TennesseeGetting sufficient sunlight throughout the year, Tennessee has the right conditions for anyone interested in going solar. And while the conditions for this type of investment are excellent, the state hasn’t done an awful lot in financial stimuli provision.

As of 2020, Tennessee ranks 31st among all states for the extensiveness of its solar network. While only 0.55% of the state’s energy is generated via solar power, legislators are attempting to make a change.

The number of installations has exceeded 2,600, and with some more positive provisions, the chances are that the numbers will continue to grow.

If you’re interested in learning a bit more about tax credits, rebates and other legal incentives that Tennessee provides, the following guide will acquaint you with the basics.

Net Energy Metering in Tennessee

This is where Tennessee policies still seem to be severely lacking.

Federal law requires net metering upon a request. At the time being, however, solar power producers in Tennessee are deprived of such an opportunity. Tennessee is one of only four states that lack policies in this regard.

This means that net metering has to be negotiated directly with utility companies if you produce more electricity than what you need. The only other places in the US where the conditions are the same include Alabama, Georgia and Hawaii.

Federal Tax Credit

Solar Panel InstallationAnyone who decides to go solar in Tennessee will need to learn a bit more about the federal tax credit. This is the legislative specific bound to significantly impact the cost of making a switch to clean energy production.

Also known as federal solar investment tax credit (ITC), this deduction allows you to reduce the cost of installing a solar energy system in Tennessee by 26%.

ITC applies both to residential and commercial installation, and the deduction is made from federal taxes.

Since there’s no cap on the ITC, it is a powerful financial incentive to execute a solar project. While the ITC percentage is anticipated to go down to 22% in 2022, it’s still a sufficiently large incentive.

However, keep in mind that owners of new solar energy systems will get to deduct only 10% of the system’s cost in taxes by 2024.

The sooner you get started with your Tennessee solar installation, the better. In the next two years, you’ll get to enjoy the most attractive federal stimuli – a deduction worth taking advantage of.

Tennessee Tax Credit

Here’s another field that’s been severely underdeveloped in Tennessee.

The state doesn’t offer a local tax credit or deduction for homeowners interested in switching to solar power. This development isn’t surprising, however, since the state doesn’t impose an income tax.

One more good thing to look forward to is the sales tax exemption. Anyone who decides to buy and install a solar system will be entitled to a full exemption from sales taxes. Depending on the installation specifics, the exemption can reduce the cost by as much as 8.25%.

If you buy a solar system, you can choose for the exemption to be applied upfront or provided in the form of a sales tax rebate after the complete installation of the system.

Additional Legal Stimuli for Solar Installations in Tennessee

While Tennessee lawmakers haven’t done a lot to stimulate solar production in the state, there are a few alternative opportunities worth pointing out. These can reduce the cost of the project and also provide a much-needed net metering option.

Tennessee Valley Authority, the primary electricity utility in the state, does have a couple of incentives for those interested in a solar installation.

Solar EnergyAt the time being, TVA gives out a $1,000 rebate for solar panel installation. In addition, TVA has launched its Green Power Provider program that offers net metering. Under this program, all excess solar electricity production is bought by the TVA at the retail rate.

There’s also a possibility for the provision of premium payments under the program. It gives you two additional cents per kilowatt-hour, and the opportunity is valid for ten years.

Getting into the program, however, comes with some restrictions. There are a limited joining capacity and an application window you’ll have to meet. This is yet another reason why the sooner you act with your solar installation, the better.


A southern state with a ton of sunshine, Tennessee seems like the perfect place for setting up a solar panel system. And it is such, even though legal stimuli and tax deductions are still minimal on a local level.

It’s only a matter of time for alternative energy to be embraced thoroughly by lawmakers in the sunny state. Should you wait for such changes to happen before making your move?

A general rule of thumb is that being a pioneer in a promising field gives you lots of opportunities that wouldn’t be available to those who arrive late at the party.

Installing a solar system in Tennessee today doesn’t have to be complicated or expensive. You have a federal tax credit, a local rebate, plus a couple of additional stimuli to explore. TVA’s programs are also worth looking into.

For best results, do your homework in advance. Calculating the cost of installation and timing the process right will give you access to excellent money-saving opportunities.

Not only will you be contributing to more environmentally-friendly energy production, but you’ll also be reaping some excellent financial rewards (that could potentially increase in size and scale in the very near future).

Map image by Wikimedia Commons User: TUBS / CC-BY-SA-3.0