Is Solar Worth It in Kentucky in 2026?
Kentucky isn't a sun-belt state, but it isn't a bad one for solar either. Around Louisville, a well-sited roof produces about 1,301 kWh per installed kilowatt per year — solid mid-country production, roughly on par with much of the Midwest and Mid-Atlantic. At 37.8°N, the sun climbs high enough in summer to make panels genuinely productive for half the year, even if winter is lean.
What actually decides the math here is two things stacking against each other. First, the 30 percent federal tax credit is gone for any system completed after December 31, 2025 — no phase-out, nothing to negotiate around. Second, Kentucky quietly stopped being a full-retail net metering state for new customers back in 2019: most homeowners who sign up today get paid an avoided-cost rate for exported power, well below what they pay to buy it. No federal credit plus a weak export rate means Kentucky solar in 2026 works best as a bill-reduction tool sized to your own usage, not a set-it-and-forget-it 25-year investment. This page walks through the real numbers.
Kentucky Electricity Prices Keep Climbing
Every kilowatt-hour your roof makes is one you don't buy from LG&E, KU, or your local co-op, so the case for solar starts with where Kentucky rates have been and where they're headed.
Full Kentucky electricity price data (1990–2025)
| Year | Kentucky (¢/kWh) | US avg (¢/kWh) |
|---|---|---|
| 1990 | 5.7 | 7.8 |
| 1991 | 5.7 | 8.0 |
| 1992 | 5.7 | 8.2 |
| 1993 | 5.7 | 8.3 |
| 1994 | 5.8 | 8.4 |
| 1995 | 5.6 | 8.4 |
| 1996 | 5.6 | 8.4 |
| 1997 | 5.6 | 8.4 |
| 1998 | 5.6 | 8.3 |
| 1999 | 5.6 | 8.2 |
| 2000 | 5.5 | 8.2 |
| 2001 | 5.6 | 8.6 |
| 2002 | 5.7 | 8.4 |
| 2003 | 5.8 | 8.7 |
| 2004 | 6.1 | 9.0 |
| 2005 | 6.6 | 9.5 |
| 2006 | 7.0 | 10.4 |
| 2007 | 7.3 | 10.7 |
| 2008 | 7.9 | 11.3 |
| 2009 | 8.4 | 11.5 |
| 2010 | 8.6 | 11.5 |
| 2011 | 9.2 | 11.7 |
| 2012 | 9.4 | 11.9 |
| 2013 | 9.8 | 12.1 |
| 2014 | 10.2 | 12.5 |
| 2015 | 10.2 | 12.7 |
| 2016 | 10.5 | 12.6 |
| 2017 | 10.9 | 12.9 |
| 2018 | 10.6 | 12.9 |
| 2019 | 10.8 | 13.0 |
| 2020 | 10.9 | 13.2 |
| 2021 | 11.5 | 13.7 |
| 2022 | 12.9 | 15.0 |
| 2023 | 12.7 | 16.0 |
| 2024 | 12.8 | 16.5 |
| 2025 * | 13.2 | 17.3 |
Source: US EIA, average residential retail electricity price. Values in cents per kWh. * 2025 is preliminary.
Kentucky residential electricity ran about 13.2 cents per kWh in 2025 (EIA preliminary data) — more than double what it was in 2005, a 102 percent increase in two decades. That's a steeper climb than the national average, notable for a state long known for cheap, coal-heavy power. Over just the last ten years the pace has been about 2.6 percent a year, as aging coal plants retire, grid investment gets billed to ratepayers, and utilities lean more on gas and purchased power. None of that guarantees the next ten years look the same, but a rising-rate trend is exactly the backdrop that makes a fixed-cost solar system look better each year you own it.
The Kentucky Sun, Month by Month
Panels respond to how high the sun sits and how long the day lasts, not to the thermometer. At 37.8°N, Kentucky's summer sun climbs high enough for strong midday output, while winter days are short and the sun stays low — a bigger seasonal swing than you'd see further south.
Kentucky monthly solar production data
| Month | kWh per installed kW |
|---|---|
| Jan | 82 |
| Feb | 87 |
| Mar | 111 |
| Apr | 122 |
| May | 127 |
| Jun | 127 |
| Jul | 126 |
| Aug | 130 |
| Sep | 113 |
| Oct | 111 |
| Nov | 94 |
| Dec | 71 |
| Year | 1301 |
Source: NREL PVWatts typical-year estimate (Louisville), per installed kW at latitude tilt.
The practical read: April through August are Kentucky's production months, and a system sized for your annual usage will run a surplus in spring and early summer, then draw it down through a duller November-to-January stretch. Because Kentucky's export rate is weak in most territories, that seasonal swing is one more reason to size conservatively rather than maximize panel count.
What Solar Costs in Kentucky in 2026
Kentucky's installed cost runs below the national average, roughly $2.55 to $3.10 per watt in 2025-2026, thanks largely to lower labor and permitting costs and a mature regional installer market. With the federal credit gone, the number you negotiate is essentially the number you pay.
| System Size | Typical 2026 Cost | Roughly Offsets | Fits |
|---|---|---|---|
| 5 kW | $12,750 to $15,500 | ~6,500 kWh/yr | Smaller home, lower usage |
| 8 kW | $20,400 to $24,800 | ~10,400 kWh/yr | Average Kentucky home |
| 12 kW | $30,600 to $37,200 | ~15,600 kWh/yr | Large home, electric heat |
An average roughly 15 kW Kentucky system lands around $38,000 to $46,000 before incentives. Since there's no sales tax exemption on solar equipment here (the standard 6 percent applies) and no federal credit for a 2026 install, that sticker price isn't discounted by anything Kentucky-specific. Always compare price per watt across at least three local quotes.
Estimate Your Kentucky Payback
The calculator below starts from Kentucky's average electricity rate and Louisville-area production. Enter your own monthly bill to see an estimated system size, payback period, and 25-year savings. Kentucky rates have climbed about 2.6 percent a year over the last decade — a reasonable default for the inflation assumption, though your real payback depends heavily on your specific utility's export rate, not just the retail rate.
Kentucky Solar Incentives in 2026
There isn't much to list here, and pretending otherwise would be dishonest.
- Gone — the 30 percent federal credit: The federal Residential Clean Energy Credit (25D) was repealed by the One Big Beautiful Bill Act for installations completed after December 31, 2025. If a quote still assumes it, the rest of the quote is probably outdated too.
- None — state tax credit: Kentucky offers no state-level solar tax credit in 2026. An older state credit expired years ago and was never renewed.
- None — sales tax exemption: Kentucky does not exempt solar equipment from the state's 6 percent sales and use tax. The Department of Revenue's own guidance (TAM 21-01) confirms there is no residential carve-out, despite some marketing sites claiming otherwise.
- None — property tax exemption: Kentucky has no statute excluding the value solar adds to your home from local property tax assessment. Practice can vary slightly by county, since your local Property Valuation Administrator makes the actual call, but there is no state law guaranteeing an exclusion the way some other states provide. See our electrical guide for how home electrical upgrades more broadly interact with assessments and permits.
- Maybe — your co-op: A handful of East Kentucky Power Cooperative member co-ops run small community-solar or rebate pilots. These aren't statewide and change year to year — ask your specific co-op directly.
Leases and PPAs are the one place a federal incentive still touches Kentucky solar: the separate 48E business credit is available to the leasing company through 2027. It's their credit, not yours, and it may or may not show up as a lower lease rate — get that in writing before assuming it's baked in.
Net Metering in Kentucky: The Value-of-Solar Program
Kentucky's framework is set by KRS 278.465-278.469, passed as 2019's Senate Bill 100. It requires KPSC-regulated utilities to offer net metering to systems up to 45 kW — but "net metering" in Kentucky no longer means a straightforward 1:1 retail credit for most new customers.
For anyone who enrolled after their utility's SB-100 compliance filing took effect, exported power is credited at a KPSC-determined avoided-cost, or "value of solar," rate — built up from avoided energy, capacity, ancillary services, transmission and distribution, and environmental compliance costs. Current post-2021 rates: about 6.9 cents/kWh at LG&E, 7.4 cents at KU, and 9.7 cents at Kentucky Power — all well below the roughly 11 to 14 cent retail rate. Duke Energy Kentucky made the same shift in January 2025. If you enrolled before your utility's rate change (LG&E/KU: before September 24, 2021), you're grandfathered onto the old full-retail 1:1 credit for 25 years — worth confirming if you're buying a home with an existing system.
Kentucky's 19 PSC-regulated rural electric cooperatives are statutorily required to offer net metering, and many still credit close to full retail value as of 2025 — but this varies co-op by co-op, so ask yours directly. A bill to further roll back net metering protections has recurred in recent General Assembly sessions, but as of today no new law has taken effect beyond the 2019 SB 100 framework. Kentucky's solar policy is genuinely unsettled and regionally fragmented — reconfirm your specific tariff with KPSC.ky.gov or DSIRE before you sign a contract.
The Catch Out West: TVA Territory Plays by Different Rules
The detail an out-of-state sales rep is most likely to miss: far-western Kentucky — Paducah, Murray, and the surrounding rural co-op territory — is served by the Tennessee Valley Authority, a federal power authority, not by KPSC-regulated utilities. Because KRS 278.465's net-metering mandate only binds PSC-jurisdictional utilities, TVA-territory co-ops and municipal systems are under no obligation to offer net metering at all. Some do so voluntarily; others don't, or offer terms far less favorable than what SB 100 guarantees elsewhere in the state.
That means a homeowner in Paducah can face a materially worse — or simply nonexistent — export deal than someone in Louisville or Lexington, despite living in the same state. Layer in Kentucky's roughly 75 percent coal-fired grid mix and its recurring legislative fights over net metering, and the honest takeaway is: don't quote yourself a statewide number. Call your specific utility or co-op first.
How to Go Solar in Kentucky
- Pull your last 12 power bills and calculate your true average monthly cost — Kentucky's heating and cooling swing between seasons more than a single month reveals.
- Find out exactly which utility or co-op serves your address, and whether you're in TVA territory or PSC-regulated territory — this changes everything else on this list.
- Call that utility or co-op and ask for their current net-metering or export rate before getting a single quote. Don't rely on a statewide average.
- Get at least three installer quotes and confirm none of them still assume the expired 30 percent federal credit.
- Check your roof orientation, shading, and remaining roof life — replace an aging roof before, not after, panels go up. Our roofing guide covers what to look for.
- Size the system to your own annual usage rather than to maximize output, given how little Kentucky pays for excess exports in most territories.
For the fundamentals of how solar systems work, sizing, and buying versus leasing, see our main solar panels guide — this page focuses on what's specific to Kentucky.
Sources
Figures on this page are current as of mid-2026. Rates: US EIA, Electric Sales, Revenue, and Average Price (2025 values preliminary). Production estimates: NREL PVWatts. Net metering rates and rules: Kentucky PSC order, LG&E/KU export rates, Kentucky PSC order, Kentucky Power tariff, and KRS 278.466. Program summary: DSIRE, Kentucky net metering. Tax treatment: Kentucky Department of Revenue, TAM 21-01 and the Kentucky Energy and Environment Cabinet. We review these figures every six months.