What solar incentives are available in Alabama?
Alabama offers limited solar incentives compared to other states, but there are a few options to look into, such as property tax exemption, utility programs, low-interest financing, and net metering.

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2026 Alabama Solar Incentives

Alabama receives more than 200 sunny days each year, giving the state strong solar potential. While Alabama’s solar market is still developing, homeowners and businesses can take advantage of several incentives and programs that help reduce the cost of going solar.

Federal Investment Tax Credit (ITC)

Commercial solar energy systems installed in Alabama can take advantage of the Federal Investment Tax Credit 48E, which provides a tax credit of 30% of the total cost of the system, provided prevailing wage and apprenticeship requirements are met. 

Residential systems can no longer claim any federal solar tax credit, as the One Big Beautiful Bill eliminated it for systems installed after January 1st, 2026. 

Commercial Depreciation

Commercial asset owners can write off 100% of a project’s value in depreciation in the first year. The One Big Beautiful Bill reinstated the 100% bonus depreciation, while simultaneously eliminating the Modified Accelerated Cost Recovery System (MACRS) that previously depreciated solar energy systems over 5 years. 

The depreciable basis of a project is reduced by half of the ITC value when combined with the 30% ITC. Here’s a quick example:

• Project cost = $800,000
• 30% credit = $240,000
• Reduced depreciation basis: $800,000 – ($240,000 / 2) = $680,000

A company’s tax rate is then taken into account to calculate the exact amount they’re able to write off. 

Net Energy Metering (NEM)

Net metering is a billing arrangement that credits solar owners for the excess electricity they generate. When your panels produce more energy than your home is using, the surplus is fed back into the grid and credited to your account, helping offset future electricity consumption and lower your bills. By using solar power efficiently, net metering reduces reliance on fossil fuels and helps maintain grid stability in Alabama.

While net metering isn’t mandated by the Alabama Public Service Commission, utilities like Alabama Power (through its Purchase of Alternative Energy rate) and the Tennessee Valley Authority offer net-billing or similar buyback programs. Credit rates tend to be modest—often a few cents per kWh—so the best way to maximize value is to use more of your solar power as you generate it.

Property Tax Exemptions for Solar

Alabama offers a property tax exemption for renewable energy systems, including solar installations. Solar typically raises a home’s value, but this exemption means that added value will not increase your property taxes. The exemption lasts 10 years and can be renewed, protecting your tax bill as your system pays for itself.

Utility Rebates and Local Programs

Beyond statewide policy, individual utilities and electric cooperatives sometimes offer their own buyback rates, energy-efficiency rebates, or low-interest financing for clean energy upgrades. What’s available depends on where you live and who provides your power, so it’s worth checking directly with your local utility. Pairing an efficiency rebate with solar can also let you install a smaller, more affordable system.

Further information and current programs can be found at the Database of State Incentives for Renewables & Efficiency (DSIRE): https://programs.dsireusa.org/system/program

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Archive 2023 Incentives in Alabama

Alabama receives more than 200 sunny days each year, giving the state strong solar potential. While Alabama’s solar market is still developing, homeowners and businesses can take advantage of several incentives and programs to help reduce the cost of going solar.

Federal Solar Investment Tax Credit (ITC)

Homeowners who qualify for the Solar ITC can take advantage of a tax credit of 30% of the cost of their solar energy system. This can add up to huge savings for solar owners. The Federal ITC is set to expire in 2035, so act now to take advantage of these solar savings while you can!

Net Energy Metering (NEM)

NET metering in Alabama is a billing arrangement for solar panel owners that credits them for the excess electricity they generate. When your solar panels produce more energy than your home consumes, the surplus is fed back into the grid and credited to your account, effectively spinning your meter backward. 

These credits can offset future electricity consumption, resulting in lower energy bills. Net metering promotes the efficient use of solar power, reduces reliance on fossil fuels, and supports the transition to clean energy. By participating in net metering, you save money and contribute to a more sustainable energy future while helping maintain grid stability in Alabama.

While not mandated by the Alabama Public Service Commission, utilities like Alabama Power and the Tennessee Valley Authority offer net energy metering or similar programs.

Property Tax Exemptions for Solar

Alabama offers a property tax exemption for renewable energy systems, including solar installations. This exemption means that the added value of your solar panels will not increase your property taxes.

Utility Rebates

For solar systems, customers will receive a premium rate of $0.12/kWh on top of the standard retail rate. All other renewable energies are offered at $0.03/kWh plus retail rates (small hydropower, biomass, and wind energy systems). New subscribers will receive a $1,000 bonus for joining that can be put toward the installation costs of a given system.

Further information and programs can be found at the https://programs.dsireusa.org/system/program

We make every effort to keep this information current, but incentive programs, funding levels, and eligibility requirements may change over time. Please verify details with your solar company before making decisions. Suggest an edit: marketing@solarinsure.com