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

Tennessee is currently positioned in the lower tier among all states in terms of its solar network’s extensiveness. A small percentage of the state’s energy is generated through solar power. However, legislators are actively working towards enhancing the state’s use of solar energy.

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

If you want to learn more about tax credits, rebates, and other legal incentives Tennessee provides, the following guide will acquaint you with the basics.

Key Takeaways

  • Tennessee ranks 31st in the US for solar energy production but has limited financial incentives for solar panel installation.
  • Tennessee lacks net metering policies, requiring negotiation with utility companies for excess electricity, and is one of four states with this limitation.
  • Tennessee has a federal solar investment tax credit (ITC) of 30% for solar installations between 2022 and 2032.

Net Energy Metering in Tennessee

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

Federal law requires net metering upon 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 must be negotiated directly with utility companies if you produce more electricity than you need. The only other places in the US with the same conditions include Alabama, Georgia, and Hawaii.

Federal Tax Credit

Solar Panel InstallationAnyone who decides to go solar in Tennessee must learn more about the federal tax credit. This is the legislative specific bound to significantly impact the cost of switching to clean energy production.

Also known as the federal solar investment tax credit (ITC), this deduction allows you to reduce the cost of installing a solar energy system in Tennessee by 30%.

ITC applies to residential and commercial installations; the deduction is made from federal taxes.

Under recent updates, the ITC offers a 30% tax credit for systems installed between 2022 and 2032. This is an increase from the previously planned tax credit rates. Starting from 2033, the tax credit will decrease, decreasing to 26% in 2033 and further reducing to 22% in 2034. No maximum limit on the amount can be claimed under this credit.

The sooner you get started with your Tennessee solar installation, the better. In the next two years, you’ll 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. However, this development isn’t surprising since the state doesn’t impose an income tax.

One more good thing to look forward to is the sales tax exemption. Anyone buying and installing 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 much to stimulate solar production in the state, there are a few alternative opportunities worth pointing out. These can reduce the project’s cost and provide a much-needed net metering option.

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

Solar EnergyCurrently, 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, the TVA buys all excess solar electricity production 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 is a limited joining capacity and an application window you’ll have to meet. This is another reason why the sooner you act with your solar installation, the better.

Conclusion

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 locally.

It’s only a matter of time before lawmakers embrace alternative energy thoroughly 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 many 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, and 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 contribute to more environmentally friendly energy production, but you’ll also be reaping some excellent financial rewards (that could potentially increase in size and scale very shortly).

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

About the Author

Solar Panels Network USA stands at the forefront of solar energy solutions, driven by a team of seasoned solar engineers and energy consultants. With over decades of experience in delivering high-quality solar installations and maintenance, we are committed to promoting sustainable energy through customer-centric, tailored solutions. Our articles reflect this commitment, crafted collaboratively by experts to provide accurate, up-to-date insights into solar technology, ensuring our readers are well-informed and empowered in their solar energy decisions.