The good news: v-pre You can install solar panels on your home in Alabama.
The bad news: v-pre You might not be able to save on your utility bills, especially with the state’s poor net metering policies.
That doesn’t mean solar panels aren’t worthwhile, though. Solar panels can still provide you with backup power during outages and the knowledge that you’re reducing fossil fuel emissions.
Can solar panels save you money?
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Depending on where you live in-state, a solar panel system might still be beneficial. Alabamians face some of the highest average electric bills in the country, according to data from SaveOnEnergy, a CNET sister website that covers the consumer energy industry. The state has the fourth highest average bills nationwide, at $173 a month — the highest among southern states.
Whether a solar system makes financial sense depends a lot on whether you plan to connect it to the grid — and on your utility company. Here are some of the best solar installers you can consult with in the state.
Best national solar panel companies in Alabama
Alabama has eight solar installers and developers, according to the Solar Energy Industries Association. While you have just a handful of choices, here are some that stand out, including at least one top national solar panel company.
Local solar installers in Alabama
How to determine which solar company is best for me
The first, best step you can take to finding a good fit for you is to get multiple quotes from multiple companies. Then you can make an apples-to-apples comparison of the costs, warranties and service each company is offering you. Pay attention to red flags in a solar sales pitch like high-pressure sales tactics, promises of getting checks from the government when you order or avoiding questions.
And while online reviews won’t necessarily predict your experience with a company, checking out reviews and complaints for the company with the Better Business Bureau can give you an idea of what customers have experienced. If you have friends or neighbors who have gone solar, ask about their experience with their installer too.
Alabama solar panel costs
The cost to install a solar system at your home depends on a lot of factors, including the size, type of solar panels and whether you get a battery system. Without a more mature solar industry in Alabama, state-level data on how much a typical system costs is hard to come by. Even still, Daniel Tait, executive director of Energy Alabama, a clean energy group, said prices tend to be in line with the national average — if not a little cheaper.
Here’s a look at the national average cost of solar panels, according to data pulled from FindEnergy.com. The average price of solar panels in Alabama is unavailable at this time.
National average cost of solar panels
|Typical system size (kW)
|Price per watt
|Total installed cost
|Cost after 30% federal tax credit
The following map displays the average total price, cost per watt and system size for solar panel systems in different states, according to data from FindEnergy.com. The prices shown do not account for tax credits or state solar incentives. If FindEnergy doesn’t have solar data for a state, it appears grayed out on the map.
Solar panel incentives and rebates
Alabama is 33rd nationwide in terms of installed solar capacity, according to the Solar Energy Industries Association, but the prospects for homeowners installing panels are dimmed by net metering policies that limit their savings and discourage connecting to the grid.
“Solar is a totally viable and mature technology, and the main thing holding back its growth and use in Alabama is our policies,” Tait said.
It isn’t all bad news when it comes to solar incentives for Alabamians, however.
Regardless of the size of the system you get, solar panels require a sizable financial investment. Fortunately, you can save quite a bit, thanks in large part to a major federal tax credit.
The main incentive is the federal residential clean energy credit, through which you can get 30% of the cost of a solar system back if you buy solar panels. It was increased from 26% and extended through 2034 by the Inflation Reduction Act, which Congress passed in 2022, and there is no cap on the size of the credit.
Note that the federal tax credit isn’t like a discount code or an instant rebate — you won’t get the money back until after you file your tax return the next year, and the actual amount you get back will be limited by how much federal income tax you paid. You can apply by filling out IRS form 5695 (PDF), and by following instructions from the Internal Revenue Service.
When comparing Alabama to other solar-friendly states, Alabama has limited solar incentives for homeowners. Check with your installer to see if any programs are available in your area.
Alabama solar incentives
|Property tax abatement
|Your local government can authorize an abatement of property taxes for qualifying renewable energy projects — saving you from having to pay more in property taxes after adding solar panels. The abatement must be in place before the project is completed.
|Rural Energy for America Program
|This initiative, administered by the US Department of Agriculture, provides guaranteed loan financing and grants to farmers and rural small businesses for renewable energy systems or energy efficiency improvements.
How to pay for solar panels in Alabama
Like any major purchase, you’ll want to have a plan to cover the costs of solar panels. Some methods require preparation or take longer for you to recoup the cost.
Cash: Nothing beats cold, hard cash, but a project in excess of $10,000 requires a lot of it. If you see solar power in your future, but not tomorrow, consider saving money now. Regular contributions to a high-yield savings account can add up quickly.
Solar loan: Many solar companies will offer financing, often from a third party. Shop around with different lenders, because your solar company’s third party choice might not have the best terms or interest rate.
Home equity loan or HELOC: You can also consider a home equity loan or line of credit, which could save you on interest, although your home is at risk if you fail to repay.
Mortgage: Another way to get the cash for solar panels is to refinance your mortgage. You can tap into your home’s equity and still just have a single payment. Some products, like Fannie Mae’s HomeStyle energy mortgage, are specifically designed to fund energy efficiency projects.
Read more: Just looking for an emergency backup? Check out portable solar panels and solar generators.
Why connecting to the grid is complicated in Alabama
Through issues like fees and net metering — the process by which you sell power to the grid — Alabama’s utility companies play a major role in determining whether a residential solar system will make sense. “That really determines, unfortunately in many cases, what you can and cannot do,” Tait said.
In North Alabama, most homeowners get their power from municipal utilities that buy power from the Tennessee Valley Authority. In this area, where solar development is more common than in the rest of the state, interconnection agreements and net metering are fairly simple, Tait said. TVA will buy excess energy, but not at a high rate, meaning many systems are built around batteries that store power for the homeowner’s use rather than selling excess power to the grid.
In much of the rest of the state, people who want to connect a solar system to the grid face the prospect of a fee charged by the utility Alabama Power based on the size of the system — $5.41 per kilowatt per month. That fee essentially wipes out the potential cost savings of going solar, and the policy is the subject of a federal lawsuit. An Alabama Power spokesperson declined to comment, citing the pending litigation.
“No one does solar in Birmingham thinking it’s going to be a smart financial move on a home,” Tait said.
People in Birmingham, Montgomery and other areas served by Alabama Power do have options, including systems specifically designed to not connect the solar to the grid itself and avoid net metering entirely, Tait said. That includes hybrid solar systems or even separate electrical systems — one connected to the solar array and one to the grid. Others, if they can generate enough electricity, can be entirely off the grid.
Other customers in Alabama are served by local electric cooperatives, which have a range of policies around solar, Tait said. If you’re served by one, contact your co-op to find out what your options are. The details may vary widely from one to another and some smaller co-ops may not have any concrete policies about connecting solar systems.
Installation factors to keep in mind
There’s more to a successful solar installation than just buying the panels and screwing them into the roof. Here are some things you should think about before making a decision.
- Your roof: Whether solar makes sense for you depends a lot on your roof — its size, shape, slope and which way it slopes. The Department of Energy says solar panels are most efficient on roofs that slope between 15 and 40 degrees, and in the northern hemisphere, they’re best placed on south-facing roofs. You also might need to repair or replace your roof before it’s ready for panels.
- Your neighborhood: Make sure you don’t have any restrictions from a homeowners association or local regulations that prevent you from having solar panels.
- Insurance: Add the panels to your homeowner’s insurance policy after they’re installed. You should check in advance to make sure your policy will cover them.
- Your location: Solar power systems work best in places where they get plenty of sun all day. If your property has a lot of shade, it might not be the best fit for a solar system. Talk with reputable installers to make sure the project is worth it.
- If you’re a renter: Before installing solar on a rental home, check with your landlord or rental management company.
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