Most of Tennessee runs on nuclear power, providing 43% of the state’s electricity in 2021. Only 3% of Tennessee’s electricity came from solar panels, and the state barely offers any incentives for its residents to go solar.
But Tennesseeans are getting solar panels anyway. There are roughly 77,880 residential solar installations in the state, according to the Solar Energy Industries Association.
One big reason solar looks appealing? High power bills. The Volunteer State has the 16th highest electricity rates in the US (12.11 cents per kilowatt-hour), according to SaveOnEnergy, CNET’s sister publication. This leads to an average monthly electricity bill of $143.26.
For those looking to go solar, the biggest bit of financial help is from the federal government — a 30% tax credit authorized by the Inflation Reduction Act, passed by Congress in 2022, according to Jill Kysor, a senior attorney and leader of solar initiatives with the Southern Environmental Law Center.
“It’s really important to have a strong state or utility-level solar policy,” Kysor told CNET. “Without a good policy from your utility, it can be really tough to make it work. There’s great opportunities out there right now with the IRA, but we still need utilities to have good policies in place for folks to really benefit.”
Here’s what you should know before going solar in Tennessee.
Tennessee solar panel costs
When it comes to solar, there’s no one-size-fits-all solution. Solar panels are very site-dependent, meaning everyone’s experience is going to be a bit different. The main factors at play when determining the cost of your solar system are system size, type of solar panels, household energy usage, the condition of your roof and your geographic location. If you choose to install a solar battery with your system, prepare to spend even more money.
Reliable state-level solar panel pricing data is hard to come by for many states, and Tennessee is no exception. However, national data is a different story. Here’s a look at the nationwide average cost of solar panels before incentives, according to the energy consulting firm Wood Mackenzie.
Nationwide average solar panel costs
|System size (kW)||Price per watt||Installed cost|
How to pay for solar panels in Tennessee
Solar panels are a serious purchase, so it’s good to know all your buying options beforehand. Weigh all your choices and pick a purchasing method that works best for your situation. Here are a few ways you can pay for your solar panels.
Cash: If it’s in your budget, paying cash upfront is the best way. There’s no interest or financing fees, and you’ll always be eligible for tax incentives. If you think solar might be a future investment, consider saving up in a high-yield savings account. This will net you more money over time.
Solar loan: If you need to finance your solar panels, most solar providers will offer you a solar loan. These loans will either be through the solar provider themselves or a third-party financial institution. However, be mindful that a solar loan might come with high interest rates and other fees.
Other types of loans: Explore other financing options beyond a solar loan. Taking out a personal loan with your bank or opening a home equity line of credit are just a couple other financing options for your solar panels. If you choose to go with a HELOC, be aware of the risks involved. Your home becomes collateral, and if you can’t pay back what you owe, your home could face foreclosure. With any loan, whether from a third-party lender or a solar provider, shop around and compare rates and terms before making a final decision.
Lease or power purchase agreement: You don’t have to own your own solar panels if you don’t want to. You can either enter a lease or a power purchase agreement. If you enter a solar lease, you’ll pay for the use of a solar system owned by the solar company. On the other hand, if you enter a power purchase agreement, you’ll pay for electricity generated from a company-owned solar system at a fixed rate. The fixed rate from the solar company is usually lower than the retail electricity rate from the local utility company.
Tennessee solar panel incentives and rebates
Tennessee doesn’t offer many incentives for its residents to go solar. Tennessee is also one of the few states in the US that doesn’t have official rules around net metering, the process of selling excess energy to the power grid. The Tennessee Valley Authority owns more than 90% of the state’s electricity generating capacity, and offers a program similar to net metering called the Dispersed Power Production Program. Keep in mind that this program is not a true net metering policy. And Tennessee’s clean energy sales tax exemption is only available for commercial and industrial solar projects, not residential.
“Most people living in Tennessee are served by a local power company that buys its electricity wholesale from TVA,” Kysor said. “TVA has several programs for rooftop solar customers, but they do not offer any traditional retail-rate net metering to customers flowing through the local power companies.”
As far as federal incentives go, homeowners can take advantage of the residential clean energy credit. This incentive allows you to claim 30% of the total cost of your solar system back in tax credits.
Here’s a closer look at the solar incentives in Tennessee.
Tennessee solar incentives
|Residential clean energy credit||This is a federal tax credit allowing you to claim 30% of the total cost of your system back on your federal taxes.|
|Green Energy Property Tax Assessment||Tennessee has a property tax assessment for certified green energy production facilities. This tax assessment limits the taxable value of having a solar system on your property. If you have solar panels, your assessed property value may not exceed 12.5% of installed costs for solar.|
|Dispersed Power Production Program||Operated by the TVA, this program allows you to sell your excess solar energy to the TVA at its avoided cost rate.|
Tennessee solar panel companies
There are 141 solar companies in Tennessee, with 60 of these companies being installers or developers, according to the SEIA. Even though you have a lot of installer options, you should still try to get as many quotes as you can to make sure you get the best price possible. Besides price, you should also take customer reviews, warranties and maintenance or labor fees into consideration when looking for a solar installer.
Here are a few solar installers servicing Tennessee.
ADT Solar operates in 23 states, including Tennessee. It installs solar panels and battery backup systems. The company offers a 25-year production and workmanship warranty, and it’ll perform a free home energy audit before installation. ADT Solar also has a price-matching guarantee.
LightWave Solar has been installing solar in Tennessee since 2006. It offers rooftop and ground-mounted solar panels, as well as panels mounted on canopies. The company also installs battery backup systems. It offers a five-year workmanship warranty. Note that LightWave Solar usually requires a 25% down payment upon signing a solar contract.
Nashville Solar Works
Nashville Solar Works is a local installer servicing parts of Tennessee. It works with professionals certified by the North American Board of Certified Energy Practitioners to install solar panels and batteries. To help you size your system correctly, Nashville Solar Works also offers a free home energy audit before starting anything else. Financing options are available through a third party.
SunPower Solar is a national solar company operating in all 50 states and offers a competitive 25-year warranty on your entire solar system. SunPower is known for having some of the most efficient solar panels currently available, with an efficiency rating of 22.8%. With SunPower Solar, you can pay cash, finance, lease or enter a power purchase agreement for your solar panels. Note that SunPower Solar does not offer price-matching and its panels tend to be pretty expensive.
Installation factors to keep in mind
Solar is an incredibly site-dependent purchase, with some homes being better suited than others. Here are a few installation factors to keep top of mind as you decide if solar is right for your home.
Condition of your roof: Some roofs are not suitable for solar panels due to factors like age, damage, angle, pitch and tree cover. These factors can impact the efficiency of your solar panels as well. Solar panels perform best on roofs angled between 15 and 40 degrees facing south, according to the US Department of Energy. A trustworthy solar installer will perform a roof inspection before solar installation.
Insurance coverage: If your homeowners insurance agency covers solar panels, consider adding your panels to your policy.
Location: The more peak sunlight hours your state has, the more efficient your solar panels will be. Tennessee gets a decent amount of sunlight, with an average of 4.1 to 4.5 hours of peak sunlight per day.
Homeowners association regulations: Because solar panels change the look of your home, your HOA might have certain rules and regulations around installing solar panels. If you have an HOA, make sure to check with them before installing solar.
Financing options: If you can’t pay cash upfront, there are various financing options available to pay for your solar panels. Solar loans, personal loans, solar leases and power purchase agreements are just a few options worth considering. Solar is a big investment, so do your research and find the best payment method that best works for your situation.