Is solar worth it in Alabama?
For a typical Alabama home in 2026, solar is not worth it: about a 18.8-year payback and $8,577 saved over 25 years after paying for the system. Check your own home, because roofs, usage and utilities vary a lot.
- Payback, typical home
- 18.8 yrs4.8 kW, paying cash
- Electricity price
- 16.4¢per kWh, U.S. 18.0¢
- Solar production
- 1,407kWh per kW per year
- Exports credited at
- ~18%No statewide net metering
The numbers for a typical Alabama home
| Electricity use | 1,120 kWh a month (Alabama average) |
|---|---|
| Best-value system | 4.8 kW, producing 6,753 kWh a year (50% of use) |
| Price | $18,380 at about $3.60/W |
| First-year savings | $874 |
| Payback | 18.8 years |
| 25-year net | $8,577 (2.8% a year return) |
| Rate increase assumed | 3.2% a year, from Alabama's 2015–2025 history |
Paying cash, no federal credit, 5% discount rate, microinverters, $25 per kW a year for maintenance and repairs. Methodology.
Why it comes out this way
- Electricity costs 16.4¢ per kWh, close to the U.S. average of 18.0¢.
- Exported solar is typically credited at about 18% of retail, so systems pay best when sized for what you use yourself.
- A typical system here produces about 1,407 kWh per kW per year (ranked #22 of 51).
- There is no federal tax credit for homeowners who buy in 2026, which adds several years to payback compared with 2025.
Net metering and export rules in Alabama
No statewide net metering. Alabama has no net metering law. Alabama Power buys any electricity you send to the grid at a low wholesale (avoided-cost) price. It also charges solar customers a monthly 'capacity reservation' fee of about $5.41 per kW of system size, which a federal judge let stand in March 2026.
Alabama Power: exports bought at its avoided-cost purchase rate under its PURPA/qualifying-facility rate rider (wholesale energy value, typically a few cents per kWh, varies with season and time). TVA-served areas (north Alabama munis/co-ops) follow TVA distributor rules, which generally do not offer retail net metering.
- Netting: instantaneous
- Unused credits: None; exports are purchased/credited at avoided cost each billing period.
- Fixed charges: Alabama Power capacity reservation charge on customer-owned generation: $5.41/kW-month of installed capacity (raised from $5/kW). A 7.2 kW system pays ~$39/month regardless of usage. Battery-backed systems may be subject to the same charge. Standard residential base charge also applies.
- Last major change: March 2026: federal court dismissed SELC/Ragsdale challenge under PURPA, leaving the capacity reservation charge in place; PSC earlier increased it to $5.41/kW.
- Pending: PSC directed Alabama Power to develop a residential demand-rate option for self-generating customers; filing/approval status not confirmed as of Oct 2026.
Read net metering explained to see why export rules can swing payback by years.
| Utility | Export credit | Notes |
|---|---|---|
| Alabama Power | 3¢/kWh | Export value approximate (avoided cost varies; not verified for 2026). Capacity reservation charge $5.41/kW-month makes residential solar payback very long; model this fee explicitly. |
| TVA local power companies (e.g., Huntsville Utilities) | Avoided-cost export credit | TVA Green Connect program connects installers but TVA ended its premium buyback; most distributors credit exports at or below avoided cost or offer no export credit. Check the local distributor. |
Solar incentives in Alabama
The federal 30% Residential Clean Energy Credit ended for systems installed after December 31, 2025. What that means.
| Program | Type | What you get | Status |
|---|---|---|---|
| No state solar incentives | other | Alabama offers no state income tax credit, rebate, sales tax exemption or statewide property tax exemption specific to residential solar. The federal 25D homeowner credit ended for expenditures after Dec 31, 2025. Eligibility: n/a | unknown |
What solar costs in Alabama
A fair cash price is around $3.60 per watt before incentives. For the 4.8 kW system that fits a typical home, expect roughly $14,700 to $20,700; smaller systems cost more per watt.
How many homes have solar
- Homes with net-metered solar (2025)
- 87
- Share of homes
- 0.0%
Sources: EIA-861 (2025), EIA small-scale solar estimates, LBNL Tracking the Sun and state interconnection data.
Electric utilities in Alabama
| Utility | Homes served | Price (2026 est.) | Typical use | Typical-home verdict |
|---|---|---|---|---|
| Alabama Power | 1,342,827 | 18.3¢ | 1,129 kWh/mo | Not worth it |
| City of Huntsville | 201,803 | 12.8¢ | 1,148 kWh/mo | Not worth it |
| Baldwin County El Member | 85,081 | 14.5¢ | 1,131 kWh/mo | Not worth it |
| Foley Board of Utilities | 53,818 | 14.3¢ | 1,178 kWh/mo | Not worth it |
| City of Athens | 52,200 | 11.8¢ | 1,312 kWh/mo | Not worth it |
| Central Alabama Electric Cooperative | 45,580 | 17.6¢ | 1,157 kWh/mo | Not worth it |
| City of Florence | 41,690 | 12.7¢ | 1,278 kWh/mo | Not worth it |
| Cullman Electric Cooperative | 40,027 | 14.9¢ | 1,258 kWh/mo | Not worth it |
| Joe Wheeler Electric Member | 37,109 | 15.8¢ | 1,359 kWh/mo | Not worth it |
| Tallapoosa River Electric Cooperative | 30,157 | 15.1¢ | 1,160 kWh/mo | Not worth it |
| Sand Mountain Electric Cooperative | 27,485 | 13.8¢ | 1,193 kWh/mo | Not worth it |
| City of Dothan | 26,932 | 10.9¢ | 1,172 kWh/mo | Not worth it |
| Covington Electric Cooperative | 23,625 | 18.0¢ | 1,135 kWh/mo | Not worth it |
| Wiregrass Electric Cooperative | 22,857 | 16.3¢ | 1,215 kWh/mo | Not worth it |
| Decatur Utilities | 22,830 | 12.4¢ | 1,177 kWh/mo | Not worth it |
| Dixie Electric Cooperative | 22,315 | 15.8¢ | 1,171 kWh/mo | Not worth it |
| Southern Pine Electric Cooperative | 20,846 | 14.9¢ | 1,047 kWh/mo | Not worth it |
| Black Warrior Electric Member | 19,934 | 15.4¢ | 1,134 kWh/mo | Not worth it |
| Cherokee Electric Cooperative | 19,006 | 16.3¢ | 1,142 kWh/mo | Not worth it |
| Clarke-Washington E M C | 18,723 | 16.2¢ | 992 kWh/mo | Not worth it |
| Marshall-De Kalb Electric Cooperative | 17,449 | 13.4¢ | 1,263 kWh/mo | Not worth it |
| South Alabama Electric Cooperative | 16,940 | 16.2¢ | 1,006 kWh/mo | Not worth it |
| Coosa Valley Electric Cooperative | 15,806 | 17.3¢ | 1,205 kWh/mo | Not worth it |
| Sheffield Utilities | 15,662 | 13.3¢ | 1,277 kWh/mo | Not worth it |
| Pea River Electric Cooperative | 15,013 | 18.0¢ | 1,144 kWh/mo | Not worth it |
Solar by city in Alabama
- Huntsville23.4-yr payback · Not worth it
- Mobile16.7-yr payback · Not worth it
- Birmingham17.5-yr payback · Not worth it
- Montgomery16.6-yr payback · Close call
- Tuscaloosa17.3-yr payback · Not worth it
- Hoover17.3-yr payback · Not worth it
- Auburn17.1-yr payback · Not worth it
- Dothan16.9-yr payback · Not worth it
- Madison24.1-yr payback · Not worth it
- Decatur23.7-yr payback · Not worth it
- Florence23-yr payback · Not worth it
- Prattville16.5-yr payback · Close call
- Vestavia Hills17.6-yr payback · Not worth it
- Phenix City17.2-yr payback · Not worth it
- Alabaster17.3-yr payback · Not worth it
- Gadsden17.5-yr payback · Not worth it
- Opelika17.2-yr payback · Not worth it
- Northport17.2-yr payback · Not worth it
- Enterprise19.2-yr payback · Not worth it
- Daphne20.3-yr payback · Not worth it
- Athens24.1-yr payback · Not worth it
- Homewood17.5-yr payback · Not worth it
- Trussville17.5-yr payback · Not worth it
- Bessemer17.4-yr payback · Not worth it
Protect yourself when buying
- Check the license. Electrical contractor license from the Alabama Electrical Contractors Board for the electrical work; residential home builder license (Alabama Home Builders Licensure Board) may apply for larger residential jobs. Look up an installer
- Cancellation rights. Federal law gives you 3 business days to cancel most door-to-door sales over $25. How to cancel
- HOA and solar access. No statewide solar access law protecting homeowners from HOA bans.
- Community solar. No statewide community solar program; limited utility/TVA offerings only.
Questions about solar in Alabama
Is solar worth it in Alabama in 2026?
For a typical Alabama home, solar is not worth it. A 4.8 kW system costing about $18,380 after state incentives saves about $874 in the first year and pays back in about 18.8 years. Your result depends on your roof, usage, utility and price, so run the calculator for your address.
How much do solar panels cost in Alabama?
A reasonable cash price is around $3.60 per watt before incentives, or roughly $14,700 to $20,700 for a 4.8 kW system.
Does Alabama have net metering?
Alabama has no net metering law. Alabama Power buys any electricity you send to the grid at a low wholesale (avoided-cost) price. It also charges solar customers a monthly 'capacity reservation' fee of about $5.41 per kW of system size, which a federal judge let stand in March 2026.
Is there a solar tax credit in Alabama?
The 30% federal credit for homeowners ended for systems installed after 2025. Alabama does not offer a state income tax credit for solar that we're aware of.
How do I check a solar installer's license in Alabama?
Electrical contractor license from the Alabama Electrical Contractors Board for the electrical work; residential home builder license (Alabama Home Builders Licensure Board) may apply for larger residential jobs.. Look up any installer with the state's license search at https://aecb.alabama.gov/.
Policy research current as of October 2026; sources include insideclimatenews.org, wbhm.org, programs.dsireusa.org. Electricity data: EIA, through July 2026. Found something out of date? Tell us.