As of November 2020, the average cost of a solar panel installation in Kentucky is around $2.34 per watt which is lower than the average price across the US. The total cost of a 6kW solar system will not exceed $10,398 after claiming the 26% federal solar tax credit.
Federal solar investment tax credit (ITC) – a governmental perk that allows all solar panel buyers to get 26% deduction of the installing cost from federal taxes. For example, if your solar system costs $15,000, your tax credit would be $3,900. Deduction will be lowered by 5.0% in 2021 and will be gone the year after unless new legislation is introduced.
Kentucky Net energy metering (NEM) – this incentive allows solar users to send the surplus of produced power back to the grid in exchange for credits. When your solar panels produce more electricity than you need, your excess electricity will be sent to your utility company’s electric grid. Before 2020, NEM was one of the state’s best incentives that allowed solar buyers to get full retail credits for the excess amount of electricity they produced. However, starting this year the rate was lowered but remains yet to be fixed. The estimated amount of credit is expected to be 55% of the full retail credit. In other words, for 1 kWh you send back to your utility’s grid, you will be credited $.068 instead of the full retail rate of $0.124.
Tennessee Valley Authority utility (TVA) feed-in tariff – similar to the Net Metering Program, the TVA program offers a $1000 rebate for going solar and a feed-in tariff which is equivalent to the retail electricity price plus an additional $0.02/kWh. However, program benefits are available only for those who live in an area served by the TVA company.
Kentucky gets plenty of sunlight and has a favorable net metering policy for going solar. The outlook is even better if you are a Tennessee Valley Authority utility customer since you will get a $1000 rebate for your solar system installation together with a feed-in tariff.
When you install a solar system, 26% of your project expenses apply toward a credit to offset any taxes you owe that year. This federal tax credit is a major incentive to go solar, but it is going to be phased out by 2024.
To be eligible to claim this credit, you must owe federal taxes.