021, a tornado damaged at least 50 houses in the southern part of the state near the border with Florida, Guardian reports. It appears that the winds reached the 85 mph speed. Solar panels withstand natural disasters very well, and a tornado in Alabama wouldn’t scare them. Tornadoes usually have the speed of 40-100 mph, but all panels are tested to survive 140 mph winds. Some models from REC or Canadian Solar are especially durable and are made to work in harsh conditions. High resistance to all sorts of natural disasters make solar a good choice in Alabama.