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April 27, 2024

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    If you own property in Kentucky, you have probably noticed your utility bills skyrocketing in recent years. While the cost of electricity might be out of your hands, there are many ways to take back control of your energy bills. Specifically, purchasing and installing a renewable energy system on your property can produce electricity and save thousands of dollars annually. Solar power, in particular, is one of the most popular sources of renewable energy and one that we highly recommend.

    Now is an excellent time for residents of Kentucky to purchase a new solar energy system for their homes. Thanks to public and private initiatives, Kentucky residents have access to several tax credits, rebates, and financing options that will lower the solar costs associated with their purchases. Keep reading to learn how your purchase and installation of solar panels in the bluegrass state can be made more financially accessible.

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    What Solar Incentives Are Available for Kentucky Homeowners?

    There are many public and private incentives in Kentucky that help you save on your solar panel purchase:

    IncentiveSummaryEnd Date

    Federal Solar Tax Credit (ITC)
    Kentucky residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax returns. In Kentucky, residents benefit from an average ITC of $7,722.2032

    Solar Sales Tax Exemption 
    The state of Kentucky does not offer a sales tax exemption for purchasing renewable energy systems like solar.None

    Solar Property Tax Exemption
    Residents of Kentucky do not benefit from a solar property tax exemption, which means they pay additional property taxes on the increased home value that arises from purchasing a solar energy system.None

    Net Metering
    Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. All energy providers are required to offer this option to homeowners.None

    Cumberland Valley Electric
    Customers can access rebates ranging from $50 to $1,370 for energy-efficient home upgrades.None

    Taylor Country RCC
    This company will provide varying rebates for some residential energy-efficiency measures and new construction incentives.None

    Property Assessed Clean Energy (PACE) Program
    The government of Kentucky offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans.None

    USDA REAP GRANT
    REAP assists agricultural producers and rural small businesses to reduce their energy costs and consumption by providing loan financing and grant funding to purchase and install renewable energy systems. Eligible participants in the REAP program are agricultural producers, with at least 50 percent of their gross income coming from agricultural operations and small businesses in eligible rural areas.None

    City of Louisville Go Green Loan Program
    Small businesses and agribusinesses in Louisville can access below-market-rate financing to increase energy efficiency and create green jobs. Small businesses in Louisville can get a loan of up to $50,000, and agribusinesses can get up to $100,000.None

    Featured Video: Learn What To Know Before Going Solar in Kentucky


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    Federal Solar Investment Tax Credit (ITC) for Kentucky Residents

    The Federal Solar financial incentive is a 30% federal tax credit allowing people who purchase solar systems to deduct from their income taxes. In Kentucky, residents enjoy an average ITC of $7,722. As a provision of the Inflation Reduction Act, this program was extended through the end of 2032.

    Kentucky Solar Sales Tax Exemption

    Unfortunately, Kentucky has no sales tax exemption for solar energy systems.

    Kentucky Solar Property Tax Exemption

    Unlike other states, Kentucky does not have a solar property tax exemption. This means that you will pay property taxes on the increased value of your home from installing solar panels. While the downside is that you’ll pay more property taxes, your home will also be more valuable due to your new solar energy system.

    Kentucky Net Metering

    Kentucky requires utility and electric cooperatives (excluding the Tennessee Valley Authority) to offer net metering to customers with 30-kW solar energy systems. This policy means that your solar panels will be connected to the public-utility power grid, and surplus power created by your panels will be transferred to the grid. 

    You can offset the cost of power drawn from the electricity grid due to net metering. The minimum compensation you’ll receive is the avoided-cost rate, which is below the retail rate. While the policy specifics of net metering programs will vary among providers, this remains massively beneficial for solar owners.

    Cumberland Valley Electric

    This company offers rebates to customers ranging from $50 to $1,370 for energy-efficient home upgrades.

    Taylor Country RCC

    This company will provide varying rebates for several residential energy-efficiency measures and new construction incentives.

    Property Assessed Clean Energy (PACE) Program

    The state of Kentucky offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans.

    Commercial Kentucky Solar Incentives

    Solar Incentives for Nonprofits and Businesses in Kentucky

    The City of Louisville Go Green Loan Program offers below-market-rate financing to small businesses and agribusinesses to increase energy efficiency and create green jobs. Small businesses in Louisville can get a loan of up to $50,000, and agribusinesses can get up to $100,000.

    As an added provision within the Inflation Reduction Act, all non-tax-exempt businesses are eligible for a 30% tax credit when they install solar systems on commercial buildings. This will remain in place through the end of 2032.

    USDA REAP Grant

    The United States Department of Agriculture (USDA) has created a program designed to increase investments in clean energy called the Rural Energy for America Program (REAP). REAP assists agricultural producers and rural small businesses to reduce their energy costs and consumption by providing loan financing and grant funding to purchase and install renewable energy systems. Eligible participants in the REAP program are agricultural producers, with at least 50 percent of their gross income coming from agricultural operations and small businesses in eligible rural areas.

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    LG and LONGi

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    10 states

    Numerous brands including Panasonic, LONGi, &LG.

    Why Go Solar in Kentucky?

    The state of Kentucky doesn’t usually come to mind when people think about solar power. But this perception of Kentucky energy production is changing rapidly. Solar energy has been rising across the United States for some time now, and Kentucky is beginning to catch up. By incentivizing industrial, commercial, and residential solar power projects, the government of Kentucky has helped spur the growth of the state’s solar market. With more public and private incentives on their way, the Kentucky solar market will likely continue to grow for years to come.

    Improved solar technology has also helped make this energy production widely accessible and effective in areas with less sunlight. But with nearly 189 sunny days per year, Kentucky is just below the national average of 205 days, meaning it gets more than enough sun to support solar energy. Plus, installing solar panels will reduce your reliance on fossil fuels, reduce your carbon footprint, and ultimately help mitigate the onset of climate change.

    Finally, as Zillow reports, solar panels can make your home far more valuable. Across the United States, the average home experiences a 4.1% increase in value after adding a solar power system. With an average home value of $188,463 in Kentucky, the average value increase from solar panels will be close to $7,727, making your solar panel investment that much more worth it.

    How Much Does it Cost to Go Solar in Kentucky?

    Solar prices in Kentucky have been dropping for years. The cost of solar energy system has fallen by more than 80 percent over the last ten years. Today, the average cost of a solar panel installation in Kentucky ranges from $11,700 for a 5-kW system to $32,760 for a 14-kW system. On a cost-per-watt basis, solar panel installation in Kentucky is an average of $2.34, which is significantly lower than the national average of $2.66 per watt.

    How Much Can You Save on Solar in Kentucky?

    In a world with ever-rising costs, solar power is your saving grace. You can save lots of money with solar energy when you purchase a solar energy system in Kentucky. By producing electricity for your home, solar panels can reduce the energy you pull from the grid, thus lowering your bills. Learn more about solar panel cost savings.

    On average, residents of Kentucky can save $20,247 in electricity bills over the lifetime of their solar energy system. This number is based on the assumption that solar panels purchased in Kentucky will have a payback period of 13 years—you will save enough money from your solar system over 13 years to make up the initial installation cost.

    You can save for decades by purchasing solar panels because of their durability. You will likely use lower electricity rates for 25 years or more, which will help you avoid future utility price hikes.

    Final Thoughts: The Best Kentucky Solar Incentives

    Now is the time to invest in solar energy in the great bluegrass state. It doesn’t matter if you’re a residential, commercial, or industrial property owner; solar panels can provide life-changing savings. Plus, with many public and private financial incentives available to potential buyers, you can save lots of money on your initial system purchase.

    Check out our deep dive into SunPower vs Sunrun.

    No one knows how much your utility bills may increase in the coming years. But if you want to stay ahead of any shocks to your wallet, buy a solar energy system and begin producing your own electricity. If you are interested in purchasing, there are many great companies that will provide installation services for you.

    You might want to explore our guide to affording solar panels through incentives.

    Are you sold on solar for your home? Get a free quote from local solar installers.

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    On average, homeowners save $5,000–$20,000 with solar panels

    Kentucky Solar Incentives FAQs

    Is solar worth it in Kentucky?

    Yes, we highly recommend solar energy in Kentucky and think solar is worth the investment. Solar power will save you lots of money on your utility bills and help reduce your production of emissions and your carbon footprint. While Kentucky does not have a renewable energy portfolio standard, various federal, state, and local financial incentives are available to purchase solar panels accessible to anyone.


    How much will my electricity bill go down with solar in Kentucky?

    On average, residents of Kentucky can save $20,247 in electricity bills over the lifetime of their solar energy system. This number is based on the assumption that solar panels purchased in Kentucky will have a payback period of 13 years—you will save enough money from your solar system over 13 years to make up the initial installation cost.


    How much does it cost for solar panels in Kentucky?

    The average cost of a solar panel installation in Kentucky ranges from $11,700 for a 5-kW system to $32,760 for a 14-kW system. On a cost-per-watt basis, solar panel installation in Kentucky is an average of $2.34. This cost has fallen by more than 80% over the last ten years and is significantly lower than the national average of $2.66 per watt.


    Can you get solar panels for free in Kentucky?

    While you probably can’t get solar panels for free in Kentucky, several federal, state, and local financial incentives can significantly minimize the costs associated with purchasing a new solar energy system.


    What solar rebates are available in Kentucky?

    Kentucky has many federal, state, and local financial incentives for purchasers of solar energy systems. These include the Federal Solar Investment Tax Credit (ITC) and various public and private rebate programs.


    How many homes in Kentucky have solar panels?

    There is enough solar installed in Kentucky to power 6,241 homes, and solar accounts for 0.2% of the state’s electricity production.


    Do solar panels increase property taxes in Kentucky?

    Yes, unfortunately, your property taxes will likely go up. Kentucky does not have a solar property tax exemption, meaning you will pay property taxes on the increased value of your home from installing solar panels. While the downside is that you’ll pay more property taxes, your home will also be more valuable due to your new solar energy system.


    How much can you write off for solar panels on taxes in Kentucky?

    Kentucky taxpayers can write off many costs of purchasing new solar energy systems. Check out this database of incentive programs for more information.


    Editorial Contributors
    avatar for Alora Bopray

    Alora Bopray

    Staff Writer

    Alora Bopray is a digital content producer for the home warranty, HVAC, and plumbing categories at Today's Homeowner. She earned her bachelor's degree in psychology from the University of St. Scholastica and her master's degree from the University of Denver. Before becoming a writer for Today's Homeowner, Alora wrote as a freelance writer for dozens of home improvement clients and informed homeowners about the solar industry as a writer for EcoWatch. When she's not writing, Alora can be found planning her next DIY home improvement project or plotting her next novel.

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    photo of Roxanne Downer

    Roxanne Downer

    Editor

    Roxanne Downer is a commerce editor at Today’s Homeowner, where she tackles everything from foundation repair to solar panel installation. She brings more than 15 years of writing and editing experience to bear in her meticulous approach to ensuring accurate, up-to-date, and engaging content. She’s previously edited for outlets including MSN, Architectural Digest, and Better Homes & Gardens. An alumna of the University of Pennsylvania, Roxanne is now an Oklahoma homeowner, DIY enthusiast, and the proud parent of a playful pug.

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