State solar incentives

Solar incentives in Tennessee you want to know about

Edited by: Andrei Gorichenskii

Tennessee is a fairly sunny state, where a PV system can substantially cut your electricity bills and help save your family budget. And to save some more money, read our article on solar incentives in Tennessee.

Key takeaways

  • Tennessee is a great state demonstrating high efficiency of renewable energy. To increase energy efficiency of renewables even more, the state offers many federal and local incentive programs, loans and energy property taxes to reduce the cost of your project. Read for more information.
  • Tennessee residents can claim a 30% federal tax credit on the total cost of their clean energy system installation. It covers not only the electric equipment but also labor costs and is available for residential and commercial systems.
  • Tennessee lacks a statewide net metering policy, but federal law mandates its availability upon request. Negotiations with utilities are required, and conditions vary. Credits may be valued at full retail or avoided cost rates. Credit rollover policies vary.
  • Solar easements protect solar systems from shading. Voluntary agreements between property owners. Must be a written and legal contract. Sample agreements are available from the Tennessee Department of Environment and Conservation.

Save 30% of your PV system cost with Federal Solar Tax Credit

The US government wants more people to go solar: it’s a modern and green way of getting energy. This is why the Solar Investment Tax Credit (ITC) program was developed. It allows American citizens to claim 30% of the cost of their installation as an income tax deduction. The cost here is not only solar panels, but also shipping, installation expenses and more. For example, if your system overall made you spend $10,000, the government returns you $3,000. To claim the ITC, complete all the necessary forms and submit them when filing your taxes.

Sell excess electricity with net metering program

Tennessee is one of the four states where a net metering policy hasn’t been developed. However, federal law requires its availability upon request. You will have to negotiate with your utility and the conditions may vary from company to company. The Tennessee Valley Authority (TVA) offers a dual-metering option for participants in its Green Power Providers program.

The general principle behind net metering always stays the same: it allows you to send the excess electricity back to the grid instead of storing it in a battery bank. When you sell your solar power to the utility, you receive credits that can be used to offset your next bills. Their value can be equal to full retail electricity price, but companies sometimes use an avoided cost rate which is a bit lower. The credits are usually rolled over for at least one year, after which time all unused credits may be retired, bought from you or allowed to roll over indefinitely.

Protect your solar panels from shade with Solar Easements

A solar easement contract is a written agreement between you and some other entity, for example, your neighbor. This type of contract helps you secure access to direct sunlight for your PV system for years to come. A solar easement protects your panels from potential impairments, such as vegetation and structures. It is voluntary and must contain the description of the property, protected space and a clause on compensation or termination of the contract. Once signed, it is tied to the land, not the owner.

Any such agreement must be created in written form and must meet the general requirements for legal contracts. You can use a sample provided by the Office of Energy Programs of the Department of Environment and Conservation.

Incentive/
Program
DescriptionBenefitsEligibility/
Requirements
Notes
Federal ITC (30%)
30% tax credit on the total cost of solar system installation.
Reduces overall system cost, accelerates payback period.
Must own the system, meet IRS guidelines.
Applies to installation, equipment, and other associated costs.
Net Metering
Allows homeowners to sell excess solar energy back to the grid for credits.
Reduces or eliminates electricity bills.
Negotiations with individual utilities.
Conditions vary, rates may be full retail or avoided cost.
Solar Easements
Legal agreements to protect access to sunlight.
Ensures optimal solar panel performance.
Negotiated between property owners.
Must be a written and legal contract.


What are solar incentives, and why do they exist?
Governments are really keen on getting people to embrace solar energy, and they're putting their money where their mouth is. They're offering a variety of financial incentives to make switching to solar a much more attractive proposition for homeowners and businesses alike. Essentially, they're saying, "We'll help you shoulder the cost if you choose to go solar."

Installing a solar panel system can be a significant upfront investment. To ease this financial burden, governments have implemented several support mechanisms. One of the most common is the provision of tax credits. This allows you to deduct a portion of your solar installation expenses directly from your tax liability, effectively reducing the amount you owe. In some regions, they go even further by offering cash rebates, which are essentially direct refunds that put money back into your pocket after the system is installed.

Another key incentive is the availability of rebates. These function much like post-purchase refunds. Once your solar panels are operational, you can apply for a rebate, which returns a percentage of your investment. This effectively reduces the overall cost of your solar system.

Furthermore, many jurisdictions have implemented net metering programs. This allows you to sell any surplus electricity generated by your solar panels back to the local utility company. If your system produces more power than you consume, the excess is fed back into the grid, and you receive credit or payment for it. This not only helps offset the initial cost of the system but can also generate ongoing income.

The rationale behind these generous incentives is multifaceted. Primarily, governments recognize the environmental benefits of solar energy. By promoting its adoption, they aim to reduce reliance on fossil fuels, mitigate greenhouse gas emissions, and combat climate change. Secondly, the solar industry fosters job creation in manufacturing, installation, and maintenance, stimulating economic growth. Lastly, solar energy contributes to energy independence, reducing reliance on foreign energy sources and enhancing national security.

For individuals and businesses, these incentives translate into substantial financial advantages. You receive assistance with the initial installation costs, enjoy lower monthly electricity bills, and potentially generate income through net metering. These programs make solar energy more accessible and affordable, enabling you to save money while contributing to a cleaner, more sustainable future.
Is it the right time to go solar?
Let's talk about whether now is a good time to think about putting solar panels on your house. We'll look at why it might be a really good idea right now.

First, we need to think about money. Your electricity bill can feel like something that keeps taking more and more of your money. Solar panels can help you control that cost. The price of solar panels has gone down a lot, so they are much easier to buy now.

At the same time, the price of regular electricity from the company that provides your power usually goes up. So, if you make your own electricity with solar panels, you can protect yourself from those increasing costs. You can think of it as making sure you have a low, fixed price for energy in the future.

Also, the government often gives you money back when you install solar panels. These money-saving programs, like tax credits, help you pay less for your solar system. This makes it an even better way to save money.

Second, the technology used in solar panels is getting better. Solar panels are like small power plants that you put on your roof. And these power plants are becoming much better at doing their job. They are more efficient, which means they can turn more sunlight into electricity. So, you get more power from the same amount of sun.

And what happens when the sun isn't shining? That's when batteries come in. Batteries that store the extra solar power are also improving. They can hold more power for longer, so you can have electricity even at night or when it's cloudy.

Third, let's think about how it helps the earth. When we burn coal or gas to make electricity, it makes the air dirty. Solar power is clean. It uses the sun, which is a natural source of energy that never runs out. By using solar power, you help reduce pollution and make the planet healthier.

Fourth, think about how it affects the value of your house. Putting solar panels on your house is like making it better. Many people like houses with solar panels, so they are willing to pay more for them. This means your house could be worth more if you have solar panels.

Fifth, having solar panels gives you more control over your energy. You don't have to rely as much on the power company, which can make you feel more secure. If there's a power outage, you might still have electricity if you have a solar system with batteries to store power.

Finally, it's important to know that solar panels work in many different places. People often think that solar power only works in very sunny places. But that's not true. Solar panels make energy anywhere the sun shines. Even on cloudy days, solar panels still make energy. And because of improvements in technology, solar panels are even better at collecting energy when there's not much light.

Check out solar panels near you!

Looking to build a home solar system? Check out solar panels that we have for sale in Tennessee

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Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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