Is Solar Worth It in Indiana in 2026?
Indiana isn't the Sunshine State, but it isn't a bad solar state either — Indianapolis sees roughly 1,265 kWh of production per installed kilowatt per year, and electricity here has gotten expensive enough to make the basic pitch, make your own power instead of buying it, worth running the numbers on: 16.2¢ per kWh in 2025, up 116 percent since 2005.
2026 is a harder year to make that case than 2025, for two reasons. First, the 30 percent federal tax credit for buying a system ended for installs completed after December 31, 2025 — gone nationwide, Indiana included. Second, more Indiana-specific: the state closed traditional net metering to new residential customers back in 2017, so anything installed today earns a much weaker export credit instead. Neither fact should stop you from considering solar; they should stop you from trusting a payback number that ignores both. This page gives you Indiana's real numbers.
Indiana Electricity Prices Have Climbed 116 Percent Since 2005
Every kilowatt-hour your roof makes is one you don't buy from the utility, so the case for solar starts with where Indiana rates have been. Here's the last two decades, from federal EIA data.
Full Indiana electricity price data (1990–2025)
| Year | Indiana (¢/kWh) | US avg (¢/kWh) |
|---|---|---|
| 1990 | 6.9 | 7.8 |
| 1991 | 6.7 | 8.0 |
| 1992 | 6.9 | 8.2 |
| 1993 | 6.7 | 8.3 |
| 1994 | 6.8 | 8.4 |
| 1995 | 6.7 | 8.4 |
| 1996 | 6.8 | 8.4 |
| 1997 | 6.9 | 8.4 |
| 1998 | 7.0 | 8.3 |
| 1999 | 7.0 | 8.2 |
| 2000 | 6.9 | 8.2 |
| 2001 | 6.9 | 8.6 |
| 2002 | 6.9 | 8.4 |
| 2003 | 7.0 | 8.7 |
| 2004 | 7.3 | 9.0 |
| 2005 | 7.5 | 9.5 |
| 2006 | 8.2 | 10.4 |
| 2007 | 8.3 | 10.7 |
| 2008 | 8.9 | 11.3 |
| 2009 | 9.5 | 11.5 |
| 2010 | 9.6 | 11.5 |
| 2011 | 10.1 | 11.7 |
| 2012 | 10.5 | 11.9 |
| 2013 | 11.0 | 12.1 |
| 2014 | 11.5 | 12.5 |
| 2015 | 11.6 | 12.7 |
| 2016 | 11.8 | 12.6 |
| 2017 | 12.3 | 12.9 |
| 2018 | 12.3 | 12.9 |
| 2019 | 12.6 | 13.0 |
| 2020 | 12.8 | 13.2 |
| 2021 | 13.4 | 13.7 |
| 2022 | 14.6 | 15.0 |
| 2023 | 14.9 | 16.0 |
| 2024 | 14.8 | 16.5 |
| 2025 * | 16.2 | 17.3 |
Source: US EIA, average residential retail electricity price. Values in cents per kWh. * 2025 is preliminary.
Indiana residential electricity has gone from roughly 7.5¢ per kWh in 2005 to about 16.2¢ in 2025 (EIA preliminary) — a 116 percent increase, at roughly 3.4 percent a year over the last decade. Indiana still leans on coal and gas generation, and utilities keep recovering plant retirements, grid upgrades, and fuel swings through rate cases that push bills higher. Nothing points toward cheaper power ahead. A rate that has outpaced inflation for two decades is exactly what solar hedges against — every kWh you generate yourself is one more year of hikes you don't feel.
The Indiana Sun, Month by Month
Panels respond to how high the sun climbs and how long it stays up, not to temperature. Indiana sits at about 40.1°N latitude — solidly in the Midwest, with a real seasonal swing between a short, low-angle winter sun and long summer days, plus more average cloud cover than a southern state.
Indiana monthly solar production data
| Month | kWh per installed kW |
|---|---|
| Jan | 77 |
| Feb | 88 |
| Mar | 112 |
| Apr | 119 |
| May | 127 |
| Jun | 124 |
| Jul | 127 |
| Aug | 128 |
| Sep | 112 |
| Oct | 105 |
| Nov | 85 |
| Dec | 59 |
| Year | 1265 |
Source: NREL PVWatts typical-year estimate (Indianapolis), per installed kW at latitude tilt.
The practical read: April through August carry most of the year's production, with June the peak. December and January are genuinely weak — plan on a fraction of summer output — so size any estimate off an annual total, not a good-month snapshot. At roughly 1,265 kWh per installed kW per year in Indianapolis, Indiana produces noticeably less per panel than a Sun Belt state, which is one more reason the electricity-price side of this decision carries more weight here than the sun does.
What Solar Costs in Indiana in 2026
Most Indiana residential installs run about $2.80 to $3.30 per watt as of mid-2026. EnergySage's July 2026 tracking puts the state average at $2.82/W for a roughly 13.1 kW system — about $36,900 gross, range $31,400 to $42,500 before incentives; other trackers show $2.85 to $3.29/W. This is a national-tracker estimate, not Indiana-official, so treat it as directional and confirm against real quotes.
| System Size | Typical 2026 Cost | Roughly Offsets | Fits |
|---|---|---|---|
| 5 kW | $14,000 to $16,500 | ~6,300 kWh/yr (~$85/mo at 16.2¢) | Smaller home, lower usage |
| 8 kW | $22,400 to $26,400 | ~10,100 kWh/yr (~$136/mo) | Average Indiana home |
| 12 kW | $33,600 to $39,600 | ~15,200 kWh/yr (~$205/mo) | Large home, electric heat or heavy AC |
Because the federal credit no longer applies to any system completed after December 31, 2025, the price you negotiate with an installer is essentially the price you pay. Indiana has no state solar tax credit or rebate to soften that, so shop hard — get at least three quotes and compare price per watt, not just the bottom-line total.
Estimate Your Indiana Payback
The calculator below starts from Indiana's average electricity rate and Indianapolis-area production. Enter your own monthly bill to see an estimated system size, payback period, and 25-year savings. Indiana rates have climbed about 3.4 percent a year over the last decade — a reasonable default for the inflation field, though you can drag it lower or higher to test your own assumptions.
Indiana Solar Incentives in 2026
Indiana's incentive picture is thin — worth being precise about what's actually there versus what installers imply.
- Gone — the 30 percent federal credit: The federal Residential Clean Energy Credit (25D) was repealed for installations completed after December 31, 2025, with no phase-out step. It simply isn't available for a system you buy and own in 2026.
- No state tax credit or rebate: Indiana has never had a state-level solar tax credit or cash rebate, and the federal repeal doesn't change that — it was already "none" here. Some municipal utilities or co-ops occasionally run their own small pilots; none are confirmed active statewide for 2026, so ask your utility.
- Still here — property tax exclusion: Under Indiana Code § 6-1.1-12-26, any increase in assessed value from a solar system is fully excluded from property tax, for systems installed after December 31, 2011. Not automatic — file Form 18865 with your county auditor. Once approved, it doesn't need annual renewal. See our property taxes and home finances guide.
- Murky — sales tax exemption: DSIRE lists an Indiana sales/use tax exemption for electrical generating equipment, and some marketing sites present it as automatic. It isn't reliably that. Indiana DOR guidance (Bulletin #51) frames this as the general manufacturing exemption — equipment producing electricity for sale — and has ruled a homeowner generating power for self-use, even with excess reverting to the grid, typically doesn't qualify, since they aren't "selling" electricity in the statutory sense. Don't bank on the roughly $2,300 to $3,200 some lead-gen sites advertise; get a written determination first.
- Partially — leases and PPAs: Third-party-owned systems can still capture a separate federal business credit (48E) through 2027, but it belongs to the leasing company, not you. It may lower your lease payment, or it may not. Compare any lease or PPA against a cash or loan purchase.
Net Metering in Indiana: Now Mostly "Excess Distributed Generation"
This is the Indiana-specific fact that changes the payback math more than anything else on this page. Traditional net metering — every exported kWh credited at the retail rate you pay — is closed to new residential customers at all five of Indiana's major investor-owned utilities: AES Indiana, Duke Energy Indiana, Indiana Michigan Power (I&M), NIPSCO, and CenterPoint Energy. It was phased out under 2017's Senate Enrolled Act 309 (SEA 309), which let utilities end retail net metering once cumulative solar hit 1.5 percent of peak load; several, including CenterPoint's predecessor in the Evansville area, hit that threshold and filed to end it early, back in 2020.
New installations are enrolled instead in Excess Distributed Generation (EDG), a net-billing scheme that credits exported power at the utility's avoided-cost rate plus 25 percent — typically 3 to 5 cents per kWh, versus the roughly 14 to 17 cent retail rate you pay to buy power back. AES Indiana's EDG rate runs around 3.9 cents per kWh as of 2025–2026 — roughly a 70 to 80 percent haircut versus a straight 1:1 credit, and one of the weaker export rates in the Midwest.
Grandfathering matters: systems installed before January 1, 2018 keep full retail net metering through July 1, 2047; installs from January 1, 2018 to June 30, 2022 keep it through July 1, 2032. Anything after June 30, 2022 goes straight to EDG — so a neighbor who installed in 2016 has a materially better 25-year deal than anyone installing today. Municipal utilities and electric cooperatives aren't bound by SEA 309 or the IURC's EDG framework and can set their own, sometimes better, terms — if one serves your home, ask directly. Citizens Action Coalition and Solar United Neighbors are lobbying the General Assembly for better export rates, so this is a live policy fight, not settled law — confirm your utility's current EDG rate before signing anything.
How to Go Solar in Indiana
Work through these steps before you sign anything.
- Pull your last 12 power bills and find your true annual average — Indiana bills swing between a mild fall month and an expensive summer or winter one.
- Confirm your roof faces south, east, or west with minimal shade; with Indiana's lower per-panel production, orientation and shading matter even more here.
- Ask your utility directly what export rate applies to a new system, and whether you're on one of the five major investor-owned utilities or a municipal utility/co-op with its own terms.
- Get at least three installer quotes, and confirm each reflects 2026 reality — no phantom 30 percent federal credit, and an export credit based on EDG, not old-style net metering.
- Check whether your county requires Form 18865 for the property tax exclusion, and ask your installer for a written position on the sales tax exemption rather than assuming it applies.
- Weigh each quote's payback against how long you plan to stay in the home. With EDG's weak export rate, a system sized closer to your own consumption pays back faster than one built to maximize exports.
For how solar systems work, sizing, and buying versus leasing, see our main solar panels guide — this page covers what's specific to Indiana. If a roof replacement is part of the conversation, read our roofing guide first, and see our electrical guide for how wiring and panel capacity interact with a solar installation.
Sources
Rates: US EIA, Electric Sales, Revenue, and Average Price (2025 preliminary). Production: NREL PVWatts. Net metering/EDG: Citizens Action Coalition, Solar United Neighbors, Canary Media, and DSIRE. Property tax exclusion: DSIRE, Indiana property tax exemption. Sales tax: Indiana DOR, Bulletin #51. Cost: EnergySage, Indiana solar cost. Reviewed every six months.