Alabama power does not come cheap, and truly the only way to lower your electricity rates is to produce your own electricity. The problem, of course, is that a solar power system in Alabama could cost more than $30,000. If you are looking for all of the best Alabama solar incentives, our guide will explain why solar installation makes sense. We’ve also listed several tax incentives and rebates to help you save money on your solar power system.
The state of Alabama does not currently have a state incentive to help you save money on your energy consumption, but there are federal and some local programs that can help lower total costs.
Why Go Solar in Alabama?
According to the SEIA, Alabama currently ranks 29th in the nation regarding solar friendliness. The problem with this is that in 2021 Alabama was ranked 19th in the nation. This means some programs have expired, and financial incentives in other states have improved, so Alabama has dropped down the rankings a bit. Although 29th in the nation is certainly not the worst, Alabama residents should be prepared that the Federal Tax Credit will probably be their best savings option or incentive.
Read our solar company comparison of SunPower and Sunrun for some of the best solar options.
The reasons to go solar in Alabama can range from a commitment to a Renewable portfolio standard, money savings, or taking advantage of our resources. People have both financial and personal reasons for going solar.
Solar power for your Alabama home is a large investment, but one that can continue to pay off because of interconnection and incentives from green power providers.
Alabama Solar Cost
Alabama solar costs are a little higher than average, ranging from around $20,000 to more than $30,000. The large differences in the costs of solar panel installations will be primarily due to your home size and how much geothermal or photovoltaic power you need to power your home. Some people use very little electricity while others with large homes and many people using them need to rely on quite a bit.
The solar panels cost money to purchase and install, but overall upkeep and maintenance on the system are not all that intensive. With the Federal Government rebate program still in place, there is quite a bit of money that Alabama residents can still save.
Sold on Solar for your home? Get a free quote from local solar installers.
How Much Can You Save on Solar in Alabama?
The average savings from the Federal Tax savings programs for Alabama homeowners will be around $6,000 to $8,000. There are also loan programs that can help lower interest rates and a property tax exemption that will save you money for years to come.
There are also net metering programs in Alabama from some companies like Alabama Power.
The Best Solar Incentives, Tax Credits, and Rebates in Alabama
The Federal Solar Investment Tax Credit (ITC) is the best solar incentive in Alabama. Many state governments support energy efficiency and alternative energy sources; unfortunately, the Alabama Public Service Commission does not have any programs currently in place to save money at the state level.
| Incentive | Summary | End Date |
| Federal Solar Tax Credit (ITC) | Alabama residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax returns. If you purchase $20,000 worth of solar panels, you can get a credit of $6,000 on your next tax return. Remember, this does require you to come out of pocket first. | December 31st, 2032 |
| Net Metering | Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. Net metering in Alabama is not mandated, but companies like Alabama power participate. | None |
| Property Tax Exemption | The state of Alabama does not increase property taxes for those with a solar panel installation. This can save thousands in property taxes through the years. | None |
Alabama Solar Energy Tax Credit
There is currently no state-level tax credit for those that install a solar power system in Alabama. This does not, however, mean that it will always remain this way. There are changes to these programs fairly often, and you should consider doing more research as you get close to your actual installation.
Alabama Solar Sales Tax Exemption
Until 2018, there was a solar sales tax abatement in place, but this has since gone away. You will have to pay taxes if you purchase a solar power system in Alabama.
Alabama Solar Property Tax Exemption
The Alabama Solar Property Tax Exemption helps make the cost of a solar panel system much more affordable. When a solar power system is installed in your Alabama home, it will increase the value of the property and the building.
With this property tax exemption, expect the taxes to remain relatively stable for years. This is something that homeowners should also consider if they plan to sell their homes at some point. An incentive like this will undoubtedly increase the total equity you have in your home.
Alabama Net Metering
Net metering is the process of banking some of the excess energy you create and having the utility company give it back to you at a reduced rate when you need it. Unfortunately, the state does not regulate the net metering policies in Alabama. Companies like Tennessee Valley Authority (TVA) or Alabama Power may offer their own programs, but you cannot always count on net metering, and the rates are not great. This would be an excellent way for Alabama to move back up the list of solar-friendly states if they implemented a better net metering policy.
Commercial Alabama Solar Incentives
When it comes to commercial properties in Alabama, most of the incentives for transitioning to solar power are the same as residential ones. However, there are some other loan-type programs for PV system installation and renewable energy that we don’t see in the residential sector.
Solar Incentives for Nonprofits and Businesses in Alabama
Nonprofits and businesses in Alabama will be subject to many of the same programs; there are no specific incentives currently to help out a non-profit. One of the few good things that a non-profit can consider is that they may have discounted tax rates on purchasing their system if they are a registered non-profit with sales tax exemption.
USDA REAP Grant
The United States Department of Agriculture offers a REAP grant, or Rural Energy for America program is a great loan program for agricultural producers. Agricultural producers are very important members of our economy; however, they also require a lot of power to stay up and running.
With the REAP Grant, agricultural producers can save money on loans for their solar systems.
In addition to the money savings, there are also financing options that may otherwise not be available through providers. If qualifying for a loan is part of the problem, working with a USDA representative could help to make this process considerably easier.
Federal Solar Tax Credit for Businesses in Alabama
For a federal corporate income tax return, there is a 30% credit against the cost of any system that was placed into the building that year. The Federal Solar Tax Credit is the best way for Alabama state businesses and property owners to save the most amount of money on their solar system installation.
Luckily, this program was extended through the end of 2032 with the passing of the Inflation Reduction Act.
Alabama Commercial Net Metering
The net metering program in Alabama is not the strongest. Local governments and business owners will have to work with their individual electric utility providers to see if there is anything that can be done to work out a net metering deal. However, until the state of Alabama starts mandating net metering, this will likely not be a very popular program.
Local Government Energy Loan Program
For local government buildings like schools that want to invest in more renewable energy sources, there is a loan program that can help to keep costs down. These loans will offer $350,000 per local government or school campus and up to $500,000 per school system.
The loan rates will be 0% for up to 10 years with a 3% management fee. The payback needs to happen within 10 years as part of this program, but it is an excellent way for large-scale projects (over $50,000) to get up off the ground.
AlabamaSAVES Revolving Loan Program
The AlabamaSAVES Revolving loan program is for commercial and industrial customers looking for large loans on energy-saving projects. The maximum loan amount here is $4,000,000, and the maximum term is ten years. It will require a starting investment of $1,000,000 to qualify for this program.
The 2% fee associated with this loan is considerably lower than the market rate, and there are very few fees and costs involved, considering the size of the loan being discussed.
Final Thoughts: The Best Alabama Solar Incentives
The best Alabama solar incentive is the Federal tax rebate program. This is the only option that will help you save thousands of dollars on the cost of your solar installation in the state of Alabama. Although there are other local loan programs for business and, of course, the property tax exemption, the state of Alabama still lacks some of these programs for helping customers switch to solar power. We should see a state program from Alabama that will encourage more participation and better savings.
FAQs about Alabama Solar Incentives
Is solar worth it in Alabama?
In Alabama, solar is worth it because of the money savings and the ability to create your energy without relying on the grid. Alabama residents that switch to solar power do not regret the money they save and the ease of use creating energy without having to do anything.
How much does it cost for solar panels in Alabama?
Solar panels in Alabama are about $30,000, but this will change based on the size of the solar array. Some homeowners will do a partial solar system to help lower the costs of the electric bill but not completely power the home. A solar panel expert and installer can help you determine how much you will need for your home.
Can you get solar panels for free in Alabama?
Solar panels are not offered for free in Alabama. Alabama’s best saving program for clean energy is the Federal ITC program.
What solar rebates are available in Alabama?
Currently, the solar rebates in Alabama include federal rebates, as there is no state tax incentive or rebate. This could change in the future.
How many homes in Alabama have solar panels?
Currently, there are only about 30,000 homes in Alabama with solar power. Hopefully, as more programs are created and solar costs go down, more houses will be willing to make the switch.
Do solar panels increase property taxes in Alabama?
Solar panels will increase the value of your home, but it will not increase your taxes in Alabama. Luckily taxes in Alabama are not impacted at the residential or commercial level for the installation of green power initiatives.
How much can you write off for solar panels on taxes in Alabama?
The current Federal ITC programs allow a 30% rebate on the total cost of the solar system. There is no additional tax benefit at the state level, but the program is set to maintain at 30% reimbursement until 2032.
Today's Homeowner’s Solar Ranking and Review Methodology
At Today's Homeowner, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.
Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all the solar energy companies on the market so you can have the information you need to make the best choice for your home.
We developed a formula to objectively determine the top-tier solar power installers and give each a score out of 100 based on the following criteria:
- Plan Options (30): Do they provide various plan options? We looked at the number of plans each solar energy company offered and the flexibility of adjusting the plan.
- Services (20): How many services are offered in each plan? We looked at whether the company manufactures its solar panels, whether it contracts out installation, and what additional products each company offers.
- Trust (10): What do customers say after installing solar panels? Does this company offer a guarantee? We considered how satisfied customers are post-service if the company does what it says it will, BBB accreditation, and service guarantees.
- Prices (10): How reasonable are the costs of the plan or service in comparison to the industry average? We compared the costs of each company to competitors that offer the same solar energy services.
- Unique perks (10): Does the company offer discounts or special services such as financial incentives, rebates, or a useful mobile app? We looked for extras each company offers that set them apart from the competition.
- Customer Service (10): How is the customer experience when contacting the company? We considered the speed of response, weekend/holiday availability, and ease of communication through phone calls, email, and online chat functions.
- Nationwide availability (10): How many states does the company offer its services? Companies that operate nationally and in all zip codes are favored over those with limited availability.
