Electricity doesn’t come cheap in Alabama, and the only surefire way to lower your energy rates is to start generating power for yourself. Solar power systems can be a sizable investment, but there are a number of incentives that could help ease your cost concerns. Keep reading to learn more about each of them.
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?
You may choose to go solar for a number of different reasons — saving money on utility bills, harnessing the Yellowhammer State’s sunny weather, or making your home more sustainable.
Solar power for your home is a large investment. According to Angi, the cost of installing solar panels in Alabama can range from $18,343 to $36,381. However, the panels can help pay for themselves over time if you connect them to the grid and take advantage of the right incentive programs. For more detailed information, you can read our comprehensive article about whether solar panels are worth the investment.
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The Best Solar Incentives, Tax Credits, and Rebates in Alabama
According to the Solar Energy Industries Association (SEIA,) Alabama currently ranks 29th in the nation for solar friendliness. This is a decline in the rankings from previous years — some programs have expired, and incentives in other states have improved. Number 29 is certainly not the worst, but many Alabama residents should be prepared to claim federal incentives as some of their best savings options.
The federal tax savings programs for Alabama homeowners can save you several thousand dollars, and your panels will not be included in future property tax assessments. The Alabama Public Service Commission does not have any incentive programs at the state level, but you might be able to take advantage of lower interest rates or interconnection programs from companies like Alabama Power.
The Federal Solar Investment Tax Credit (ITC) is the best solar incentive in Alabama. The Alabama Public Service Commission does not currently have any incentive programs 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 Sales Tax Abatement
Until 2018, there was a solar sales tax abatement in place throughout Alabama. This program has expired, so you will now have to pay sales taxes for new solar panels.
Alabama Solar Property Tax Exemption
The Alabama Solar Property Tax Exemption helps make the cost of a solar panel system much more affordable. New solar power systems tend to increase property values, but they cannot be factored into property tax assessments in the Yellowhammer State.
Barring other improvements you make to your home, this exemption can help stabilize your tax burden through the years. It’s also something to consider if you plan to sell your home, since adding solar will increase your total equity stake.
Alabama Net Metering
Net metering is a program where you can receive credit for excess energy your solar system produces and sends back to the grid. Unlike some other state governments, Alabama neither mandates nor regulates net metering. 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 have went down over time.
More Alabama Resources
Check out our informative article to learn about the price of solar panels.
FAQs about Alabama Solar Incentives
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.
Solar panels in Alabama are about $18,343 to $36,381, 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.
Solar panels are not offered for free in Alabama. Alabama’s best saving program for clean energy is the Federal ITC program.
Currently, the solar rebates in Alabama include federal rebates, as there is no state tax incentive or rebate. This could change in the future.
Currently, there are only about 30,000 homes in Alabama with solar power. As more programs are created and solar costs go down, more houses will likely be willing to make the switch.
You’ll have to pay sales tax for your solar panels, but not property taxes. Solar panels will increase your home’s value, but they can’t factor into a property tax assessment.
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.
